Business Management     

Published: May 15, 2023
Updated: May 15, 2023

HR’s key role in corporate sustainability:
Key to better bottomline and image

Sustainable business practices improve the bottomline of a company and HR managers leverage their efforts in creating an environment where the talent of the company is retained to work in harmony with sustainable business strategies. As Dr Naveen Malhotra points out, companies are now mindful of their economic, environmental and social impact. Sustainability is an issue which is good for business and positively impacts employees and other stakeholders in the form of an increased bottomline, improved employee morale, a strong public image, increased brand recognition, positive return on investment, etc. Furthermore, it is employees who drive the sustainability agenda and implement sustainability plans at the ground level.

Sustainability has become a critical issue for businesses today. Business sustainability means structuring an organization from inside out so as to guarantee ongoing success. Success has many faces — growth, continued employment stability, a budget to innovate, and most of all nimbleness to compete in a changing marketplace.

There are various roles that HR has to perform in sustainability, but the most important one is embedding sustainability into the organization’s culture in order to align the leadership and employees efforts with the company’s long-term vision of sustainable business, because there are cases where an organization fails to achieve this objective due to lack of support from leaders, limited involvement of employees and poor systems. HR needs to work at developing sustainable systems and processes. The HRM has to ensure that the organization has in place strategic leadership that has defined the sustainable business strategy and distilled it into an action plan for the workplace. The sustainability practice pervades every aspect of doing business and needs to be embedded across the organization. The sustainability approach affects corporate practices and requires greater involvement.

HR acts as a source of competitive advantage that can be leveraged by creating sustainability linked performance targets, undertaking training, education, value-based recruitment, etc. HR can play a major role in engaging employees by tapping into and channeling their efforts for sustainability. Companies today have resorted to report on sustainability initiatives taken by them in order to promote investor confidence, trust and employee loyalty. HR plays an active role in formalizing informal learning and knowledge-sharing in order to create an organization that is responsive to the factors internal and external to the organization. It is moreover able to attract and retain the right set of talent and align them with the sustainability agenda of the company.

MANY BENEFITS

There are various benefits of sustainability for business, like building brand reputation, improving investor confidence, better financial performance, becoming more attractive to talent, attracting environmentally conscious customers, increasing revenue, managing costs and, last but not the least, complying with regulatory and legal requirements. HR should always be in a proactive mode so that it gives its best in driving its initiatives towards developing sustainable business practices. HR executives have to be courageous leaders in order to promote what we call ‘sustainable business’.

In order for HR’s sustainable business strategies to fit within the internal and external environment of business, it is imperative to have a deeper grasp of the organization’s core business model and take a fuller perspective of the whole business. Also, through training and development of people, HR can educate them about sustainable business. HR’s role in implementing sustainable business practices takes into account not only the social, economic and environmental considerations simultaneously catering to the needs of various stakeholders but also gives equal precedence to the needs of present as well as future generations. Hence, placing sustainability at the first place of developing a business strategy is central to the view of an enduring path to sustainable business. HR has a lot to do with this as it has the potential to be transformational for the company, and the HRM has to ensure that people make it happen, which is very critical for sustainable business.

Many organizations face failure due to a lack of strategic business sustainability and this failure means that these organizations fall behind when competing with those that have embraced sustainability. Organizations that practice business sustainability ultimately deliver a talent strategy that allows them to continue to remain agile and achieve strong growth.

Thus, HR plays an indispensable role in promoting a corporate culture that is receptive to sustainable business practices leading to economic, social and environmental sustainability. HR has been at the helm of business sustainability. HR leaders have the skills to think about what a rapid pace of change in today’s economy looks like. HR leaders also have the hard skills to build a resilient and agile talent strategy to deal with digital transformation and its impact on their workforce.

KEY PRACTICES

HR needs to adopt practices to embed the organizational culture within sustainable business strategies and shape the organizational system in such a way that it has impact on employees, society and other stakeholders so that they all align with the sustainability vision of the company. Thus, the HR function is one of the key players responsible for implementing a sustainable strategy in organizations.

From a business perspective, sustainability is defined as 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.

