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State of Human Capital Risk management worrisome in India: CII-Suresh Neotia Centre of Excellence for Leadership and Willis Towers Watson Study
Apr 25, 2016

New Delhi April 25, 2016 — Depicting a challenging scenario around human capital risk (HCR) management in India, a pioneering study done by CII – Suresh Neotia Centre of Excellence for Leadership in association with Willis Towers Watson finds that 62% companies indicate HCR to be an urgent Board level concern, yet only one in three respondents have a formally defined risk mitigation or control strategy in place. Further, just over 40% believe they are effective at HCR management, with MNCs being more effective than domestic organisations. These are some of the major findings of the study - State of Human Capital Risk in India that gathered the views of nearly 100 CEOs, CHROs and other senior executives in India spanning a diverse set of industries. The study observes that rising HR challenges like workforce planning, retention, succession planning and skill gaps will drive organisations to prioritise human capital risk management.

The study ranks the top HCRs facing companies in India based on an assessment of both - the potential impact and probability of occurrence - across 17 identified HCRs.

While only a few years ago, “managing human capital risk” rarely figured on the agenda of the Board and C-Suite leadership in Asia and even less so in India, the study reveals that today, Boards in India are recognising their crucial role in matters around human capital. Sixty-two percent of all respondents have identified HCR as an “urgently important” or “very important” Board-level concern for organisations. Surprisingly, only 38% of the HR respondents have cited Board involvement as an important concern, compared with 62% of CEOs, general counsel and other senior managers.

”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 – and working with specialists 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 fire’, to a more pro-active mode of ‘anticipating and warding off fires’” said Harshavardhan Neotia, Chairman, CII-Suresh Neotia Centre of Excellence for Leadership (SNCEL).

Commenting on the study findings, Vivek Nath, Managing Director- South Asia ( India and South Asia), Willis Towers Watson said, “The implications of HR risk measurement and mitigation extend beyond pure compliance and organisations must build a more holistic approach. It should be seen as a tool to mitigate financial, operational and reputational risk while delivering a consistent service delivery process leading to an improved overall employee experience. Getting this equation right will enhance efficiencies and help organisations leverage synergies across business and geographies. Evident from this study, human capital risk is gradually becoming a significant C-Suite and Board level agenda item and has the benefit of getting HR a strategic seat at the proverbial table.”

Sharing perspectives on the study findings, Chandrajit Banerjee, Director General, CII said, "The government’s economic philosophy of fostering higher growth by easing prevailing business conditions and encouraging foreign investment in the country provides opportunities for organizations in India to grow at a faster pace. Human capital is undoubtedly emerging as the most critical driver of innovation, growth and firm level competitiveness. With companies undergoing remarkable business transformations such as globalising, M&A and restructuring, being informed and prepared to deal with emerging human capital risks will be a key determinant of sustenance and success. This study is informative and insightful and provides much needed direction to key stakeholders on HR risk management.”

 An underlying finding of the study is that corporate leaders today are more likely to realise that human capital can make or break the sustained viability and success of their business, and to make it a priority. Confirming that HCR management will grow in importance, the study finds that three out of four respondents plan to invest additional resources in HCR management over the next five years.

Enclosed are some key highlights of the study.

April 25, 2016

New Delhi

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