Author: Denita Strietelmeier

Managing Your Talent Pipeline and Succession Planning

Risk Institute Portraits Fisher Hall - Third Floor Feb-02-2016 Photo by Jay LaPrete ©2016 Jay LaPretePhilip S. Renaud II, MS, CPCU
Executive Director, The Risk Institute
The Ohio State University Fisher College of Business

 

 

On May 12, 2016, The Risk Institute at The Ohio State University Fisher College of Business held, as the final session  of its 2015-2016 Executive Education series, The Talent War: Managing the Talent Pipeline and Succession Planning. The session was very well attended with participants from a cross section of industry sectors.

All industry sectors from retail to manufacturing regularly face the challenge of recruiting, selecting, on-boarding developing and maximizing talent. More and more sectors are reporting significant challenges in recruiting and retaining good talent.

Whether caused by rapid advances in technology and skills, changing workplace perceptions of millennials, or pending retirement of the “boomer” generation, businesses are facing a new and complicated set of dynamics

Session leaders, Anthony J. Rucci (The Ohio State University Fisher College of Business), Levi Segal, (Aon Hewitt) and Yvonne Kalucis (MXD Group) collaborated to provide insights into understanding the changing, complex alignment of talent management to general business strategy. The session emphasized how to proactively use risk management to balance the risks related to talent management in order to meet business goals and enhance business performance.

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Professor Rucci’s presentation included very interesting points on:

  • The intangible value chain (predicting performance risk with intangibles)
  • Employee “commitment” as a key risk indicator
  • CEO challenges and strategic talent management
  • Organization capabilities risk measurement and audit

Professor Rucci was followed by Levi Segal, who spoke on Strategic Performance Management: Can You Afford to NOT Get This Right? Segal raised some thought provoking questions that included:

  • Are you competing for top talent with more industries than before?
  • Are we incenting the right behavior?
  • How much economic value do high performers add versus the rest?
  • Are you ready to manage and pay for performance in an age of less pay, decreased flexibility and greater regulation?

Finally, Yvonne Kalucis presented on Strategic Talent from the practitioner perspective. The presentation highlighted unique characteristics of strategic positions within an organization. Defining characteristics of strategic positions typically are:

  • Usually <20% of organization
  • Hold disproportionate importance to a company’s ability to execute its strategy
  • Wide variability in the quality of the work displayed among team members in the position

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The session provided thought provoking ideas and advanced The Risk Institute’s unique role in uniting industry thought leaders, academics and highly respected practitioners in an ongoing dialog to advance the understanding and evolution of risk management. The Risk Institute’s conversation about risk management is open and collaborative with its relevance across all industries and its potential for competitiveness and growth.

For more information about upcoming events, our students, partners or research, visit our website: fisher.osu.edu/centers/risk.

Managing the Risks and Opportunities of Social Media

By Professor Bernadette A. Minton, Academic Director, The Risk Institute
Arthur E. Shepard Endowed Professor in Insurance

During the last decade, the rise of social media, which accelerated with the introduction of smartphone technology, has provided unprecedented opportunities for organizations to build influence, their brand, and reputations.  The organic nature of social media allows enterprises to reach millions of consumers and influencers in ways they never could before.

Yet, this opportunity does not come without risks.

RiskInstitute_block B 250x296During a recent Risk Institute Executive Education session on Social Media and Risk Management, Prof. Lanier Holt of The Ohio State University’s School of Communication stressed the effect of social media in today’s media climate is that “Perception IS the Realty.” Customers, bloggers and others can use social media to quickly turn on a firm/brand, leaving in shambles a distant memory of its once vibrant self.

Thus, it is not surprising that, in the same session, Bill Deakin, Executive Director, North American Consumer Products, EY, noted that recent surveys consistently report that executives view social media as one of the leading risks facing their organizations.

An organization’s brand is a collaborative effort of most, if not all, areas of the firm – from marketing and sales to finance and operations.  As such, the benefits and risks of social media rarely impact just one area of an organization.  So, as Deakin stressed, a social media strategy must be an organization-wide responsibility.

By integrating enterprise risk management strategies for understanding, evaluating and managing these risks, organizations can capitalize on the opportunities inherent in social media, which include:

  • empowering consumers to comment anywhere and anytime on an organization and what it is doing and companies to provide real-time feedback to customers letting them know they are being heard.
  • providing organizations a venue to tell stories in engaging ways to a wider audience, helping to build reputation, customer affinity and sales.
  • allowing companies to analyze in real-time online conversations to assess the effectiveness of the firm’s products or initiatives.
  • providing firms a way to provide the information in real time to manage risk by getting ahead of negative events, not allowing others to tell their stories for them.

The power of social media is something that was unimaginable even 10 years ago. But, today it can empower an entrepreneurial startup with the same brand-building abilities as the world’s largest and most well-established company. When approached with an enterprise risk management perspective, organizations can create value by balancing the power of social media engagement with its associated risks. To find out more about The Risk Institute’s perspective on enterprise risk management, visit fisher.osu.edu/risk.

To find out more about The Risk Institute’s Executive Education Risk Series, or to register for the upcoming session on Demand Uncertainty on April 30, 2015, visit our webpage.

