Why are Business Owners willing to risk their business??

Yesterday, while I was talking to a business collegue, she made a good comment – “why are business owners so willing to accept a risk when it is so easy to fix”. This comment got me thinking.  I am meeting with business owners everyday and I see them making such decisions.  For most it is simply a matter of whether they can afford to fix the problem or not – regardless of the level of risk.

The question for me is whether they are asking the right question.

Now we all know that the level of risk is a combination of the likelihood of something happening and the consequences if it does occur. 

It worries me that businesses often do not protect themselves against a risk until they actually get caught out by that risk.  When that happens the cost is often substantially more than than any risk control would have cost proactively.

This is particularly relevant with employment and workplace risk. Business owners can be reluctant to take measures to protect their business when it comes to their employees and their employment. 

I am yet to find an business owner who has not taken measures to protect their business against theft, fire, public liability etc.  Policies for these are in place and renewed annually.  When dealing with clients they ensure that their and their clients expectations are managed through appropriate agreements and procedures.  In short, in these areas, they manage their risk.

However, the number of business owners who do not manage the risks in employment should be a concern.  It is not unusual for me to come across businesses:

  • Without employment agreements and other tools to manage expectations (such as position descriptions).
  • Who are unaware of the appropriate award or agreement for use in their industry
  • Without appropriate OH&S practices
  • Without appropriate policies and procedures in regards to legislative requirements
  • Who do not understand the unfair and unlawful dismissal laws
  • Who do not understand the risk and cost of employee turnover.

This list could go on.  The truth of the matter is that the cost of a breach of any of the above would far out weigh the cost of implementing easy processes to alleviate them.

In that respect, the question should not be “can I afford them”, it should be “can I afford not to have them controlled”.

At People Smartz, we are currently offering a Free Compliance Review for businesses to enable them to assess their levels of risk. 

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