Business sustainability from the point of view of human resources management is a management and leadership philosophy and is about how people are to be most enabled so that they contribute to success at their work by minimizing the negative impact of their work on the environmental and social factors and at the same time improve the financial factors in organizations.

This article reviews the role of HRM in business sustainability with the construct of HRM strategic integration in a business sustainability strategy. Further, this article focuses on the way HRM should incorporate sustainability in its practices in the organization and its impact on organizational performance.

HR can help innovative sustainability initiatives in four general areas: culture change, corporate strategy, organization effectiveness and human capital development.

HRM METHODS

Strategic human resource management (S-HRM) involves the development of HR programmes, practices and policies which are linked with business strategy in order to achieve strategic objectives of the organization. Strategic human resource management activities support the achievement of organizational goals and values by aligning human resource strategies with organizational strategy.

Distinguishing sustainable HRM: It is more outwardlooking and it has long-term decisions with the objective of winning competitive advantage over competitors. The fundamental objective of sustainable HRM is to develop employee loyalty and retention, the right HRM eco-system, and create a Quality of Work Life.

The role of HRM in organizational sustainability is HR sustainability, which means sustainable work systems; focus on sustainable human resource strategy. Sustainable HR strategy is the management of human resources to meet the optimal needs of the organization in the current scenario without compromising the ability to meet the needs of the future. Sustainability in HR management means providing a qualified workforce, both for the current and future activities of the organization.

Incorporation of sustainable HRM practices is the overall application of corporate sustainability which is based on the wider framework of sustainable development wherein CEOs, management, HR professionals and employees play a vital role and need to have high involvement in implementation of sustainable HRM.

HR CHALLENGES

Human Resources plays a key role in maintaining the long-term sustainability of a business. It must ensure that the organization maintains its flexibility to manage change and does not compromise in primarily critical areas. Competitiveness is very much about agility, speed and flexibility in decision- making. It’s not about one right product; it’s about the overall set-up of the business to be able to respond quickly and flexibly to changing customer needs.

In meeting this challenge, Human Resources must work closely with the company’s top management and act together to achieve the optimal outcome. The HR department must support the business to innovate, keep an eye on the competition and enable employees to find new ways of working. In many companies, the HR department is the one that has the most contact with employees as well as competitors.

An organization with a clear focus on sustainability balances its profit with its growth requirements. It does not compromise on development and training. It invests a significant portion of revenue in improving available skills and competencies. Growth is usually realized through employees and we tend to forget this.

In addition, HR must ensure that the business does not compromise on business ethics. A sustainable company is very conscious of a strong corporate culture, does not tolerate any questionable practices and acts clearly and quickly when any violation is found. It takes ethics as a necessary foundation, even if it has a major impact on its business and operations. It simply does not compromise in this area.

ECO BALANCE

There is another important issue of sustainability, which is about the balance of business -- that future generations can live on planet Earth. The solution is always focused on respecting the environment around us, relating to communities, promoting education and providing more with fewer natural resources. However, this is not a challenge for Human Resources alone (the entire leadership team must be responsible for finding appropriate solutions).

HR faces the challenge of how to use its knowledge and business skills to bring critical knowledge regarding sustainability to the attention of the senior management. As such, the senior level hardly sees any link between efforts put for social and economic betterment and sustainable activities. Basically, the senior management is concerned about meeting quantitative targets, thus keeping sustainability as a secondary activity, because if they are not able to meet their targets on time they might face the risk of losing a job. What is important for them is meeting deadlines in the wake of improving the bottomline of the company, thus ignoring the sustainability aspect. HR generally faces the problem of how it should actually integrate the sustainability agenda into programmes of recruitment and staff development. Proper planning is to be done, which calls for support from various levels in an organization, and getting this unanimous support is a difficult task for HR.

Limited understanding and involvement of sustainability across levels in an organization results in dilution of objective of sustainable business practices. Moreover, many HR leaders do not even have a good understanding of what sustainability is, which makes them ill-equipped to set up sustainability strategies. Sustainability being a long-term phenomenon, reaping long-term benefits, organizations generally overlook a sustainability drive because of the intangible results.

