4.1.6. Reputational
Seven articles related to human resource risks of a reputational nature. These articles focused on issues of reputation, ethics,
sustainability and corporate social responsibility and the actions that may positively or negatively impact on the perceptions of
the organization held by shareholders, customers or indeed wider society.
Beatty et al. (2003) reflected on professional and ethical risks (and also included legal risks which will be covered separately
under the next theme) and argued that HRM has a role to play in the broader area of corporate governance to mitigate these
risks. The study identified that HRM rewards and compensation decisions were most likely to present professional, legal and
ethical risks and that these human resource risks are indeed linked to broader organizational risks. On the other hand, performance
management and effective communication systems were found to be the most effective to reduce risks associated with unethical or
illegal behavior. In turn, reducing the risks of unethical behavior within the firm reduces the risk of reputational damage external to
the firm.
Two papers (Helm, 2011; Kayes et al., 2007) considered the acts of individual employees and the risk they present to the organizational
reputation. Kayes et al. (2007) specifically looked at ethical lapses by employees and the inherent risks, and argued that addressing
this issue requires a move beyond simple compliance, to building a culture of ethical behavior in organizations.Whilst looking at potential
negative impacts of damage to reputation, it is also relevant to consider the potential upsides of a strong corporate reputation, with
Edmans (2012) demonstrating that firms with a reputation as a positive place to work generated higher stock returns than other
comparable firms.