What is HR's future in a sustainable business?by
Sustainable Development is the strategic opportunity for HR
‘Be the change you want to see in the world’ is a famous quote from Mahatma Gandhi, a man who not only had significant historical influence across the Indian sub-continent but also here in South Africa.
If Gandhi was a modern day HR Leader, what would his focus be in living out the changes he wanted to see happening in an organisation. Would his focus be more on the welfare of the people or the health of the balance sheet? Would he be a backroom pen pusher or a boardroom visionary? We will never know; however what the HR Profession can learn from his inspiring example is that there are times when it is essential to speak up, speak out and break the mould.
HR is more often seen as an opportunistic chancer rather than being a true ‘agent of change’. As with any speciality field, HR tends to be insular in its thinking, transactional in its actions and short term in its strategic focus. But, if there was one burning issue which collectively the world of HR decided to come together to challenge and seek to radically overhaul what would it be? What would propel HR from being a follower to a leader, from being an invited guest at the ‘top table’ to being a shaper of the world of business?
How about Sustainable Development? Organisations, and the society they serve, are made up of people and HR is supposedly the ‘people expert’. Individually, many of us are concerned with what is going on in the world in respect of pollution, depletion of natural resources, insecurity (employment, political and personal), the exploitation of others for the sake of improved profitability, short-termism, increasing competitiveness of business, the lack of partnership between business, communities and customers etc... Leading companies are starting to look at how these issues”fit” into mainstream business processes. In general however, what is it that is stopping employees’ values dovetailing with the values of the organisation?
HR is the guardian of the organisation’s conscience
Why should it be HR’s role to champion sustainable development? The simple answer is because HR’s unspoken mandate is protect the long term welfare of the organisation and the people it employs. It should be the guardian of the organisation’s conscience. Sustainable development, as the term implies, is about ensuring there is a future which does not favour a few over the many or compromise the long-term vitality of the world.
Sustainable development requires us to “meet the needs of the current generation without compromising the ability of future generations to meet their own needs” (Brundtland, 1987). For this to become a reality within organisations requires a rethink around the concepts of responsibility and equity as well as an honest re-evaluation of the concept of organisational value.
Business has the opportunity, and resources to create phenomenal change for the good. HR can become the catalyst to create the momentum and commitment needed across an organisation to transform itself and it can do this by being better informed, inspiring and challenging others as well as modelling sustainable practices.
The people - environment relationship
All human endeavour depends directly or indirectly on the environment. The environment provides us with many products and services, and acts as the source of basic life support whilst it also absorbs all our waste material.
The crisis of Sustainable Development is that we are consuming resources faster than they can be replaced, we are creating and throwing away too much of what we determine to be waste, and we are releasing substances into the air, into the water and onto the earth’s surface that cannot be “neutralised” quickly enough by natural systems.
Historically, the environment was viewed as a never-ending source of raw materials which could be exploited by organisations for their immediate gain without any real concern about the environmental and social impact of their actions. Increasingly Company Boards recognise there is a clear and present threat that what organisations need from the environment is either not available, or getting very expensive. Throwing away what we don’t need is also becoming more difficult and more expensive. Rapid local and international policy and legislative changes are tightening the controls on inputs to and outputs from organisations. Even product viability is being threatened by sustainability considerations: from carcinogenic substances in black ink, to nickel-containing compounds, through to the plastic shopping bag: societal expectations are changing and organisations must adapt or die. Importantly, sustainable development poses enormous opportunities for adaptive, innovative and far-seeing organisations.
Business and Sustainable Development
In response to these environmental and social challenges many organisations are adopting Corporate Social Responsibility (CSR) policies as a way of becoming more sustainable. CSR involves managing an organisation in such a way that it can be ‘economically profitable, law abiding, ethical and socially supportive’ (Kolk & Tulder, 2010). Every liability and opportunity facing business can be “grouped” within an element of the five capitals; CSR practices require that all of these elements are well managed through sound ethics, leadership and risk approaches.
While environmental management systems, such as ISO 14001 and EMAS, the European system have gone some way to highlighting the importance of environmental considerations in running a business, they are not enough. Achieving sustainable development in business comes down to what we value, how we measure value and what our values are. However, value has traditionally been measured almost exclusively by monetary means in respect of the financial return on investment (ROI) as well as profit and loss. So long as these remain the core measures of organisational success sustainable development is merely an aspiration not the reality.
This debate on what are organisation’s core values is one which HR should be actively exploring and championing across their organisations.
