Cognitive analysis of human resource risk management strategies based on managers' mental models and risk assessment matrix to improve business performance: A case study of knowledge-based companies

Document Type : Research Paper

Authors

1 Ph.D. Graduate in Business Management, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran

2 Assistant Professor, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran

3 Associate professor, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran

4 Associate Professor, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran

Abstract

Introduction: Recently, human resource risk management has attracted the attention of risk researchers. Risk is the uncertainty in the distribution of the consequences of an event, the probability of its occurrence, and its mental value. The environment has no independent role, and uncertainty is a characteristic of the manager who wants to make decisions. All the behaviors and decisions of individuals also depend on their cognitive frameworks and mental models. So, human resource risk management is a concept that manifests itself under the influence of managers’ mental model. In the present study, with a cognitive view of human resource risk management in knowledge-based companies, we try to gain a better understanding of a manager’s frame of mind. The cognitive aspect and mental framework of managers have widely been studied by management researchers in recent years. The present study aims at the cognitive analysis of human resource risk management strategies based on managers' mental models and risk assessment matrix to improve business performance.
Methodology: The present research is applied in terms of purpose and descriptive-survey in terms of method. The data are collected through library and field studies. The statistical population of the study included 77 managers of knowledge-based companies in East Azerbaijan Province where human resource risk management was relevant. It was studied by the census sampling method. Questionnaires and scenarios were used for data collection. The validity of the questionnaire was assessed for its content. Its reliability was also calculated in terms of Cronbach's alpha coefficient (0.887). For the statistical analysis, descriptive statistics were used to describe the research variables. Then, the inferential statistics section was answered using chi-square, Tukey and one-way ANOVA tests.
Results and Discussion: In the present study, we cognitively analyzed human resource risk management strategies based on managers' mental models and a risk assessment matrix. The cognitive approach has developed significantly in recent years and, through the knowledge of the brain, mind and its functions, has been able to obtain valuable information about the origins of human behavior.
The findings showed the type of managers' interpretation of real events, their attitude of risk, their choice of a particular type of human resource risk management strategy, and their interpretation of real events. There was a significant relationship between these parameters and human resource risk management. In addition, a significant difference was found between the choice of a particular type of risk management strategy in managers' estimation of risk outcomes and the probability of risk occurrence. The results were consistent with the risk assessment matrix. The risk is high, and, in the maintenance strategy, the average managers' assessment of the risk outcomes and the probability of risk occurring are low. In the risk reduction strategy, the average of managers 'assessment of low risk outcomes and the probability of occurrence of high risk and, in the risk transfer strategy, the average of managers' assessment of high risk outcomes and the probability of occurrence of risk are low.
Conclusion: In this study, it was found that most managers in knowledge-based companies are risk-takers, consider human resource risk management attractive, and, in the face of risks, choose risk reduction and maintenance strategies. There is also a significant relationship between managers' mental models and strategy selection. The more managers value the company's opportunities and strengths and find human resource risk management attractive, the more risk-averse they are, and the more they value weaknesses and threats. They consider human resource risk management as a necessity (determinism), and risk aversion is obvious in their management. In fact, instead of waiting for opportunities, risk-taking managers hunt for opportunities. In addition, it was found that the more risk-taking managers are, the more they tend to choose risk reduction and maintenance strategies, and the more risk-averse they are. The more prominent managers are more inclined to choose reduction and avoidance strategies. In fact, the differences in managers' interpretations and perceptions of risk make them act differently in their decisions and behave differently. In other words, the mental models of managers in knowledge-based companies in East Azerbaijan Province is a determining factor in interpreting the environmental events and identifying the opportunities and threats that affect the decision-making process. Therefore, it is better for these managers to increase their awareness of human resource risks, the source of risks, their control methods as well as the status and position of their company and competitors.

