HR Has Key Role in Sustainability Strategy, Report Finds

Human resource professionals should play a significant role in creating and implementing sustainability strategies for their organizations, according to a research report by the Society for Human Resource Management (SHRM) and two other organizations.

Further, these strategies can have a big impact on employee morale, business processes and an organization’s public image, according to the report, Advancing Sustainability: HR’s Role, which was released April 11, 2011.

The report was produced in conjunction with Business for Social Responsibility(BSR), a global organization that assists companies with corporate responsibility programs, and with Aurosoorya, which mixes pragmatic and intuitive approaches to help organizations make changes.

Based on data collected in 2010 from U.S.-based companies, including multinational organizations, the report finds that sustainability is most effective when integrated into a company’s strategic framework rather than created as a feel-good exercise for leaders and employees. Research data showing that sustainability can boost the bottom line lends support to the argument that sustainability programs should be prominent and leveraged to attract and retain talent and to enhance an organization’s brand.

“The use of sustainability programs in organizations is growing rapidly. Organizations are becoming increasingly aware of the benefits of sustainability both to society and to their own bottom lines,” said Mark Schmit, Ph.D., SPHR, SHRM’s director of research. “Sustainability programs make good business sense and help to maintain our environment.”

Getting involved in sustainability strategy and programs “is a great way for HR to work at a higher level,” said Gerlinde Herrmann, GPHR, president of The Hermann Group Limited, an executive search firm, and a member of SHRM’s Corporate Social Responsibility and Sustainability Special Expertise Panel. “HR needs to grab a hold of this and champion it.”

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Organizations are becoming increasingly
aware of the benefits of sustainability both
to society and to their own bottom lines.

Mark Schmit, Ph.D., SPHR, SHRM research director
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“To effectively execute on sustainability initiatives requires breadth and depth of connection within the corporation and the ability to affect the right levers,” stated Pravir Malik, founder and fractal systems architect at Aurosoorya. “HR is well positioned to step into such a role.”

Sustainability is important for all employees, but particularly for the youngest workers, noted Mary Cheddie, a former SHRM Board member. “It’s very appropriate that HR take the lead” in driving such initiatives.

However, the survey report found “somewhat of a disconnect” between HR professionals’ involvement in creating and in implementing sustainability strategy in their organizations. Only 6 percent of HR leaders responding to the survey said they are involved in the creation of strategic sustainability programs. But one-fourth of respondents said that they are involved in the implementation of such programs. In the study, sustainability is defined as “the commitment by organizations to balance financial performance with contributions to the quality of life of their employees, the society at large and environmentally sensitive initiatives.”

Drivers, Barriers to Sustainability Initiatives

The report reveals “a call to action for the HR profession to take a greater role in the strategic planning process and display leadership on this important topic.”

The survey data show that three-quarters of organizations engage in sustainable workplace or business practices. The key drivers of investment in sustainability are:

• Contribution to society.
• Competitive financial advantage.
• Environmental considerations.
• Saving money on operational costs.
• Health and safety considerations.

Survey respondents noted some barriers to implementing sustainable strategies or practices, including the cost of launching them, the difficulty of measuring return on investment, lack of support from leaders, the costs of maintaining sustainable practices, and a lack of internal capacity or knowledge.

The most frequently cited positive outcomes from sustainability initiatives, according to the survey report, are:

• Improved employee morale.
• More efficient business processes.
• Stronger public image.
• Increased employee loyalty.
• Increased brand recognition.

That employee morale tops the list of outcomes is significant, say leaders in corporate sustainability.

“It’s not just a matter of making your employees happy,” said Herrmann. “It’s an opportunity to get them to buy in to what the company stands for.” Companies want employees who “can get together with friends and say with pride, ‘I work for XYZ Company.’ ”

But existing and potential employees can distinguish between companies that truly embrace sustainability and those that use it simply as a slogan, warned Herrmann. “People are looking for authenticity—whether your brand statement really is you.”

She said that even small organizations can infuse their work with sustainability. “Small companies can wrap their arms around it a little bit better,” she said. And though every organization, regardless of size, needs a sustainability champion, “sometimes you’ve got to allocate pieces to other people,” she noted. For example, “You need to sit down with your marketing people and make sure that the sustainability brand is not overstated. HR players have got to be business people.”

Return on Investment in Sustainability

Sustainability’s contribution to the bottom line is another significant finding of the research. Among survey respondents who calculate sustainability’s return on investment (ROI), 47 percent reported a positive ROI, 46 percent said it was too early to determine their ROI, 6 percent said they were breaking even on sustainability, and no organization reported a negative ROI.

“Organizations are definitely finding that these programs do generate a positive return on investment,” said Jennifer Schramm, MPhil., GPHR, manager, SHRM workplace trends and forecasting. “Many practices that organizations are already doing can be added to this equation. The key first step is simply to identify these practices in the organization, monitor and measure their impact and build from there.”

Another benefit of sustainability programs is their contribution to workplace flexibility, which research shows is a major concern for employees. One such example is telecommuting, said Schramm. “Not only does the use of telecommuting provide employees with a greater degree of flexibility, it also decreases the pollution and energy usage associated with commuting.”

Among other findings of the survey report:

• Sustainability is more likely to be effective when integrated into a company’s strategic framework. More than half of organizations with sustainable workplace or business practices have a formal sustainability policy that includes goals and policies tied to the company’s strategic planning process.
• Major advancements into sustainability are more effective with support from executives.
• All levels of employees need to value sustainability.
• Organizations can leverage sustainability to attract, retain and develop employees. Nearly half of survey respondents said their investment in sustainability fosters an employer brand that attracts top talent.
• Volunteer community outreach initiatives can engage all levels of an organization’s employees. Recognizing employee participation in volunteer programs is the most common way that companies involve workers in sustainability.

Cheddie noted that sustainability programs can start out small, such as by establishing a recycling program in the workplace. “Take it one step at a time,” she said. “It doesn’t have to be grandiose.”

A key indicator of the importance and value of sustainability in the business world is the fact that sustainability initiatives survived a recession in which many organizations shed employees by the thousands.

Said Herrmann, “The companies that survived and thrived found that their sustainability approach helped them come through this. The community viewed them positively, and their best employees stayed.”

Commented Malik, “We are at a critical juncture globally, where sustainability/social responsibility as a concept and a way of being has to redefine how businesses function and define themselves.”

Steve Bates is manager of online editorial content for SHRM. He can be reached at sbates@shrm.org.

Related Resources:

Business Ethics: The Role of Culture and values for an Ethical Workplace, SHRM Research Report, December 2009

2008 Executive Roundtable Symposium on Sustainability and Human Resource Management Strategy, SHRM Research Report, May 2008