FM GLOBAL PEOPLE RISKS SURVEY

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FM GLOBAL PEOPLE RISKS SURVEY

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FM GLOBAL PEOPLE RISKS SURVEY

• In September/October 2005 IRMSA commissioned a
  survey to determine the top people risks and
  offer guidance to IRMSA Members on focal areas of
  people risk management
• The survey was web-based and anonymous
• The sample base was Members of IRMSA and other
  Institutions
• The survey was directed principally at Risk
  Managers, but was open to the most appropriate
  person (e.g. HR managers)

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ACKNOWLEDGMENTS

• Acknowledgement to the following people for input
  and support
• Kay Darbourn (project manager)
• Andrew Pike (questionnaire, evaluation of results
  and commentary)
• Robin Atkinson (CEO input)
• Hayden Seach (questionnaire input)
• Amanda Vernon (website)
• De Wet Vorster (synthesis of raw data into
  graphic form)
• FM Global (sponsorship)
• A-Cubed Consulting (Pty) Ltd (sponsorship)

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RESULTS

Results have been consolidated into the following
slides and comments, conclusions and
recommendations have been made as appropriate
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Number of respondents (51)per company size

• 68 of respondents have more than 250 employees.
  43 of the respondents had gt1,000 employees.
• The sample of respondents was considered
  representative

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Respondentsby Designation

• The 32 Risk Manager respondents are mostly from
  large organisations.The majority of the
  Director respondents (29) are from companies
  with less than 50 employees.
• This suggests that smaller companies have fewer
  formal ERM structures.

5 resp 251 to 10009 resp gt 1000
9 of 15 Director respondents are from companies
with lt 50
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Industry Sector

• Although the cross-section was extensive, the
  Other category was not specified by most
  respondents

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Affiliations

• The bulk (69) of respondents indicated IRMSA
  affiliation.

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HIV Prevalence

• 43 of respondents estimated the HIV Prevalence
  in their organisations at less than 3 . Of these
  22, nine were Directors. Eight of the 21 Risk
  Manager respondents estimated HIV Prevalence
  levels at 4 to 10.
• The estimates do not accord with national
  statistics which are significantly higher.

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HIV Cost

• 68.9 of respondents have no idea how much HIV is
  costing their organisations. 12 respondents
  indicated Not Applicable, 24 Unknown. The 3
  respondents who indicated costs greater than
  R100K have more than 100 employees. Four of these
  large organisations indicated costs of R50K
  R100K per employee.

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HIV Training

• 65 of respondents indicated that training takes
  place in their organisations to reduce the
  prevalence if HIV.
• 61 of respondents indicated that training is
  done to enhance tolerance of HIV.

To reduce prevalence
To enhance tolerance
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ARV treatment provided to employees

• 31 of respondents indicated that ARV treatment
  is provided to employees. 64 of these
  organisations fall in the category gt1000
  employees.
• Only one each of organisations of the other size
  categories responded in the affirmative.

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Absenteeism days PA

• Illness accounts for the majority of absenteeism
  days namely 61.
• The larger numbers for bigger organisations
  suggest either that it is easier to get away
  with it or it is simply a numbers issue.
• The results are consistent with US absenteeism
  surveys.

Average days absent for organisations with less
than 1000 employees 685Average days absent for
organisations with more than 1000 employees
17,927
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Absenteeism patterns

• Winter and Holidays were given priority 1 by 82
  of respondents who made a choice. Unfortunately
  65 of respondents chose not to answer this
  topic.
• Only one respondent perceived lack of any pattern.

Average days absent for organisations with less
than 1000 employees 383Average days absent for
organisations with more than 1000 employees
79397
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Absenteeism costs RSA

• Cost to organisations of absenteeism is very
  significant. These estimates were not a part of
  the survey

2005 IRMSA SURVEY EXTRAPOLATED Total Annual
Cost lt 1,000 employees, average income
R100,000 R283,058 lt 1,000 employees, average
income R50,000 R141,529 lt 1,000 employees,
average income R25,000 R70,764 gt 1,000
employees, average income R100,000 R7,407,851 gt
1,000 employees, average income
R50,000 R3,703,926 gt 1,000 employees, average
income R25,000 R1,851,963
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Absenteeism costs U.S.

• These US costs were added for comparison and
  taken from an older US survey. The costs are
  relatively comparative to the estimated S.A. costs

COST BY COMPANY SIZE 1998 Total Annual Cost Up to
99 employees 26,100 100 - 249
employees 56,841 250 - 499 employees 209,563 5
00 - 999 employees 457,274 1,000 - 2,499
employees 1,295,693 2,500 - 4,999
employees 2,676,891 5,000 - 9,999
employees 3,979,464
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Conclusions and Recommendations

• Absenteeism is a significant cost to
  organisations and the number 3 perceived risk,
  but is generally symptomatic of underlying risks.
  It is vital that control measures should include
  looking for and dealing with linked un-obvious
  causes such as Sick Building Syndrome, stress
  (number 2 risk), lack of performance management
  and job satisfaction issues such as (demotivation
  number 2 risk). It is suggested that it
  probably links closely to loss of key staff, the
  number 1 risk

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Number of stress related claims

• 49 reported stress claims.
• The majority or 37 of those actually indicating
  a rating falls in the less than 5 claims
  category.
• 8 were in the 21-50 claims per year range

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Stress related illnesses as a of payroll

• 38 of respondents dont have an answer to this
  question.
• The majority , by a small margin, 24 of
  respondents indicated that Stress related
  illnesses are costing less than half a of
  payroll.