Keywords


Aguila, P. O., ElMaraghy, W., & ElMaraghy, H. (2019). Impact of risk attitudes on the concurrent design of supply chains and product architectures, Procedia CIRP, 81, 974-979.
AS/NZ 4360. (1999). Risk management. Strathfield: Standards Association of Australia.
Aven, T., & Renn, O. (2010). Risk management and governance: Concepts, guidelines and applications. Berlin: Springer-Verlag.
 Brown, A., Karthaus, C., Rehak. L & Adams., B. (2009). The Role of Mental Models in Dynamic Decision-Making, Humansystems Incorporated.
Bagheri, S., Latifi, S., Mohseni Melerdi, S. (2018). The Impact of Market Orientation on Organizational Performance within the Competitive Advantage Framework in SMEs: A Case Study of the Complex of Industrial Parks in Mazandaran Province. Journal of Business Administration Researches, 10(19), 169-187.
Becker, K., & Smidt, M. (2016). A risk perspective on human resource management: A review and directions for future research. Human Resource Management Review, 26(2), 149-165.
Brown, A., Karthaus, C., Rehak, L & Adams, B. (2009). The Role of Mental Models in Dynamic Decision-Making, Humansystems Incorporated.
Cascio, W. (2012). Be a ringmaster of risk. HR magazine, 38-43.
Cascio, W., & Boudreau, J. (2014). HR strategy: Optimizing risks, optimizing rewards. Journal of Organizational Effectiveness: People and Performance, 1(1), 77-97.
Daltona. P.S, Nhungb. N & Rüschenpöhlerc. J. (2019).  Worries of the poor: The impact of financial burden on the risk attitudes of micro-entrepreneurs, Journal of Economic Psychology, 79, 102198.
Dehghani Soltani, M., Mesbahi, M. (2020). The impact of organizational memory on the development of new products in knowledge-based companies. Journal of Business Administration Researches, 11(22), 177-196.
Dickson, G., Cassidy, D., Gordon, A., & Wilkinson, S. (1991). Risk management, The Chartered Insurance Institute. Hartnolls, Ltd, Bodmin, England, 476 p.
Dohmen. T, Falk. A, Huffman. D & Sunde. U. (2010). Are risk aversion and impatience related to cognitive ability? The American Economic Review, 100(3), 1238-1260.
Ebrahimi. E. (2016). Designing and explaining human resource risk model (Case study: Iran Power Development Company), Tehran University, Faculty of Management, (in Persian).
Edwards- Leis, Christine Elizabeth (2010). Mental models of Teaching, Learning and Assessment: A Longitudinal Study. PhD. Dissertation. James Cook Univercity.
Ernst & Young. I. (2008). Global Human Resources (HR) risk: from the danger zone to the value zone. London: EY.
Florio. C, Leoni. V. (2017). Enterprise risk management and firm performance: The Italian case, The British Accounting Review, 49(1), 56-74.
Friedrichsena. C. N, Daroub.S.H, Monroed. M.C, Steppc. J.R, Gerbera .S. (2019). Stakeholders' mental models of soil food value chain in the Everglades, Geoderma, 343, 166–175.
Glick. M. B, Chermack.T.J, Luckel. H & Gauck. B.Q. (2012). Effects of scenario planning on participant mental models, European Journal of Training and Development, 36(5), 488- 507.
Görlitz. K, Tamm.M. (2020). Parenthood, risk attitudes and risky behavior, Journal of Economic Psychology, 79, 102189.
Gregory, Richard. (2000). Perception. Zangwill. pp. 598–601.
Guan. Y, Tang. D.Y. (2018). Employee Risk Attitude and Corporate Risk Taking: Evidence from Pension Asset Allocation, Journal of Corporate Finance, 48, 261-274.
Hamzeie, A., pourkiani, M. (2018). Investigating the Relationship between Types of Human Resources Risks with Technological Innovation in Pharmaceutical Knowledge Companies. , 9(35), 105-130.
Hatch.Mary Jo, Cunliffe. A. L. (2016).  Organization Theory: Modern, Symbolic, and Postmodern Perspectives, Translated By: Danaee Fard, Hassan, Meraban Book Publications, (in Persian).
Hooshmand. R. (2019). Differentiating transformational and non- transformational Strategic leaders on the basis of neurological imaging using Neuroscience, Allameh Tabataba'i University, Faculty of Management and Accounting, (in Persian).
IOD. (2009). King report on corporate governance for South- Africa. Johannesburg: Institute of Directors in Southern Africa.
