A Risk Perspective On Human Resource Management A Review And Directions For Future Research

A risk perspective on human resource management: A review and directions for future research Karen Becker⁎, Michelle Smidt QUT Business School, Queensland University of Technology, 2 George Street, Brisbane, QLD 4001, Australia article info abstract Article history: Received 5 June 2015 Received in revised form 16 December 2015 Accepted 19 December 2015 Available online xxxx Arguing the value of effective HRM practice has long been a focus in the HRM literature. However, there is also a case for identifying the risks presented by inappropriate or absent HRM practices. Although risk management has been established in the broader management literature for over two decades, human resource related risks have not featured as prominently as other types of risks. HRM as a discipline has a role to play in addressing this situation and raising awareness of human resource issues as risks for the organization. A review of papers published since the year

thus far taken a risk management perspective on human resources. Although the HRM and risk management disciplines stand to benefit from drawing the two areas together, this review concludes that further research and development of the phenomenon of human resource risk management is needed. © 2015 Elsevier Inc. All rights reserved. Keywords: Risk management Human resource risk Workforce risk Employee risk HRM risk

The large majority of the research and literature in the area of human resource management (HRM) focuses on the positive impact of HRM systems and practices. Outcomes such as employee well-being, organizational effectiveness and wider societal contributions have long been the focus to argue that HRM can make a positive contribution to the organization and broader society (for example, seeBeer, Spector, Lawrence, Mills, & Walton, 1984). Indeed, the argument continues to be made that effective HRM has the potential to have significant impact both within the organization and in the broader societal context (Jackson, Schuler, & Jiang, 2014). However, just as effective HRM can have a positive impact, there is also a case for considering the risks of ineffective, inappro- priate or absent HRM practices. With the increasing focus on identifying and evaluating risks in organizations (Haimes, 2005), risk management has become a key strategic priority. It is expected that businesses adopt and integrate risk management practices into their operations, and this expectation has seen a range of standards such as the ISO 31000:2009 Risk management principles and guidelines (International Organization for Standardization (ISO), 2009) emerge, accompanied by a multitude of tools and frameworks. This focus on risks and the subsequent tools and frameworks has primarily focused onfinancial and physical risks, largely neglecting the area of HRM and any people-related risks beyond those of health and safety. So from both a HRM and a risk management perspective, it would appear that there is an opportunity for risks related to HRM to be further acknowledged, explored and integrated into established risk management processes. The purpose of this article is therefore to review the management literature since the year 2000 in order to analyze the extent to which the discussion of human resources and HRM practices adopt a risk perspective, and to identify potential future research Human Resource Management Review xxx (2015) xxx–xxx ⁎Corresponding author. E-mail address:karen.becker@qut.edu.au(K. Becker). HUMRES-00528; No of Pages 17 http://dx.doi.org/10.1016/j.hrmr.2015.12.001

Contents lists available atScienceDirect Human Resource Management Review journal homepage: www.elsevier.com/locate/humres Please cite this article as: Becker, K., & Smidt, M., A risk perspective on human resource management: A review and directions for future research,Human Resource Management Review(2015),http://dx.doi.org/10.1016/j.hrmr.2015.12.001 in this area. Empirical and theoretical articles were reviewed to identify those that recognize human resources as a source of risk and/or HRM as a way to mitigate organizational risk. Analyses were conducted of these articles and the contributions they make to advance this agenda. Based on this review we are then able to identify future research opportunities to address the gaps identified in order to better shape future research for mutual benefit in the area where HRM and risk management intersect.

