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Organisational

Sustainability

With acknowledgements to colleague Jeremy Eatough

What is sustainable development?

•The term sustainable development means different things to different people. But, in essence, it is concerned with meeting the needs of people today without compromising the ability of future generations to meet their own needs.

• (World Business Council for Sustainable Development, 2005)

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So…

•From a business perspective, sustainability [is] a “company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and social opportunities into its business strategies”

• (Symposium on Sustainability, 2001)

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Indeed..

•As Boudreau and Ramstad (2005: 134) point out “decision makers, opinion leaders, voters, and employees care about sustainability. They want corporations to reduce the externalities that burden future generations. Sustainability is not just good ethics; it is potentially good long-term economics. HR has an important role to play in sustainability”.Ehnert, I. (2006). ‘Sustainability Issues in Human in Human Resource Management

What are Sustainable activities?

•Sustainability results from activities which:▫extend the socially useful life of organisations▫enhance the planet’s ability to maintain and renew the

viability of the biosphere and protect all living species ▫enhance society’s ability to maintain itself and to solve

its major problems ▫maintain a decent level of welfare for present and

future generations of humanity•Sustainable organisations engage in activities that

contribute in these four ways.

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6The Change Leadership that Sustainability DemandsChristoph Lueneburger & Daniel Goleman

MIT Sloan Management Review (May 2010)

• As many markets become ever more “transparent” to environmentally conscious customers, the pursuit of sustainability will shift from a choice that companies make to a sheer necessity of survival. It will affect the de facto “license” of a business to operate — a license that customers won’t hesitate to revoke.

• Many executives understand how these dynamics will fundamentally alter their businesses, and they understand that sustainability is, ultimately, about the sustainability of their own organizations. But they often stumble in making the transition because of basic misconceptions about what it will take to transform their companies

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• transformed by new technologies• increasingly dominated by global organisations• highly competitive• driven by knowledge development• consuming resources at unsustainable levels

The New World

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The dilemma and the challenge

• The Dilemma: we cannot continue to conduct business as usual

• The Challenge: to create a sustainable economy and society

• Can we rely on governments to achieve a sustainable world?

• “Like it or not, the responsibility for ensuring a sustainable world falls largely on the shoulders of the world’s enterprises, the economic engines of the future.” (Hart, 2006)

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Nudging or leaping? Copyright Dunphy, Griffiths and Benn, Organizational Change for Corporate Sustainability, 2007

So how will the drive for sustainability affect organisations? First, we need to understand that achieving sustainability is a process – organisations advance by stages

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So what are the opportunities?

•Different organisations are likely to be at a number of different stages in relation to embracing sustainability

• from denial through to enthusiasm•Let’s look at four different phases▫The Reactive Minimalists▫The Industrious Stewards▫The Proactive Strategists▫The Sustainable Corporation

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The Reactive Minimalists

• Objective: Seek to be compliant to the law and all environmental, health and safety requirements and relevant community expectations.

• Typical actions: ▫ Determine what is relevant legislation, regulations and

community expectations▫ Build an effective risk management system with an informed

workforce committed to compliance▫ Establish organised monitoring system.

• Positive outcomes:▫ Risk minimisation▫ Easier finance▫ Basis for positive reputation▫ Improved relationships with regulators.

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The Industrious Stewards

• Objective: Progressively eliminate waste and increase process and materials efficiencies.

• Typical actions:▫ Reduce resource use (energy, water, materials)▫ Design/redesign buildings/plant to dramatically reduce ‘footprint’,

create adaptable spaces▫ Recycle/remanufacture (cleaner production)▫ Dematerialise –service provision rather than material production▫ Redesign products: sustainably produced and environmentally

friendly• Potential business benefits:▫ Cost reduction; savings▫ Increased employee productivity▫ Increased employee involvement/engagement▫ Better teamwork and lateral communication.

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The Proactive Strategists

• Objective: Pursue the strategic opportunities in sustainability.

• Typical actions: ▫ Re-brand and build wider stakeholder support▫ Increase employee and stakeholder engagement to source

innovative ideas▫ Innovate with new models of stakeholder governance▫ Concentrate on adding value and innovating.

• Potential business benefits: ▫ Increased revenue and market share ▫ Stronger stakeholder support (reputation and commitment)▫ Higher customer retention rates; faster attraction of new

customers▫ Employer of choice – attract and retain skilled managers and

professionals▫ Operate at high value-added end of market.

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The Sustainable Corporation Phase:

• Objective: Redefine the business environment in the interests of the core strategies of the firm aligned toa more sustainable world

• Typical actions: ▫ Participate in public policy formation▫ Reorganise the company’s supply chain to ensure that the whole

production process is sustainable▫ Participate in international agreements▫ Seek external auditing of sustainability▫ Build a constructive culture that encourages openness, debate,

innovation and participation.• Potential business benefits: ▫ Global leadership in the sustainability movement▫ Enhanced reputation and stakeholder support and involvement▫ Attraction/retention of talented, highly motivated employees.▫ Increased share value

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The leadership objective:

Sustainable organisations that • add financial value for shareholders• produce valued goods and services for society• sustain those who work for organisations• sustain our social world• sustain and renew the biosphere

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Major instruments of sustainable HRM

•Recruitment: requirement & job profiles; HR marketing; labour market research

•Deployment: health management; staff composition (older employees!); advanced working-time management

•Development: encouraging continuous education; career planning; promoting individual responsibility & participation

•HR marketing; image analysis & improvement•Retention: sophisticated incentive systems•Disemployment: exit interviews; outplacement•Management & Leadership: participative management

styles; MbO; assessment of superiors

Thom, Zaugg, & Blum model, University of Berne 2001

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•Third wave organisationsThird wave organisations

•Value-driven and transformativeValue-driven and transformative• Responsive to emerging shift in Responsive to emerging shift in global valuesglobal values• Making corporate citizenship and Making corporate citizenship and corporate sustainability core business corporate sustainability core business strategiesstrategies

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Additional Resources

• B Doppelt Leading Change Toward Sustainability: A Change Management Guide for Business, Government and Civil Society, Greenleaf, Sheffield UK, 2003.

• D. Dunphy, A Griffiths and S. Benn, Organisational Change for Corporate Sustainability, 2nd ed., Routledge, London, 2003

• Q. Jones, D. Dunphy et al, In Great Company: Unlocking the Secrets of corporate Transformation, Human Synergistics, 2007

• D. Grayson and A. Hodges, Corporate Social Opportunity - 7 steps to make corporate social responsibility work for your business, Greenleaf, Sheffield UK, 2004

• J. Porritt, Capitalism: As if the world matters, Earthscan, London, UK, 2006

• B. Willard, The Next Sustainability Wave: Building Boardroom Buy-In, New Society Publishers, Canada, 2005

• R. Wright, A Short History of Progress, Text Publishing, Melbourne, Australia, 2004