Managing the Risks of Recruiting

Introduction

On the 15^th of March 2014, the Nigerian Immigration Service (NIS) carried out a pre-recruitment aptitude test nationwide. Over 500,000 (five hundred thousand) job seekers were attending these tests to compete for less than 5,000 (five thousand) vacancies. This means that the ratio of applicants to jobs was more than 100 to 1. At this test there were stampedes at several centres and as at the last count eighteen young Nigerians had lost their lives with scores wounded. Several others lost their lives in traffic accidents on the way to and way from the test venues. I surmise that there is a better way for the Government to recruit while managing the risks of recruitment.

The unfortunate stampede which led to the deaths of several job candidates seeking to join the Nigerian Immigration Service, is a tragedy on many levels and an avoidable one at that.

Firstly it is a tragedy for the families of the young men and women who died. Families that were hoping for these young people to come home with good news of a successful interview not to be called to identify their loved ones in the morgue.

It is also a tragedy for the image of Nigeria. The most populous country in Africa with the now (re-based) largest economy in Africa. It should not be seen to be failing to provide sufficient opportunities for our young people to be gainfully employed. The sheer number of candidates in the stadia was astounding and clearly indicates that a lot more needs to be done to create jobs for our school leavers. More importantly for the subject of this paper is the fact that the exercise was conducted without any regard for risk management.

I was moved while watching the news of this sad event to hear a traumatised victim asking why in this modern times the recruitment was done in such a manner. This is a question that is no doubt being asked up and down the country and lessons need to be learned.

Problem Statement

In the past government agencies and the Nigerian military and paramilitary services have seemingly held the view that candidates need to be seen to be screened. Note that I use the word screened (not interviewed). Following from this logic; to screen 500,000 you need to see 500,000 physically. The problem is that seeing 500,000 persons at the same time is a big risk. Asking 500,000 person to physically appear which involves travel even if not on the same day also involves huge risks. These are risks that the recruiter should manage and mitigate and not pass on to the hapless job seeker. The attitude of the Nigerian Immigration Service and its “recruitment consultant” seems to be “please come at your own risk”.

Previous Options

At this last screening and recruitment exercise the Nigerian Immigration Service actually used an online platform to receive applications and collect the application fee. After this the candidates were required to report at various stadia for written aptitude tests. The question is; “why stop the use of technology at application collection?” Why not use the online platform to organize online testing.

Clement Ashley Consulting's Solution

1. Use an online platform to collect applications- this saves time, manages the risks of travel as well as missing or misplaced applications as well as the risk of wrong recording of names and other candidate details. Also aids data mining and shortlisting.
2. Abolish the practice of collecting application processing fees from candidates responding to your job advert. This is not only unethical but abolishment also removes the risk of exploitation as well as profit induced risky practices and a risk prone mindset such as “the more the merrier”
3. Use online aptitude and job knowledge tests to screen and shortlist for further screening, this addresses the risk of looking further at persons who lack the basic knowledge and intelligence for the job. It also addresses the risk of travel, queuing and crowd control. Any concerns about the sanctity of online test can be addressed by Information Security methodologies.
4. Use online psychometric and personality tests to screen and shortlist for further screening and/or interview. This addresses the risk of looking further at persons with the wrong personality or mindset. It also addresses the risk of travel, queuing and crowd control and saves the time of the interviewers.
5. Use a recruitment software application to move candidates application down the recruitment funnel from one stage to another this saves time and money (the cost of personnel) and the need for physical file carrying with the attendant risk of manipulation.
6. Only invite candidates for final interview when the ratio is down to less than or equal to: five candidates per vacancy,, anything more than that is unreasonable.
7. Only carry out medical or other physical tests during or after the interview, if a pre-condition for employment then combine with final interview to minimize travel, cost of examination and queuing.

Clement Ashley Consulting recommends that job seekers be treated with respect. As part of quality control this proposed recruitment methodology should be audited regularly for compliance.

Benefit 1

Using this approach recruitment is faster. Marking of scripts that could take weeks will be accomplished instantaneously.

Benefit 2

Using this approach recruitment is cheaper. Only a few hands will be necessary to manage an automated recruitment process.

Benefit 3

Using this approach recruitment will be less risky for the applicants as travel, queuing and the need for crowd management will be reduced or eliminated.

Benefit 4

Using this approach the recruitment process will be transparent leading to more credibility for government agencies or other large scale recruiting organisations.

Summary

Technology based recruitment in the 21^st Century is a minimum standard requirement for large scale recruitments. Anyone reading this, will be forgiven for wondering why this paper is necessary.