There has been much debate around the definition and meaning of the term“risk”, and indeed there is not a single, widely-accepted definition for this term in the academic literature (Hagigi & Sivakumar, 2009; Lehtiranta, 2014). Definitions of risk typically range from those that focus on the potential negative outcomes of lack of predictability in the business environment (e.g.Jablonowski, 2006), to those that argue that risk represents the variability of outcomes (which may be positive or negative) (e.g.Jaafari, 2001; Osipova & Eriksson, 2013). Uncertainty is a term often used interchangeably with risk (e.g. seeSydow & Frenkel, 2013) or is included as an element of the definition of risk for example,“we view risk broadly as the uncertainty inherent in potential outcomes for a business entity”(Hagigi & Sivakumar, 2009, p. 287). More specifically,Holton (2004)suggests that risk comprises two essential components; exposure and uncertainty, and both must be present in order for risk to exist. Exposure requires that there be a personal interest in an outcome, and uncertainty exists if the possibility of that outcome cannot be assured.Aven (2010)summarizes a range of definitions suggesting that fundamentally a risk comprises: an event, consequences, and probabilities (or uncertainties). It is this definition that we have adopted for this review noting the existence of consequences (positive or negative) and uncertainties when dealing with the human resources of an organization. Different disciplines also tend to view risk through different lenses, and the topic of risk and risk management has been explored by a range of business disciplines such as economics, strategic management, and behavioral science (Elahi, 2013). Regardless of the different discipline perspectives and foci, risk management has become an important business activity as the business environment and uncertainties within it continue to grow. Risk management is considered to involve the identification, analysis, evaluation, control and monitoring of risk and uncertainty (Baker, Ponniah, & Smith, 1999) in order to avoid or minimize the potential negative impacts on organizations. The use and implementation of risk management has been driven by the aims to prevent losses, mainlyfinancial, and secure successful achievement of business objectives. Based on an investigation of the history of risk management,Dionne (2013)estimates that modern risk management perspectives developed between 1955 and 1964. With its initial use connected to market insurance andfinancial institutions, risk management gradually evolved into the corporate function of today, the main purpose of which is to enable the organization to manage risks and uncertainties (Dionne, 2013). Importantly, risk management is not simply about compliance or about stifling risk-taking;Elahi (2013)argues that in a world of complexity and rapidly changing environments, effective risk management may be a source of competitive advantage. In the field of risk management, and in the broader business literature, there is growing recognition that one of the key risks in a business is human capital (Hinton, 2003) and risk management as a discipline is cognizant that“human resources loss”has the ability to significantly impact the organization and its ability to deliver the business strategy (Nickson, 2001 , p. 26).Nickson (2001)in fact argues that as human resources inherently involve a level of uncertainty, and as risk management's main focus is uncertainty, forging the twofields of risk management and HRM is critical. Over the years risks have been identified and categorized in a variety of ways.Hagigi and Sivakumar (2009)suggest that risks can be categorized at the broadest level in terms of their origin; exogenous (external to the organization) or endogenous (within thefirm). Endogenous risks were seen to cover issues such as management attitudes and organizational practices (Hagigi & Sivakumar, 2009) and could be seen to encompass the human resources of thefirm and the associated uncertainties linked to these. Alternately,Dionne (2013)also categorized risk and suggested that within the operational risk category, issues relating to employees (such as employee errors) should be considered. In these types of categorizations, human resources are often acknowledged as an element of organizational risk, albeit in a limited way. So whilst in the risk management sphere, the human element is implied in some frameworks, the question remains as to whether or not there is widespread recognition of the wide range of risks that human resources present in an organization and how effective HRM practices may serve to mitigate some of these risks. This paper therefore addresses this question, undertaking a review that focusses on the extent to which HRM is viewed from a risk perspective in the literature.

To identify and analyze literature that consider risk as it relates to human resources, we undertook a comprehensive review of a wide range of articles, but used a number of steps to place limits on this review. We restricted our review to articles published since January 2000 (search conducted on 28 July 2015). The period since 2000 has seen the emergence of risk management as a discipline (and business imperative), in part in response to significantfinancial collapses in the early years of the new century (Dionne, 2013) and therefore this period represented an appropriate timeframe from which to gather articles relating to contemporary risk management. The choice of journals to include in a systematic review is always a contentious issue, as ensuring sufficient breadth of review and yet allow for depth of analysis requires the careful consideration of search parameters. Some reviews have chosen to begin with a list of specific journals (e.g. the top 20 management journals—seeWerner and Ward (2004)orGomez-Mejia and Balkin

Please cite this article as: Becker, K., & Smidt, M., A risk perspective on human resource management: A review and directions for future research,Human Resource Management Review(2015),http://dx.doi.org/10.1016/j.hrmr.2015.12.001 (1992)). However, rather than narrowing our review based on journals, we chose to use the Scopus database as a starting point to broaden our search and draw from as wide a range of journals as possible. This database is one of the largest abstracting and was consequently refined within Scopus according to the criteria shown inTable 1yielding a total of 1414 articles. In refining the results further we then took into account the standing and ranking of journals drawing on the Scimago Journal Ranking system (SJR), a ranking of scientific journal prestige (for a full explanation of SJR refer toGuerrero-Bote and Moya-Anegón (2012)). To determine the inclusion boundaries and refine the list further, we then referred to the previously mentioned list of top