 

Preparing for Supply Chain Disruption and “100-year events”

john-gray 100x150By Professor John Gray

Tsunamis. Nuclear disasters. Factory fires. These are the kinds of cataclysmic incidents companies often label “100-year events,” putting even the best risk management infrastructures to the test and leaving an indelible stamp on the businesses that survive.

For companies with global reach, however, these so-called 100-year events can occur with striking regularity. For a firm operating in 30 independent regions, the likelihood that they experience at least one “100-year event” in one of those regions in a given year is over 25 percent. Considering each year independent of the other, this company in a half-decade will have a nearly 80 percent likelihood of experiencing at least one 100-year event, making the unpredictable seem, on the contrary, quite predictable.

The incidents themselves don’t indicate a company has taken undue risks or “failed.” In the end, what separates firms with strong risk programs and those with weaker ones is the degree to which they’re aware of risks they face (and have reduced these risks where appropriate), how they detect those risks, and how they respond when an event occurs.

Greif Protest 2014

One Columbus, Ohio-area company, Delaware-based industrial packager Greif experienced its own collision with supply chain risk when one of its plants in Turkey was taken over in the spring. News reports described the takeover as “led by a small radical group of individuals,” reportedly communist workers. The takeover and subsequent plant closing will cost the company $27 million this year, no small change for a firm whose 2013 net income was under $150 million.

From an outsider’s perspective, such an incident can raise many questions: When the company chose Turkey, were these risks considered in comparison with other locations? If they were, how was the risk incorporated into the decision? If not, would they have changed course if this possibility hit the radar? Once the plant was operational, what disruption mitigation plans were implemented? And finally, were there any opportunities for prevention?

It is important to note that Greif already has a well-structured and comprehensive risk management system in place, driven by risk management teams for each strategic business unit. They’re the source of regular monitoring of economic, political and regulatory changes that might impact operations along with education, auditing and compliance management for the company’s global footprint. Even with such a system in place, this incident still occurred, illustrating a brutal truth about supply chain risk management: You can do everything right and will still experience adverse events.

Doing everything right starts with a program that includes four key elements: Assessment, planning, detection, and response.

  • Assessment is crucial as the supply chain is being designed, but it is impossible to assign expected costs to all potential supply chain risks. Companies often use a “red-yellow-green” or slightly more sophisticated coding system to supplement the analysis of quantifiable costs. Assessment also includes evaluations of “time to recover” ( TTR) and “revenue at risk” (RAR) (which goes by other names, including revenue impact and risk exposure) for a given site, which are critical for planning.
  • A key aspect of Planning is Business Continuity Plans (BCPs), which outline steps to be taken in the event of foreseeable disruptions. This is also where firms invest in risk mitigation (for example, owning extra inventory or developing a second source for a component). TTR and RAR provide the justification for such investments.
  • Detection is learning about risks as soon as possible, ideally while they are still developing.
  • Finally, Response is the “real-time” work after an incident has occurred.  Firms with sophisticated supply chain risk systems have “playbooks” to improve responsiveness to many possible incidents.

In the aftermath, companies faced with challenges similar to Greif’s typically revisit their location-related risk management programs and often face another classic problem of risk management: Return on investment. Because quantifying all risks, even probabilistically, is impossible, quantifying ROI is not feasible. Because of this, firms may overinvest in risk management plans after an incident hits close to home, and then scale back programs, ironically, when they have been effective at reducing risk. The general belief in the context of investment in supply chain risk managements currently seems to be “more is better.” As most firms historically have neglected this area, that’s probably a good thing. At some point, though, especially after periods of quiet, CFOs may start asking what return they are getting on risk mitigation plans with such as multiple/backup sources, extra inventory, and a staff working on plans they hope will never be used. Supply chain risk managers will likely need to rely on more and better data on the likelihood and costs of supply chain risks, not just for internal planning but for justification of risk-reducing investments. With the “big data” trend, consultants, entrepreneurs, and even insurance companies are stepping up to try to fill this need. It is far from clear whether supply chain risk will ever be quantifiable enough to develop accurate ROIs for risk-reductions , but it is likely firms will continue to get incrementally better. That’s all anyone, even the CFOs, can ask for.

Professor John Gray is an associate professor of operations at the Fisher College of Business and an affiliated faculty member of The Risk Institute. Prior to receiving his PhD from the Kenan-Flagler Business School at the University of North Carolina – Chapel Hill, he worked for eight years in operations management at Procter & Gamble while receiving an MBA from Wake Forest University. Prof. Gray’s research has received several awards and recognitions, including the 2012 Emerald Citations of Excellence award, the OM Division’s Chan Hahn best paper award at the Academy of Management conference in 2012, and the 2011 Pace Setters award for research at Fisher. He also serves as a senior editor for Production and Operations Management and an associate editor for the Journal of Operations Management. Among his service to professional societies, he is serving a 5-year leadership role for the Academy of Management’s OM Division from 2014-2018.

Interested in supply chain logistics and risk management? Join us for our executive education session on  September 10, 2014  to learn more.  Contact The Risk Institute for details. 

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