ISO 31000. (2009). Risk management principles and guidelines. Geneva: International Standard Organization.
Kamali, T., Bahramzadeh, H., Samanian, M. (2020). Identification and Prioritization of Human Resources Risks of the Bank Melli of North Khorasan Using a Mixed Approach. Journal of Cultural Management, 13(46), 115-130.
Kashif Shad. M, Lai. F. W, Fatt. C.L, Klemeš. J. J, Bokhari. A. (2019). Integrating Sustainability Reporting into Enterprise Risk Management and its Relationship with Business Performance: A Conceptual Framework, Journal of Cleaner Production, 208, 415-425.
Kesavayuth. D, Ko. K.M, Zikos.V. (2019). Locus of control and financial risk attitudes, Economic Modelling, 72, 122-131.
Khayyatian. S .M.S, Tabatabaian. S.H.A, Amiri. M, Elyasi. M. (2015). Analysis of the Factors Influencing Growth and Sustainability of Knowledge Based Firms in Iran, innovation and entrepreneurship, 3(6), 57-74, (in Persian).
Kimbrough. L. R. (2006), the Relationship between Perceptions of Organizational Culture and Implementation of Enterprise Risk Management, Thesis (Ph.D.) - University of Alabama, Huntsville.
Leboeuf. M. (1985), The Greatest Management Principle in the World, New York: G.P. Putnam ssons.
Mantzavinos. C, North. D.C, Shariq.S.(2004).learning institutions and economic performance,perspectives on politics, 2(1), 75-84.
Malik. M. F, Zaman. M, Buckby. S. (2020). Enterprise risk management and firm performance: Role of the risk committee, Journal of Contemporary Accounting and Economics, 16(1), 1-22.
Martynova, N., Ratnovski, L., & Vlahu, R. (2020). Bank profitability, leverage constraints, and risk-taking. Journal of Financial Intermediation, 44, 100821.
Mesgari.M.H. (2017). Factors Affecting Ecommerce Success in Knowledge Based Companies, Allameh Tabataba'i University, Faculty of Management and Accounting, (in Persian).
Merna, T. and Al-Thani, F. (2005). Corporate risk management: An organisational perspective, England: John Wiley & Sons.
Mohammed, M. (2007). Managing risk: A case study of a non-government organization that provides long term cares and support services for people with mental, intellectual and physical disabilities. New Zealand: Doctoral Dissertation, Massey University.
Mousavi, N., Mousavi, S. (2020). Nvestigating the Impact of Human Resource Risks on Human Capital with the Intermediate Impact of Organizational Blind. Management Studies in Development and Evolution, 29(95), 103-135.
Mousavi. S.N, Shariatnejad. A, Saedi. A. (2018). Designing a Human Resource Risk Management Model in Public Organizations Using Database Theory, Journal of Human Resources Studies, 8(28), 121- 142, (in Persian).
Nax. H.H, Newton. J.(2019). Risk attitudes and risk dominance in the long run, Games and Economic Behavior, (116), 179-184.
Nikulina I.E., Khomenko I.V. (2015), Сognitive management: theory and practice in the organization, Procedia - Social and Behavioral Sciences, 166, 441 – 445.
NOBRE, F. S., TOBIAS, A. M., WALKER, D. (2008b). Organizational and Technological Implications of Cognitive Machines: Designing Future Information Management Systems. [S. l.]: Information Science Publishing - IGI Global. ISBN: 978-1-60566-302-9
Nonaka and H. Takeuchi (2011) "The Company – creator of knowledge." M: Olympus-Business.
Nosic. A, Weber.M. (2007). Determinants of Risk Taking Behavior: The role of Risk Attitudes, Risk Perceptions and Beliefs, Working Paper, University of Mannheim.
Oblak. K, Ličen.M & Slapničar. S. (2018). The role of cognitive frames in combined decisions about risk and effort, Management Accounting Research, Volume 39, pp: 35-46.
Paltrinieri. N, Comfort. L & Reniers. G. (2019). Learning about risk: Machine learning for risk assessment, Safety Science, 118, 475-486.
Paul, C, & Mitlacher, L. (2008). Expanding risk management systems: human resources and German banks. Strategic Change, (17), 21–33.
Payne, S. J. (2012). Mental models in Human-Computer Interaction. In Human–Computer Interaction handbook: fundamentals, evolving technologies, and emerging applications. Edited by A. Sears & J. A. Jacko. Newyork: Taylor & Francis.
