Preparations are now well underway for the COP26 taking place in Glasgow in November 2021. The COP (“Conference of Parties”) 26 will bring together leaders, organisations and individuals committed to addressing the pressing and vital issues facing the planet in terms of the environment and related matters.
But at the same time, even while we see a growing interest in ESG (Environment, Social and Governance), it seems that not everyone in the business community is entirely conversant with what all of these things mean nor what the implications are for their organisations if they fail to pay close attention.
Recognising that it is a tall order to address all issues pertaining to organisational responses to the sustainable business transformation – to attempt to “boil the ocean" - in this article we zero in on the role of the human resource professional in contributing to the advancement of the sustainability agenda for their organisations.
Why the human resource professional specifically?
The human resource professional is ideally placed within organisations to input and contribute to strategic planning, helping organisations to get ready for the future and to deliver on their strategy - while at the same time taking a lead in execution and implementation.
There is an opportunity for human resource professionals to exercise innovation in terms of bringing their unique perspective on the employee experience today, especially when it comes to helping the organisation to clarify and then to work towards achieving its sustainable business development goals (SDGs), which is something of concern to incumbent employees and certainly the employees of the future. Having said all of this, there are still significant challenges not just for human resource professionals but for boards and senior management teams, with one of the most vexatious issues (of many) being decisions around how to incentivize people to get things done.
We have written extensively about how we believe altruism is key to - or should be a key driver - for the sustainability agenda - but at the same time we must not lose sight of the importance of the sustainability agenda as a business imperative. So while it could be an opportunity for HR to discuss the ACE (Altruism, Compassion, Empathy) model at Board level and within Executive teams - in the context of making Sustainability happen - and HR could play a pivotal role here (in other words “we should do what needs to be done because it’s the right thing to do”) - at the same time there’s no doubt that we need to strengthen the idealism of altruism by recognising that (for now) we live in a business culture dominated by KPIs and strategic imperatives – and that that's something we need to recognise has to apply to sustainability and sustainable business transformation too. Purpose and profit can and must co-exist.
Dare we mention the elephant in the room? Rewards and recognition
We can see that there is a connection between rewards and recognition and the achievement of business goals. Few would argue with that. If we accept that business goals must eventually become one of the same when it comes to sustainability goals, then it follows that we might need to consider how to incentivize people - to reward people - to “get with the programme” and to strive to achieve targets for more sustainable activities and business outcomes.
Then the question arises as to who exactly we are incentivizing and how might that incentivization work? How do we deal with people who might be reticent to put sustainability into their business planning because they know that their efforts might take a long time to come to fruition and that they might ultimately not be around to see their efforts recognised?
People think about these things whether we like it or not. Not everyone is going to instantly buy into the notion that the answer is to push hard on the concept of purpose and purpose-driven organisations. Nothing focuses the mind of the CEO more than the idea that her future ability to attract finance is going to be determined by her organisation’s ability to set and then report on meaningful sustainability targets.
So of course, let’s continue to agitate for purpose to be put centre-stage but at the same time, let us also recognise that we need to strengthen our hand and our ability to persuade and encourage through things that people can find tangible too at both the organisational level (“will I be able to get financing for the enterprise?) and the individual level (“will I be recognised for what I do and if so, how?).
All these things are just some of the many questions that we believe human resource professionals are particularly well-positioned and qualified to unpick, analyze, scrutinize and advise on. So in addition to practical consderations such as how we encourage people to support sustainable business transformation initiatives, we include here 5 considerations where we believe human resource professionals in particular can be active and can provide impact, energy and direction to the sustainability agenda of those forward-looking and innovative organisations.
1. HR has the potential to play a critical role in driving the sustainable business agenda and addressing ESG in all its facets
HR can provide active support by being visibly and vocally engaged in building the DNA of the future purpose-driven, ESG-oriented organisation through retained prosperity for all stakeholders involved.
While it’s important to be profitable, it has to be in the context of a stakeholder model and accelerated innovation. We need to think medium and long term: we cannot be focused on short term profit gains for shareholder value maximization. So HR is well-placed to help change mindsets, inculcating purpose and responsible leadership into the business.
As well as the CFO, the CHRO should have the eyes and ears of the CEO because this is all about creating value and prosperity for all stakeholders. As the chart below shows, HR has a hand in many ESG-connected areas and issues:
(with thanks to Squire Patton Boggs LLP, Singapore)
In his article Green Means Gold: Sustainability, the Key in Attracting Talent, Tony Monro, Marketing Director at Reconomy, writing in People Matters (24 June 2021) says:
‘According to a PwC report, 36% of HR departments across the globe are actually amending their recruitment strategies to focus on their business’ social and environmental stance.’