SJR was Industrial Relations (0.603). Consequently any articles in journals with an SJR score below 0.603 were discarded as well as Harvard Business Review articles (consistent with previous reviews such as (Gomez-Mejia & Balkin, 1992; Werner & Ward,

Whilst this is still a large number of articles and demonstrates the wide use of the term“risk”in publications, it is possible that in many of these instances, the authors are using the term in a broader, everyday sense to mean“chance”or“threat”(Oxford Dictionary of English, 2010), rather than specifically referring to issues relating to business risk or risk management. Therefore, the next step of our review was to analyze the abstracts, keywords and titles and eliminate any articles where the key focus was not on HRM/employee issues and subsequent risks relating to these. It is noteworthy that this review supported the observation made byMacpherson and Holt (2007)in their own systematic review, that writing accurate and clear abstracts as well as choosing a coherent andfitting title is critical to future analysis. Failure to reflect content clearly and accurately in these elements of the manuscript greatly complicates both future searches and relevance evaluations. In some cases in our review, reading beyond the abstract was necessary in order to make afinal decision on inclusion or exclusion. Many of the articles discarded focused onfinancial risk and markets, or employee share plans while other articles had a safety focus where employees were mentioned but the risks discussed were of a technical nature. A number of papers also focused on employee risk-taking (e.g. employee share plans, pay for performance or creativity) rather than taking an organizational risk perspective. After analysis of the abstract, title and keywords and removal of unrelated articles, 81 papers remained. These were subject to further analysis and form the basis of thefindings reported in this review.Table 2shows the journals in which the 81 articles appeared, and the citations. We do not claim that this is an exhaustive and all-inclusive list; indeed creating such a list is problematic if not impossible to achieve given a recent estimation of approximately 28,000 journals in the managementfield (Miller & Van de Ven, 2015). However, we believe the approach chosen for this review has yielded a breadth of disciplines and topics that contribute to a richer consideration of human resources, HRM and risk management.

The resultant 81 articles were then further analyzed to identify themes, issues and theoretical perspectives. The articles were also classified according to whether they were presenting a conceptual/theoretical argument or reporting an empirical study (qualitative, quantitative or mixed methods). Thefindings from this analysis and the contributions of thisfinal set of articles have been synthesized and form the key focus of our discussion and conclusions.

A detailed analysis of the 81 articles revealed three distinct clusters of approaches and foci (referred to as groups) as represented in Fig. 1. A large proportion of articles commenced with a focus on analyzing specific human resource risks in an organization. Many then went on to offer ways to mitigate these risks—usually referring to HRM practice/s. A second group of articles focused on specific organizational or HRM practice and identified the risks that may emerge as a result of adoption of such practices, or identified how the use of such practices minimizes risk. Finally, a small yet critical group of articles took an integrative view of risk management and HRM, considering how HRM and risk management can be integrated as systems, rather than individual practices. Although thisfinal group represents the least number of articles, they make an important contribution to advancing the consideration of HRM as a critical element of risk management. Each of these groups of articles were analyzed to identify the themes emerging from the data. The groups and themes are synthesized in the following analysis, followed by reflections on the theories applied and methodological approaches taken. From this analysis, recommendations for future research directions are offered. Table 1 Search parameters. Search terms Risk AND “human resource”OR“employees”OR“personnel” Terms appear in Abstract; Title; Keywords Source type Journals Document type Articles; Articles in press; Reviews Subject area Business/Management/Accounting (this is a single area designated within Scopus and the one containing management and HRM journals) Language English Years 2000 –2015

Please cite this article as: Becker, K., & Smidt, M., A risk perspective on human resource management: A review and directions for future research,Human Resource Management Review(2015),http://dx.doi.org/10.1016/j.hrmr.2015.12.001

The papers that began with a focus on risk made up an overwhelming majority of the articles (57 of the 81 papers). Whilst the primary focus was on a specific risk and the impact on the organization, most went on to consider the HRM practices that could be applied to mitigate this risk. Eight risks were identified in the analysis and these are shown inFig. 2. It is important to note that many of the papers focused on more than a single risk e.g. some combined health and wellbeing risks with risks of turnover or absenteeism.