Rahman seresht, H., Shakeri, E., Shokri, A. (2017). The effect of organizational health and employees' creativity on their productivity using structural equations modeling. The Journal of Productivity Management, 11(3(42)), 37-60, (in Persian).
Santos. M.A & Garcia. M.T.(2007), Organizational Change: The Role of Managers’ Mental Models, Journal of Change Management, 6(3), 305–320.
Shahram. I. (2018). A Framework for Equity Sharing Between Main Actors in Knowledge-Based Firms in Advanced Materials Field, Allameh Tabataba'i University, Faculty of Management and Accounting, (in Persian).
Shakeri, E., dehghanan, H., Khashei, V., Taghavifard, M. (2021). Cognitive Analysis of Managers' Mental Models in Human Resource Risk Management to Improve Organizational Performance via Zaltman Metaphor Elicitation Technique, The Journal of Productivity Management, 15(2(57) ), 23-49(in Persian).
Shakeri. E. (2021). A Model for the Role of Managers Mental Models in Human Resource Risk Management in Knowledge Based Enterprises, Allameh Tabataba'i University Faculty of Management and Accounting, (in Persian).
Shariati. M., Rahnamay Roodposhti. F, Talebnia. G; Royaee. R. (2018). Metacognition, connotative meaning dimensions and management accountants' decision making: Studying Accounting students' minds, 7(26), 11-30, (in Persian).
Shariati Sough. M. (1995). The Attitude of Iranian Industrial managers to work, Shiraz Univesity, Industrial Management, (in Persian).
Sjoberg, L., Moen, B. & Rundmo, T. (2004) Explaining Risk Perception. An Evaluation of the Psychometric Paradigm in Risk Perception Research. Norwegian University of Science and Technology, C Rotunde Publikasjoner.
Soltanpour. A, Baroughi. F & Alizadeh, B .(2020).The inverse 1-median location problem on uncertain tree networks with tail value at risk criterion, Information Sciences , 506, 383-394.
Stevens, J. (2006). Managing risk: The HR contribution. London: Routledge.
Stoneman. M. J, Jackson. L, Dunnett. S & Cooke. L. (2019). Enhanced understanding of risk assessment in police custody in England and Wales using statistical modeling, Safety Science, 117, 49–57.
Tan. S. (2019). Systematic review of human and organizational risks for probabilistic risk analysis in high-rise buildings, Reliability Engineering and System Safety, 188, 233-250.
Taofeeq .D.M., Adeleke. A.Q, Lee.C.K. (2020).The synergy between human factors and risk attitudes of Malaysian contractors’: Moderating effect of government policy, Safety Science, 121, 331-347.
Tavor. T. (2019). The theoretical attitude and actual behavior of an individual toward risk, Journal of Behavioral and Experimental Finance, 23, 1-11.
Westbrook, L. (2006). Mental Models: a theoretical overview and preliminary study. Journal of information Science archive, 32(6), 563-579.
Wiesner. R., Poole. N. (2009). Managing Change: Mental Models of SME Managers, Faculty of Business, University of Southern Queensland.
Wilks. G. & Davis. R .j.(2000), Risk management for scuba diving operators on Australia's Great Barrier Reef, Tourism Management 21, 591-599.

Williams. R. B.(2018), Conceptual models and mental models in operation: Frustration, performance and flow with two different video game controllers,  Entertainment Computing, 28, 2-10.

Xiang. C, Lu. Y & Gupta. S. (2013). Knowledge sharing in information system development teams: examining the impact of shared mental model from a social capital theory perspective, Behaviour & Information Technology, 32(10), 1024-1040.

Young. I. (2008), Mental Models: Aligning Design Strategy with Human Behavior, Brooklyn, New York.
Young, M. & Hexter, E. (2011). Managing human capital risk. New York: The Conference Board.
Zhang. Y (2009b). The Construction of Mental Models of Information- rich Web Spaces: The Development Process and the Impact of Task Complexity. PhD. Dissertation, Philosophy in the School of Information and Library Science, University of North Carolina at Chapel Hill.