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Stress related training

• 39 of respondents indicated that their
  organisations provide some form of Stress and
  Time Management training. 55 do not.
• EAP is more encouraging with 61 indicating some
  form of EAP programme exists.

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What is your biggest Stress related risk?

• The items listed under Other were each selected
  by 11 different respondents. 40 Respondents did
  not access Other.
• Work overload was seen to be the biggest Stress
  related risk, 37.
• Relationships amongst staff and management is
  second most chosen at 19

Other
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Health Risk Prevalence

• Again, it is significant that Colds Flu and
  Stress are the most prevalent health risks
  because of their link to each other.

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Most Costly Health Risks

• Colds Flu are directly linked to stress in most
  cases, so it makes sense that they rank as 1st
  2nd most costly health risks

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Fraud or corruption experienced inpast 3 yrs

• 53 of respondents indicated that fraud or
  corruption was experienced in their
  organisations.
• 35of respondents indicated no experience.
• 12 didnt know or did not decide.

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Employee levels in which fraud was experienced

• Unfortunately 24 or 47 of respondents did not
  provide a selection.The on the graph is
  calculated excluding these 24.
• Fraud was experienced at all levels, but With
  prevalence apparently higher at the higher levels
  within organizations.

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Fraud Cost Estimates

• 33 of respondents estimated Fraud costs in
  excess of R100k per annum.

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Comments and Recommendations

• Low staff productivity is the one area which many
  organizations identified as an ethical hotspot.
  Interestingly, most organizations have not
  provided training to their staff in performance
  appraisals i.e. how to be appraised. A
  significant number had not provided performance
  appraisal training to their managers. These two
  facts might be an explanation for low
  productivity, because they point to performance
  appraisals not being properly conducted as part
  of the overall performance management systems.

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People related causes of loss of productivity

• Stress is rated as the highest people related
  cause of loss, with absenteeism and demotivation
  2nd 3rd

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Performance Management

• 76 of respondents indicated the existence of a
  code of ethics.
• Only 47 indicated the existence of an Ethics
  Hotline.

Your organisation has/ Conduct / has implemented
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Succession Plan

• 16 have a fully evolved succession plan.
• 10 have a partial, well-evolved plan.
• 42 have a primitive succession plan.
• 20 have no plan at all.

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Comments and Recommendations

• Loss of key staff number one people-risk. When
  this is viewed with the statistic that probably
  in excess of 62 of the respondents have either a
  primitive or no succession plan whatsoever, the
  impact of loss of key staff is probably very
  significant. A U.S. survey estimated that the
  average cost of replacing a middle manager was
  equivalent to one years salary for that manager.
  

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Comments and Recommendations

• Recommended control measures for the loss of key
  staff include
• Proper succession plans
• Effective incentives
• Ensuring job satisfaction through skills building
  , they can do some work environment, effective
  use of talents
• Effective performance management or performance
  appraisals
• Career mapping
• Effective recruiting policies including golden
  hello provisions in order to attract the right
  replacement staff

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Transformation Scorecard criteria met?

• 35 have met transformation scorecard criteria.
• 53 have a plan.

If not does your organisation have a strategised
plan in place?
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Learner-ships are offered

• Only 6 offer learnerships.
• 43 do not.
• (Blank) data fields were ignored for this slide.

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The following is offered as a minimum..

• Management and supervisor training prevail, but
  only 57 for leadership.
• (Blank) data fields were ignored for this slide.

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Does your organisation have .

• 55 of organisations have formal risk
  methodologies.
• (Blank) data fields were ignored for this slide.

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Averaged adverse people risks

• Loss of key staff was regarded as having the
  biggest impact on organisations with violence
  having the least.
• Stress and demotivation ran a close second, with
  absenteeism having the third highest impact
• 25 of respondents gave HIV/AIDS a least impact
  score.

Average Impact Rating
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Conclusions and Recommendations

• Loss of key staff, stress and demotivation and
  absenteeism are regarded as the top three people
  risks. Surprisingly, HIV - AIDS is in the bottom
  three.
• Insufficient training and poor performance
  management are also high risk factors.
• If respondents grasp at least the top five risks
  and apply effective controls to them, it is
  believed that a significant difference will be
  made to the performance of organizations.
• A follow-up survey on top risks will be
  considered in a years time.