Friday, April 15, 2011

Advancing Sustainability: HR's Role

"Advancing Sustainability: HR's Role" is the title of a new report just published by the Society for Human Resources Management (SHRM),the world’s largest association devoted to human resources management, representing more than 250,000 members in over 140 countries, together with Business for Social Responsibility (BSR), a member organization whose purpose is to develop sustainable business strategies and solutions and Aurosoorya, an organization that assists people and organizations to link to patterns that matter to develop deep change. This is an impressive 108 page report, which summarizes data from a survey of 728 HR professionals employed by organizations operating in the United States. The report baselines the role that human resources is currently perceived to play in the corporate sustainability realm and is one of the few comprehensive surveys that have been published on this subject.

A key conclusion from the survey is that the top five positive outcomes from sustainability initiatives are perceived to be: 1) improved employee morale, 2) more efficient business processes, 3) stronger public image, 4) increased employee loyalty, and 5) increased brand recognition. An interesting piece of data is that nearly four out of ten businesses (39%) reported calculating an ROI for their sustainability efforts. Among organizations calculating an ROI, 47% calculated a positive return on their investment, 46% reported it was still too early to determine their ROI, 6% calculated a break-even point and, most noteworthy, no organizations calculated a negative ROI.

The report also makes an assessment of where companies are on their sustainability journey using a model called The Sustainability Maturity Model which moves from compliance, through integration to transformation. Any guesses as to how many have reached the nirvana-like state of transformation? Yep, you were right. 7%. The good news, if you believe it, is that 45% say they are integrating sustainability into the everyday operations of the business. These tend to be larger businesses, while those lagging at the compliance phase tend to be SME's.

Why don't companies do more?
The top five obstacles reported were: 1) costs of launching, 2) difficulty in measuring the return on investment, 3) lack of support from organization’s leaders, 4) costs of maintaining, and 5) lack of internal capacity or knowledge. Interesting that respondents did not include lack of HR motivation to think outside of the traditional HR box as one of the key barriers. If the HR Manager were sustainability-enabled, the top five obstacles would disappear instantaneously.

Who decides sustainability strategy?
Interestingly, when asked who determines sustainability strategy, the top responses were the senior management team (36%) or the CEO (22%) with the HR Department being down the list at 6%. However, when asked who implements sustainability strategy,  the senior management team came in tops again with 51% and the HR Department came in second with 25% of the responses. The Advancing Sustainability report calls this a "disconnect" : "The results from this survey revealed somewhat of a disconnect between HR’s involvement in creating and implementing the sustainability strategy in their organizations."

The report includes several essays with insights from several experts and case studies from SAP, Gap Inc, Alcatel-Lucent, Hitachi, Interface, Nestle and Pfizer as well as spotlights on China and India.

The bottom line?
"This research finds that the human resource function is one of the key groups responsible for implementing a sustainability strategy in organizations. This is not surprising since sustainability is a people issue that is important in shaping the organization’s behavior and culture. It is for these and other reasons that the HR profession is and will continue to be an important component in the emergence and evolution of sustainability."

That's good news, right?  This research presents an interesting reflection of what happens now, in the minds of a large group of HR Managers. Many of them state they have a responsibility to implement sustainability strategy but few say they have input to that strategy. I believe this is not such good news. It is not enough to be satisfied with HR as doers (implementers of strategy) and not as thinkers (co-creators of strategy). People policies should not be regarded as something you think about after you decide business strategy. Human Resources Managers should be full and equal partners in creating business (=sustainability)  strategy and often shaping it to meet the needs of an external reality. It goes like this:

Determine the business opportunity
Agree the strategy.
Implement the strategy.

Let's say the business opportunity is to develop a new product line marketed to women. The business strategy necessarily requires rethinking how the culture of the organization enables, empowers and advances women in the business, as women will have insights which are important to any plan to market to women (leaving aside for a second all the other compelling arguments in favour of a gender-equal workplace). The strategy, then, needs a broad range of HR input, and not just a go-and-recruit-some-women directive. Equally, the implementation of this strategy has to be a partnership between HR and other functions, and not simple an HR "initiative".

Let's say the business opportunity is to become a carbon neutral company. The business strategy necessarily requires thinking about how to engage employees in greenification of the business, which is more than just turning off the office lights at the end of the day and virtualizing data servers, but a comprehensively embedded culture of engagement with sustainability objectives. As it is stated in the report, "As organizations seek to reduce their carbon footprint, it will force HR professionals to completely rethink how work takes place." If this is not strategic, what is ? Shaping the way the company goes about this needs to be linked to culture and capability and a host of creative solutions. The business strategy therefore requires HR input. The implementation requires a partnership between HR and other functions in the business.

Scott S. Criqu, HR manager of Trinity In-Home Care, gets it right, in my view, when he is quoted in the report as saying: “From my experience, the disconnect stems from HR’s inability to form strategic partnerships within their companies. HR departments and executives are seen by other top executives as a tool and not a resource for strategic planning." I believe he is correct and that CSR for HR is a two-way street. Just as executives, including the Chief Sustainability Officer, if there is one, must invite HR to sit at the strategy table, so HR must demand to be there (and prove its worthiness for being there).

And here we get back to the chicken.. or is it the egg.... who goes first?
Should HR wait to be dragged into sustainability, alive (just about) and kicking? Or should HR be proactive in exploiting the massive opportunity that sustainability brings to develop a new position of influence for HR in the business? There is so much that HR can do without waiting to be asked. It takes enlightened, aware, motivated and very confident HR Managers to follow this course. But first, HR has to wake up to what sustainability is all about and what it means for the transformation of the HR function was well as the business, society and the environment.

The "Advancing Sustainability: HR's Role" report is a very important contribution to understanding what is holding so many companies back from reaching sustainability transformation. It provides many insights and examples, some encouraging, of how sustainability is currently perceived and what HR can and should do to make a more tangible difference. This report is indeed a baseline, because what it reflects is a limited activity and marginal strategic leadership. The only thing that this report left out was the fact that HR change for sustainability is URGENT! My mantra: It is time for HR to wake up to CSR!

elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Author of CSR for HR: A necessary partnership for advancing responsible business practices.   Contact me via  on Twitter or via my website

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