The Chief Legal Officer’s Essential Role In Minimizing Employee Risk
Employee risk is a sensitive and potentially explosive issue for any company. Recent changes such as remote and hybrid work environments, the demand for in-office attendance, and increased automation are all making their marks on the employee risk profile of organizations.
The CLO Is A Trusted Advisor
Many companies rely on in-house lawyers to advise HR managers on handling toxic employees and other sensitive issues. The legal department is the first place companies go when they need employee handbooks, severance and employment agreements, or to respond to workplace investigations.
But empowering your chief legal officer to advise the board of directors and executive management can add significant value. CLOs are uniquely positioned to objectively analyze the legal implications of employee-related decisions and give practical advice on risk management without getting caught up in company politics that can often impede effective decision-making.
CLOs can help decision-makers navigate the growing complexities of risk and compliance in the changing world of work by:
- Identifying and mitigating employment-related risks arising from business decisions and activities others may not recognize.
- Staying current on changes in laws and regulations that may affect the company. Recently, 60% of GCs surveyed said they face challenges in addressing rising regulations, all of whom report amplified strains on capacity across ESG, risk management, and compliance monitoring.
- Guiding the handling of sensitive information or data to protect the company and its employees. Last year, over half of CLOs surveyed said they implemented technology solutions to help comply with data privacy regulations, and 84% expect to increase spending on regulatory compliance solutions this year.
CLOs Need An Essential, Holistic View Of Employee Risks
CLOs must be empowered to tap into data on employee performance, engagement, satisfaction, and other metrics for comprehensive insights into how people perform their jobs and where risks may arise.
Data can also indicate whether to chalk an employee’s performance issues up to excessive workloads, poor attendance, or another cause. Data showed my frustrated friend that the company hadn’t provided the struggling worker with all the resources needed to fulfill the new role effectively. Once they remedied the situation, he returned to his former happy self and top performance.
Data analytics are especially valuable to treat all employees fairly. For example, business intelligence software can assign work based on an employee’s specific skills, experience, goals, and current availability rather than a manager’s impulse or personal preference. This approach can help avoid unconscious bias and discrimination.
Evidenced-Based Risk Management Is A Must
With more contextualized insights, CLOs can use evidence-based reasoning to develop an effective risk management strategy that considers the interests of all stakeholders. In discussing tactics to act on this data, they can:
- spot trends and problems before they negatively impact the company
- handle potential conflicts of interest and other ethical issues
- create policies and procedures that protect both the company and its employees
- ensure all employees are aware of their rights and responsibilities under applicable laws.
Managing people risk at the board level is a complex and ever-changing challenge. CLOs and GCs can provide invaluable assistance when they use data to make more informed decisions. Over time, they can also evaluate the efficacy of the actions taken to proactively adjust policies and procedures and continue to protect the company and its employees from evolving sources of risk.
