Within local and regional workforce areas, leaders are pushed and pulled by a set of stakeholders with different appetites for risk: Federal and state governments are heavily focused on compliance, whereas community-based organizations tend to take a “whatever means necessary” approach to achieving their missions. Often, workforce boards are forced to adopt the risk profiles of their most influential and powerful stakeholders. This can determine which organizations are risk-averse and which are risk-tolerant, which in turn has implications for their levels of innovation and impact.
Even though risk is an important part of a workforce board’s business model, many of them don’t understand how best to manage it. Future-focused workforce boards that take a transformational view of their role as risk managers tend to approach their mission of training, supporting, and connecting workers to high-quality employment opportunities more creatively.
Given that risk tolerance or aversion can drive the decisions of workforce system participants, we need to better understand how workforce boards are grappling with risk, whether implicitly or explicitly. Toward that end, we interviewed leaders within the public workforce system to understand how actual and perceived risk shapes organizational behavior across operations, strategy, services, culture, and partnerships and how workforce boards can adapt to or actively change the degree of risk their organization, customers, and communities experience.
Risk Assessment Will Set You Free
Some of the risks that workforce boards experience arise day-to-day, while others are incurred over a longer period of time. Traditional and measurable risks include cybersecurity, compliance, and financial health. There are also intangible risks, such as implementing policies or programs that are politically divisive or making decisions that could compromise the organization’s reputation or perceived trustworthiness. If these risks are not successfully anticipated and managed, it can result in real damage to an organization, its staff, and the people it serves. To mitigate organizational risks, workforce boards must first understand how to identify and assess them, the impacts of not effectively managing them, and options for mitigating or abating potential damage.
CareerSource Central Florida uses a framework and software tool called Failure Mode and Effects Analysis (FMEA) to categorize and prioritize risk by severity, occurrence rate, and detection on a scale of 1 to 10. For example, a risk that’s rated a 10 in severity is considered “catastrophic,” while a rating of 1 in occurrence is considered an “inevitable” risk. Benchmarks can be established based on current systems to determine acceptable risk levels. Of course, not all workforce boards will be able to maintain an entire enterprise risk management system. While such tools can help identify high-priority risks, it’s the process that goes into making those decisions and developing plans for mitigation that determines an organization’s resiliency.
Beyond using the FMEA tool, all staff members at CareerSource Central Florida are trained in the Six Sigma process improvement methodology and earn a Yellow or Green Belt certification. A board subcommittee meets regularly to update the framework, evaluate mitigation strategies, and reprioritize risks. A commitment to professional development along with opportunities for staff members to discuss and plan for risk imbues a risk management mindset throughout the entire organization and gets everyone speaking the same language, from frontline staff members to the board chair.