There is a generally a disconnect between creation and implementation of a sustainability strategy because even today it is viewed as within the purview of public relations, investor relations, and regulatory and environmental compliance.

So there is still some distance to go before sustainability is truly integrated into the fabric of an organization, making it a mandatory activity.

HR PLAYBOOK

• To engage each and every employee in this practice and make it a part of employment value proposition.
• Incorporating the concept of sustainable business in performance evaluation, remuneration etc. •Collaborating with Non-Governmental Organizations and local communities, thus inspiring people to learn, and identifying sustainable development competencies.
• Reporting on sustainability initiatives in the company’s annual report to show their commitment towards this area as a long-term goal.
• Identifying emerging societal trends as well as recruiting environmental specialists to support environmental strategy development.
• Conducting seminars/training(s) on inculcating sustainability values in the system of organization.
• Making sustainability a part of the organization’s goal to make it an everyday affair of the employees to engage in such initiatives while performing their tasks.
• Assessing how workforce diversity contributes to performance, like initiatives for advancement of women, providing both men and women with a support for career, family, etc.
• Recruiting and retaining talent that responds to the challenges ahead with strong awareness of social and environmental issues.
• Aligning employee incentives, targets, etc with the wider objective of a sustainable business initiative in the company.
• Information related to sustainability to be reported on the website of the organization and even the company’s intranet so that the employees are always in conformity with the rules and regulations relating to the same.
• Aligning their leadership with the sustainability initiatives since leaders are the role models for other employees.

HR STRATEGY

Putting in place strategic human resources planning is always a good start to making a business sustainable in the long term. A strategic plan is always focused both internally and externally. It does not allow the organization to ignore external factors. The leadership team is pushed to find answers to all strategic challenges. It works the same way in human resources.

HR can identify skills and competency gaps. It can spot gaps that were previously unnoticed. It can learn new approaches from competitors who have had to overcome similar obstacles and can illuminate the way forward.

The best way for HR to avoid the challenge of sustainability is through a competitive Learning Strategy. It inspires the leadership team to invest in workforce development. It gives employees clear goals and objectives and rewards them with personal growth. It pushes managers to seek outside inspiration. Overall, an excellent Learning Strategy keeps the organization ahead of the curve.

CONCLUSION

We are living in turbulent times. Technological advancement is progressing at a very high speed and innovation brings ever-changing conditions and influences processes in organization on all levels. The external legal, political and socio-economic forces of the macro-environment cause uncertainties.

Sustainability has become a critical issue for any organization today. HR plays a key role in creating and implementing sustainable strategies for their organizations.

Sustainable business practices improves the bottomline of the company and thus HR managers leverage their efforts in creating an environment where the talent of the company is retained to work in harmony with sustainable business strategies.

There are several key drivers of investing in sustainability which HR professionals consider in order to promote a sustainable organization.

Companies are now mindful of their economic, environmental and social impact. Sustainability is an issue which is good for business and positively impacts the employees and other stakeholders in the form of an increased bottomline, improved employees morale, a strong public image, increased brand recognition, positive return on investment, etc. Furthermore, it is employees that drive the sustainability agenda and implement sustainability plans at the ground level.

Thus, HR professionals play a strategic role in devising sustainable practices. Such practices help the company survive and thrive.

HR plays the vital role of strategic influencers with the company’s top leadership and a proactive role in driving initiatives related to sustainability. It has the potential to transform the company’s model. Utilizing the HR skills in the organizational process, change management and culture stewardship, HRM can help create and implement a sustainable business strategy throughout the organization.

Thus, the key roles played by HR to promote sustainable business practices are enabler, change agent, facilitator and collaborator.

(Dr Naveen Malhotra is a Senior HR leader with successful career of 30 years plus with a track record of delivering transformation leadership, have been architect in planning and implementation of HR initiatives for business development, for developing human capital capapcity – a ligning structure, skills & processes to drive the growth and continuous improvement. Had been Chief Human Resource Officer & Group President Corporate Communications for a large size of Group with a turnover of 80 billion and employee strength over 10000 employees.