Human capital risks impact most on business: CII study

New Delhi, April 25 (IANS) Human capital risks have the most impact on business performance compared to other risks like from the market or macro-economic factors, the Confederation of Indian Industry (CII) said in a study released on Monday.

The study conducted jointly by the CII’s Suresh Neotia Centre of Excellence for Leadership (SNCEL) and Willis Towers Watson found that human capital risks (HCR), such as those arising from high attrition, attraction and retention and skills inadequacy, rank first with a score of 84 percent in terms of impact on business performance.

“The study finds that 62 percent companies indicate human capital risk to be an urgent board level concern, yet only one in three respondents have a formally defined risk mitigation or control strategy in place,” CII said in a statement here.

Identifying the top human capital risks faced by companies in India, the study found: “Insufficient leadership bench-strength poses the biggest risk to organisations in India with 74 percent respondents indicating this significantly impacts business performance and 38 percent saying this risk has been a concern for their organisation in the past.

“Retention of critical talent segments was identified by 77 percent of the respondents as a risk that could have a ‘major’ or ‘catastrophic’ impact on business performance and 31 percent indicated that they have faced retention issues in the past two years.”

Capability gaps rank third, with 74 percent of respondents believing skill gaps significantly hurt business performance and 28 percent saying their company has struggled with this risk.

The study – State of Human Capital Risk in India – surveyed nearly 100 chief executives and other senior executives in India spanning a diverse set of industries.

After human capital, market risk factors like competition, reputation and brand image came next scoring 70 percent, followed by macro-economic risks at 55 percent and financial risks with 52 percent.

Political uncertainty, which is characterised by mistrust in policy-making, communal violence, protection of rights, among others, figured towards the bottom of the risks’ list with 29 percent.

Commenting on the report, Harshavardhan Neotia, chairman, CII-SNCEL said: “Human capital is the fulcrum upon which productivity, superior performance, and eventually growth, now depends. Using the right risk mitigation tools and frameworks – as highlighted in this study – will prepare organisations to effectively manage people-related risks.

“This will enrich understanding, improve planning and facilitate transitioning from a reactive mode of ‘putting out the fire’, to a more pro-active mode of ‘anticipating and warding off fires’.”



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