I’ve worked at a couple of fast-growing startups in my career and I can tell you firsthand that human resource management, other than a priority on recruiting top talent, is often an overlooked priority. That is, until something goes wrong and the company is suddenly in legal hot water.

HR is just not in the DNA of many companies and executives that thrive on innovation, even after the organization has, like Uber, established itself as a market leader. But overlooking the importance of HR to minimize a company’s exposure to corporate risk is a big mistake. Just ask Uber.

Allegations of sexual harassment and sexism at Uber have put the San Francisco company at risk  ̶  with customers and future investors.

Uber’s Mistake: Downplaying HR

Uber’s "most glaring overall problems seems to center on how the human resources role was conceived at Uber by its brash and commanding leader [CEO Travis] Kalanick," writes Johana Bhuiyan in a recent Recode article. "The issue: He felt the function of HR at Uber was largely to recruit talent and also efficiently let go of personnel when needed, according to sources."

Again, this is common in the startup world of high-tech innovation, where the HR role is often handed to an administrative function within accounting to make sure people get paid and that the company is in compliance with record-keeping requirements.

The title of a Harvard Business Review article says it all: Uber is Finally Realizing HR Isn’t Just for Recruiting. Too often, startup leaders overlook the essential functions of HR, until it’s too late, writes John Boudreau, professor and research director at USC’s Marshall School of Business and Center for Effective Organizations.

"When HR becomes solely a talent race, boards and CEOs can miss the less obvious but equally vital value of managing both new hires and leaders who are facing increased demands," Boudreau notes. "Too often, leaders view such investments as costly training on things that seem to be ‘common sense’ or issues they can afford to get around to later."

HR: The Cure for Unnecessary Risks

Crisis is sure to follow when HR is left on the back burner, Boudreau warns. "If risky managerial behaviors are tolerated while HR focuses on recruitment, those behaviors can be seen as accepted. In contrast, if checks and balances are established early, they can be seen as fundamental to organizational growth and value. In this way, high-profile investigations may never be necessary, because a word from HR will be enough to nip things in the bud."

Risk management is one of six essential functions of HR management, according to A Guide to the Human Resource Body of Knowledge™ (HRBoK™), published by the HR Certification Institute® (HRCI®), and providing an outline of the knowledge and competencies HR practitioners must demonstrate to earn HR credentials.

In addition to protecting employees from job hazards, HR is also called on to:

• Promote health and well-being.
• Protect organizational assets from loss and liability.
• Identify and comply with the laws that apply to the business.
• Focus on preventing risk to all stakeholders.
• Design health and safety programs that meet the diverse needs of international HR management.
• Develop policies that communicate both employer and employee rights and responsibilities, and procedures to protect physical, financial and human assets.
• Train and communicate with the workforce on policies and identified hazards in the workplace.
• Work with internal and external and external resources to plan and respond to disasters and emergencies.
• Comply with record-keeping and notice requirements.

Organizations that value risk management and HR leaders with proven competencies are also more likely to take on more strategic HR initiatives such as diversity and inclusion, and creating high-performance work teams.

"Companies risk their long-term success when they regard workers as replaceable resources instead of assets to be nurtured," says Lisa Haugh, Vice President and General Counsel at Udemy, a guest writer for Entrepreneur. Haugh urges companies to rely on HR to build a culture of inclusion, provide training to all managers and establish zero-tolerance policies for bad behavior. "By empowering HR to offer employees meaningful support in their career journeys, they can increase engagement and retention, and avoid making negative headlines."

Related Learning and Resources

HRCI Pro: Employment Law

Certificate in Human Resource Management

Certificate in HR Ethics