The World Business Council for Sustainable Development (WBCSD) recently mapped out their “Vision 2050: the new agenda for business” where “...in 2050, around 9 billion people live well, and within the limits of the planet” (WBCSD, 2010). For the WBCSD, the vision can only be achieved through a pathway that unfolds in a series of stages, across each of following nine elements:
- People’s values
- Human development
- Energy and power
- Mobility, and
Achieving this pathway will require, among many other things, radical cooperation, mainstreaming sustainability, global education, sustainable marketplace choices, and creating “healthy people, healthy societies, healthy business”. Notice how “healthy people” comes first: hence the importance of the role of HR. This will also involve redefining business success, so that true value and true cost across all the capitals can be calculated, not simply in financial terms. So how can HR help to define a new understanding of valuing people, society and the environment?
Because HR deals with people, it deals with the very mechanism by which we will realise a sustainable future, or not. How and what decisions we take, how and what value we create and measure – all of this hinges on people. As a start, HR needs to develop an understanding of its role in the following:
- Create the shift to a values based business. This is a requirement of the King III Code of Corporate Governance recently released in South Africa. Many authors (Jim Collins etc) have demonstrated the enduring success stories of organisations that have adopted this approach through transformational leadership. Becoming values based may mean for example that prospective senior executives are assessed to unearth their values, on which their employment decision will be in part based.
- Refocus strategic planning as strategic scenario creation. Look way down the line at risks, opportunities, the possibility of unintended consequences, the global context... “read the writing on the wall” across all of the five capitals.
- Shift from being a reactionary organisation that only responds to external pressure, to being an adaptive, anticipatory, agile, resilient and balanced group.
- Know where you are on all aspects of sustainability. Do baseline audits of material concerns – not financially material, but material for those things that may prevent you (or assist you) in achieving your organisational goals (which should be seamlessly meshed with your values and sustainability goals).
- Consult – in the genuine meaning of the word – with stakeholders, including staff, suppliers, customers, communities, NGO’s..... Consultation requires at a minimum, 2 way communication, which requires, at a minimum, empathic listening. Find out what society’s expectations of the company are, find out what real impact and effect you have on stakeholders, and together work out the future that you all desire, and the actions needed to get you there.
- Be transparent and honest: no reasonable person requires instant perfection – that only happens in chocolate advertisements. Set realistic targets. Report on failures and successes in a way that is meaningful to your target audience. You may need to devise different ways of reporting to and engaging with your various stakeholder audiences.
- Relook at all the business activities and processes through the Five Capitals value framework. You will be amazed at the obvious savings, high-risk issues, and sheer inefficiencies that emerge. Some “typical” issues that might emerge in your business streams include:
- Strategy: redefining success in terms of values, and in terms of value across all aspects of sustainable development; seamlessly integrating sustainable development criteria and ethics with the business strategy to ensure organisational longevity and responsiveness introduces an integrated systems approach to business planning and management rather than the traditional discipline-specific or organisational structure approach. Pursue partnerships, anywhere and everywhere in the search for solutions to business sustainability issues. Ensure governance processes address all aspects of sustainable development.
- Procurement: reducing packaging; increasing the recycled content in packaging; responsible and reduced waste disposal; fair trade; supply-chain responsibility, accountability and ethics (environmental, social and financial); purchase of products with reduced ecological footprints (assessing issues such as recycled content, eco-toxicity (e.g. heavy metals, hormone mimics), carcinogenic contents (e.g. PCBs, ink components), banned/restricted substance contents (e.g. CFC’s)); the list simply goes on....
- Operations: reducing raw material and other input uses (e.g. paper, steel, water – appropriate to your business); recycling and reuse; re-engineering for lower energy consumption; energy efficiency, even in offices etc (replacement technology and changed practices); location of activities in or near to highly sensitive ecosystems; indirect and cumulative impacts.
- People: fundamentally, human development is key to a sustainable future. Organisations must empower people to participate in the decisions that affect them; actively facilitate the creation of a shared vision; encourage greater accountability, flexibility, creativity, agility, and discretionary decision-making; recognise that staff are co-creators of the organisation, not part of its assets; include demonstrable values-based measures in performance agreements, as well as concrete targets relating to the five capitals as appropriate for the role.
Create the change you want to see in your organisation
All of these strategic and operational business issues have a strategic and operational people implication which is where HR comes in. To bring about the turnaround envisaged by the 2050 Vision will take time, effort, courage and perseverance sprinkled with a fair degree of risk taking. If Sustainable Development does not become the strategic HR focus over the next 5- 10 years then HR will have failed in its leadership duties of guarding the organisation’s conscience and being a true agent of change.
HR has this opportunity to move from being a follower to a leader however the big question is has it the courage of its convictions to speak up, speak out and break the mould? HR’s future is in its own hands.