The largest number of papers in this group related to employee health and wellbeing. Of all the HRM functions, it is reasonable to expect that the workplace health and safety (WHS) function would be focused on risk. Indeed, the fundamental elements of a Table 2 List of journals containingfinal 81 articles. Journal No. articles References a Journal of Construction Engineering and Management

Kleiner and Chen (2014),Martin and Lewis (2014), Hinz, Hallowell and Baud (2013), Chi, Han and Kim (2013), Hinze, Godfrey and Sullivan (2013), Herron, Bigelow, del Puerto, Gilkey, Rosecrance, Chen and Keefe (2012), Hallowell and Calhoun (2011), Dai and Goodrum (2011), Zhou, Fang, and Mohamed (2011), Park (2009),Choudhry, Fang, and Lingard (2009), Zou and Zhang (2009) Human Resource Management 7 Farndale, Paauwe, and Boselie (2010),Pierce and Aguinis (2009),Messersmith (2007),Roehling and Wright (2006),Cardon (2003),Beatty, Ewing, and Tharp (2003),Fischer and Mittorp (2002) International Journal of Project Management

Liu, and Ling (2011),Asquin, Garel, and Picq (2010),Trajkovski and Loosemore (2006) Construction Management and Economics 4 Dewlaney and Hallowell (2012);Lingard, Cooke, and Blismas (2010a);Lingard, Cooke, and Blismas (2010b); Lingard and Holmes (2001) IEEE Transactions on Engineering Management

Spafford (2013),Componation and Byrd (2000) International Journal of Human Resource Management

Wright (2005) Human Resource Management Review 3 Zafar (2013),Belcourt (2006),Foote and Folta (2002) Journal of Operations Management 3 Jiang, Baker, and Frazier (2009), Goven, Mcfadden, Hoobler and Tallon (2006),Brown, Willis, and Prussia (2000) Business Horizons 2 Posthuma (2012), Kayes, Stirling, and Nielsen (2007) Career Development International 2 Lu, Cooper and Lin (2013), Demerouti, Le Blanc, Bakker, Schaufeli, and Hox (2009) Engineering, Construction and Architectural Management

International Journal of Stress Management

Journal of Business and Psychology 2 Williams, Schaffer, and Ellis (2013),Huang, Chen, Krauss, and Rogers (2004) Journal of Business Research 2 Ruiz and Conduras (2015), Helm (2011) Journal of Risk Research 2 Leaver and Reader (2015) ,Didla, Mearns, and Flin (2009) Management Science 2 Dahl (2011); Carillo and Gaimon (2004) Academy of Management Perspectives 1 Edmans (2012) Asia Pacific Journal of Human Resources 1 Gallagher and Underhill (2012) British Journal of Management 1 Loretto, Platt, and Popham (2010) California Management Review 1 Ballinger, Craig, Cross, and Gray (2011) Human Resource Management Journal 1 Glambek, Matthiesen, Hetland, and Einarsen (2014) Industrial and Labor Relations Review 1 Boockmann and Steffes (2010) Industrial Management and Data Systems 1 Baccarini, Salm and Love (2004) Industrial Relations 1 Battisti and Vallanti (2013) Information Technology and Management 1 Wang, Wang, Zhang, and Cao (2011) International Business Review 1 Katsikea, Theodosiou, and Morgan (2015) International Journal of Accounting Information Systems

International Journal of Production Research

Journal of Business Ethics 1 Dembe (2009) Journal of Business Logistics 1 Sydow and Frenkel (2013) Journal of Management in Engineering 1 Lin (2011) Journal of Managerial Psychology 1 Giorgi (2010) Journal of Services Marketing 1 Ottenbacher and Harrington (2010) Leadership Quarterly 1 Zheng et al. (2015) Management Decision 1 Hotho and Champion (2011) Public Administration Review 1 Berman, West and Richter (2002) TOTAL 81 a Where the references appear only in this table, the full references will not appear in the reference list. The full reference list is available from theauthors.

Please cite this article as: Becker, K., & Smidt, M., A risk perspective on human resource management: A review and directions for future research,Human Resource Management Review(2015),http://dx.doi.org/10.1016/j.hrmr.2015.12.001