This strikes us as encouraging – but with the potential for much more to be done. And HR can lead the way on this, right down to the granular level of job descriptions, to ensure that they communicate the sustainability message right into the core of organisational systems, policies and procedures.
This is but one small example of what could be done by HR to support the development of a sustainability mindset right from the get-go.
2. HR can facilitate the development of vital partnerships and links inside and outside the company ecosystem especially in building the bridges between the “E” (“Environmental”), “S” (“Social”) and the “G” (“Governance”) – in other words, HR could be the Bridge Builder
HR will need to collaborate with the business to help create beneficial relationships and build the transdisciplinary teams and ecosystems to address a variety of ESG issues. HR Leadership can be the pivotal glue in this sustainable business transformation process.
3. HR possesses skills in organisation design which can be leveraged to support the sustainable business agenda.
HR is ideally positioned to assess what systems and processes need to change in the move towards sustainable business transformation - especially through developing and recruiting the talent needed to build those vital transdisciplinary teams and ecosystems.
Human resource professionals are experienced in the area of strategic workforce planning, which is one of the key prerequisites for effective organisation design, and as such practitioners will look carefully at global and macroeconomic factors in terms of shaping their understanding of future workforce needs. In this respect HR practitioners and specialists within the HR community are able to help with the broader strategic thrust of the company by uncovering and providing important data points to the C-Suite about how the workforce is likely to shape up in the future and the nature and degree by which it will be affected by current and impending environmental, social and governance factors.
These include: how to best use and engage with various types of workforces to maximise productivity and optimise costs: gig, part-time, project based, onsite/offsite, off-shore/near-shore, redeployment, sabbaticals, cross- industry collaboration for sharing resources - are just some examples of this.
4. HR works in the key areas of talent attraction and talent retention
How can HR help to shape the thinking around what talent we will need to bring into our
organisations in order to advance the agenda and how we attract that talent? In his article in Forbes (April 2021), Gen Z is emerging as the Sustainability Generation, the Experience Management (XM) expert Greg Petro noted:
‘The pandemic didn’t start the sustainability revolution, but it has put it into hyperdrive, and Gen Z is in the driver’s seat.’
What is crucial to note is that Gen Z employees are going to have specific expectations of their employers. These expectations display certain similarities but also key differences as compared with those of Millennials or Gen Y (who now form the majority of managers in organisations around the world).
HR practitioners can help the business to make sense of these often subtle differences (in respect of the psychological contract) and can assist in designing employee experiences that appeal to Gen Z while at the same time ensuring that the “other four to five generations under one roof” are well-catered for as well – a great potential contribution to the “S” in ESG.
It is worth noting that Gen Z are as anxious about long-term financial security as the Baby Boomers were/are: so while we can fixate on the importance of purpose and meaningful work (something Gen Z has in common with the Millennials or Gen Y), it will be important for HR professionals to surface to managers in the organisation the importance of money to Gen Z and in the same breath, the financial stability of the organisation they are joining or have joined. And for Gen Z, where questions around financial stability or organisational resilience arise, questions around the organisation’s commitment to sustainability are right there, too (or not far behind).
5. HR comes of age as a strategy and innovation partner.
For years the debate amongst HR people has been to wonder about their role as strategic partners to the business and their role as innovators. While we have made significant progress in recent years, there is still massive scope for improvement.
This is why Sustainability/ESG presents a unique opportunity for the CHRO to dial-up the importance of the CHRO role to the business. It is about HR helping to embed Purpose, Prosperity and Innovation into the organisation’s DNA but not only this: HR also has a valuable role to play in the areas of organisation design and organisation development and this should leveraged in service of advancing the sustainability and sustainable business transformation agenda.
Should the CHRO simply abdicate responsibility to the “new business knight in shining armour”, the CSO? Or should the CHRO step up and ensure that HR is also one of the key players? This is a big and important question.
We believe that sustainability/ESG should be a critical space for HR to demonstrate its value-add to the CEO and the Executive Team. The CHRO should be the business partner of the CFO and the CSO to “make it happen”. HR can assist in revisiting the purpose and values of the organisation, building the sustainability narrative that appeals to and is a strong psychological connector for Millennials and Gen Z and for supporting the development of a growth mindset and embedding new values. HR can work alongside business in weaving business strategy and people strategy, leveraging all the
sub-systems of HR for flawless execution and measurable outcomes.
Make it Happen: Better Business, Better Tomorrow should be the credo of HR and the catalyst for sustainable business transformation in supporting the building of the DNA of the business of the future. This is the moment for HR to shine and help to drive the sustainable business agenda.
Partner, SusteneriGroup and CEO, Expert Humans
Rudi Plettinx, CEO and Senior Partner SusteneriGroup
Singapore and Brussels