Organizational Change
Why Sustainability Should Be Embedded in HR

There’s an urgent challenge for human resources leaders: Ensuring their organizations anticipate and prepare for the inevitable effects of sustainability mega-forces. As globalization, shifting demographics and competition for the world’s depleting resources compel transformational change, companies will need enlightened and sustainability-savvy leadership to thrive in this brave new world. HR has a significant role to play to align talent with these emerging realities.

Sustainability mega-forces will affect the ability of organizations to succeed and thrive over the coming decades. The global population is expected to balloon from seven to nine billion people by 2050, forcing companies to reinvent themselves in order to secure access to resources and the social license to operate and grow.

Just as concerning, the income inequality gap continues to widen, further threatening social cohesion. Adaptive organizations that anticipate, plan for, and help alleviate these trends will build resilience and competitive advantage while contributing to a more viable society.

But for organizations to succeed in this new global context, current and future leaders will need a host of new skills and competencies — and organizational incentives will need to align with strategic sustainability priorities. HR professionals can influence and enable this strategic shift.

Values-based companies

Employees increasingly prefer to work for organizations that reflect their values. Millennials want to build careers with organizations that are making a positive difference. Mid-to-late career professionals, on the other hand, may contemplate leaving their organizations to fulfill a desire to contribute to the greater good.

Coro Strandberg,
speaker
at
SB'16 San Diego
So how can we evolve HR’s role within organizations to attract and retain these employees?

Corporate social responsibility (CSR) is strongly correlated with high employee engagement and thus organizational productivity and innovation. Companies with strong CSR and sustainability programs enjoy higher morale and loyalty. HR professionals occupy the key desk to help foster good internal CSR results and build it into the employee value proposition.

Sustainability central to HR portfolio

The business discipline of sustainability and corporate social responsibility has only really emerged over the past two decades. Originally, CSR was a philanthropic, compliance or operational issue, but given the new business context and rising expectations from investors, customers, government and employees, CSR is increasingly a strategic issue for companies.

For the 21st-century organization, social and environmental trends present both global risks and opportunities, which affect operations as well as suppliers and customers. Social and environmental issues are now, more than ever, executive and boardroom issues. As such, CSR considerations are central to the HR portfolio.

Tools to help

There are many resources to help HR managers become proficient in embedding CSR into the employee lifecycle and experience (see list of resources at the end of this article). If done correctly, HR can support an organization to become future-fit, helping to embed social and environmental factors into:

  • corporate purpose, vision, mission, values and strategy
  • employee code of conduct
  • workforce planning and recruitment
  • orientation, training and competency development
  • compensation and performance management
  • change management and corporate culture
  • employee involvement and engagement
  • employee communications
  • celebrating success.

These steps are inextricably linked to HR’s core competencies, including the ability to increase the attractiveness of the employer to desirable potential employees; to create a workforce plan by identifying future talent needs to support the organization’s goals and objectives; and to identify organizational learning priorities aligned with the business strategy.

CSR critical to succession planning

Not far from this issue lies the matter of CEO succession planning. With CEO turnover at about 16 per cent and retirements a top driver of CEO renewal in 2014, according to outplacement consulting firm Challenger, Gray & Christmas — and given the relationship between effective sustainability performance and firm success — boards and their HR advisors must ensure they have adequately included sustainability and CSR factors in their succession plans and search criteria.

There are six critical CSR requirements for CEO succession planning and recruitment:

  • “values” role model
  • externally aware
  • CSR strategist and change manager
  • collaborates with stakeholders
  • catalyst and advocate
  • develops responsible leaders

As CEOs set the tone at the top, getting this right will be essential for CSR and sustainability progress at any organization.

Motivating sustainability-conscious behaviour

HR managers will also need to play a lead role advising on sustainable pay metrics and bonus-able goals. Organizations have a long way to go getting the right incentives in place. While many companies include social and environmental factors in executive compensation plans, most are compliance-focused and backwards looking, and few have actual targets.

HR managers can play a stronger role building organizational insights in this area and aligning incentive compensation with strategic sustainability objectives.

A value-added HR professional will support the organization to anticipate and manage these profound labour market and societal shifts to foster business and social success. HR managers must find ways to bring CSR and sustainability into scope when sourcing and optimizing talent. This helps achieve organizational outcomes to realize CSR’s power as a top driver of employee engagement and retention.

Resources and Tools:

This post first appeared on LinkedIn on April 19, 2016.

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