Managing Risks Growing Businesses Face

Introduction

Growth (top-line) and profitability (bottom-line) are two major indices that define how well organizations are doing in pursuit of their strategic objectives and short term goals.

Business organizations achieve growth through organic or inorganic channels. Growth occurs largely via the development of a new product, creation of a new business line, mergers and acquisitions, increase in market share and direct expansion into a new market. In pursuing any, a combination or all of the aforementioned growth strategies business organizations face several risks. Typically organizations are faced with Macro-economic risk, Credit risk, Market risk, Reputation risk, problems associated with access to credit, social acceptance/corporate social responsibility risk, technology risk, political risk, geopolitical risk, Economic shock, etc. Effective risk management enables business organizations to successfully exploit business opportunities and contain threats. It does this by providing insights and assurances required to take advantage of profitable ventures.

Problem Statement

The risk management framework and practices that exist in most business organizations are not adequate to enable them to navigate to safety in times of trouble. The risk management culture, the governance and organizational structure, the design of the risk management framework, processes, policies and procedures, risk management tools, sophistication of risk identification and measurement techniques and skills available are not fit for today’s purpose and tomorrows expectations. This is evidenced by the impact of the recent global financial crisis. Systemically exposed business organizations are even more exposed. Business organizations need to embrace best practices to better prepare them for the rainy day.

Previous Options

Current practice in most business organizations is that risks are managed in 'silos'. Risks are also not managed in the context of strategy and objectives. Risk Management is often times seen as totally alienated from performance management. This means that each business line, group or division in an organization manages its strategic, business and operational risks independently, if at all.. A case of ‘’to your tents O Israel’’. Risks are therefore not managed centrally or in alignment with strategic objectives and so, many of the strengths an organization can build and the benefits of a centralized risk management do not accrue to such organizations.

Our firm, Clement Ashley Consulting provides a risk management framework that takes an enterprise-wide view of risk as against silo management. This approach is called Enterprise-wide Risk Management (ERM). Enterprise Risk Management implies that risk management is done at the enterprise level instead of at the business line, business group or business division level and so is centrally coordinated. Strategic, Business and Operational risks are therefore managed not independently but holistically at the enterprise level. For financial institutions that are regulated Economic capital is a must as against a purely regulatory capital limit. Risk assessment is done from time to time so as to reflect market realities. There is also frequent review of the application and suitability of the established process in order to identify gaps for improvement.

Our approach begins with a review of existing risk management process and framework in the organization with a view to modify existing framework and practice based on regulatory requirements, market realities, business needs and best practices.

Benefit 1

Clement Ashley Consulting's Solution is in concert with what regulatory and supervisory authorities and rating agencies demand and so enables business organizations to comply with regulatory and supervisory requirements. The framework which Clement Ashley provides is also in line with best practices world over.

Benefit 2

Risk aggregation at the centre provides the required knowledge about how risks interact, about risk concentration and the actual overall risk faced by the organization giving that some risks offset others while some reinforce others such that risk responses and controls provided are better targeted and therefore more effective compared to what can be achieved under silo management.

Benefit 3

Risk management is centralized in Enterprise Risk Management and so duplication is avoided and therefore cost is minimized. Central coordination also ensures that there is consistency in the risk management approach.

Benefit 4

Any thing that can prevent an organisation from achieving its objectives and targets (be they financial targets or otherwise) is a risk that must be managed. Enterprise-wide risk management therefore assists organizations meet and exceed their performance objectives and stakeholders expectations.

Implementation

Implementation involves assessing the effectiveness of the designed risk management process and framework. It includes checking how well risk responses and controls, early warning indicators, etc are working. If responses and controls are not effective then a further risk identification is required to identify any risks left that made the responses and controls ineffective. Implementation may be iterative. It is a real time and real life activity. It does not include any form of simulation. Implementation stage provides the opportunity to adapt the designed framework to market realities and at the same time maintain the desired robustness that allows it provide adequate safeguard. Implementation is usually done in phases in line with the priorities of the client.

Summary

Till date many organizations manage risks in silos. Today’s realities and tomorrows expectations make silo management utterly inadequate. Risk aggregation at the enterprise level allows for better responses and more effective controls in the risk management process. Beyond meeting regulatory and rating agencies requirements and other stakeholders’ expectations, enterprise-wide risk management reduces to the barest minimum chances of unexpected losses. Removal of duplication and the cost reduction that go with it make enterprise risk management a more cost effective way of managing risks.