DEDICATED TO MAKING A DIFFERENCE

DRIVING SUCCESS

Human resources and sustainable development

What is sustainable development?

The term sustainable development means different things

to different people. But, in essence, it is concerned with

meeting the needs of people today without compromising

the ability of future generations to meet their own needs.

Sustainable development therefore involves:

A broad view of social, environmental and economic outcomes;

A long-term perspective, concerned with the interests and rights of future generations as well as of people today;

An inclusive approach to action, which recognises the need for all people to be involved in the decisions that affect their lives.

This briefing has been prepared by Mike Peirce of CPI and Katherine Madden of WBCSD, with case study material from Danielle Capenter Sprungli, WBCSD, cartoons from David Lewis, copyediting from Dr Sophie Mills and quotes from HR professionals drawn from an Ashridge research report prepared for the WBCSD’s Accountability and Reporting programme. The advice from Jake Reynolds and Jon Hanks of CPI has been invaluable throughout the process.

Adapted from Beyond Reporting: Creating business value and accountability, Engen, T, and Di Piazza, S, 2005

Who is

responsible

Responsible

for what

To whom

Through what

mechanisms

Cross-functional

Connection

With what

outcomes

Supply Chain

Management

Risk Management

Product Responsibility

Management

Suppliers

Standard Setting Bodies

NGOs

Competitors

Greater role in strategy

Audit

Training

Standards/Monitoring/

Compliance

Establishing working

relationships

Sales

Marketing

Corporate Affairs

Product Development

Deliver accountable

supply chain through

strategic embedding

Human Resources

Employee Recruitment

and Retention

Motivation

Competencies

Management

Employees

Wider Business Community

Institutions

Regulators

Peer learning

Training and development

Creating culture amongst

employees

Leadership

Corporate Affairs

Marketing

Use sustainable

development as a marketing

tool and to enhance

employee performance

Marketing

Brands

Reputation

Corporate Affairs

Market Awareness

International Agencies

Regulators

Competitors

Customers

Media

NGOs

R&D

Stakeholder

Intelligence

(customer feedback,

dialogue, benchmarking)

PR

Marketing

Corporate Affairs

Create more sustainable

products and services

Finance

Fiduciary

Responsibilities

Reputation

Shareholders

Finance Directors

Management

The Market

Competitors

Investors

Shareholders

Assessment Bodies

Regulators

Analysis

Investor surveys

Annual General

Meetings (AGMs)

Disclosure

Public/Corporate

Affairs

Marketing

Meet broader fiduciary

responsibilities

Public/Corporate

Affairs

Reputation

Management

Employees

NGOs

Advisory Panels

Competitors

Wider Business Community

Institutions

Regulators

Connecting business

functions and

management with

stakeholder concerns

Relationship building

All functions and units

Raise company profile

Integrating sustainable development in your organisation

Sustainable development is not just the responsibility of environmental specialists or communications professionals. It requires contributions from people across all functions of an organisation.

This briefing has been designed for HR managers and

people with responsibilities for recruitment, performance

evaluation and training and development.

It focuses on the issue of sustainable development – a term which many HR managers have become accustomed to hearing alongside jargon such as stakeholder engagement and Corporate Social Responsibility (CSR).

Sustainable development is a compelling idea for many people. It is concerned with how business can contribute to some of the most significant challenges that the world faces today – from climate change and biodiversity, to working conditions and health amongst the poorest in the world.

But HR managers have often struggled to introduce sustainable development within their organisations. How, for example, should they integrate these issues into programmes for recruitment and staff development, and how can they use their knowledge of the business to bring critical issues to the attention of senior management?

The briefing does not claim there are any easy routes for HR managers to benefit from the challenge of sustainable development. Instead it asks you to test the role and relevance of sustainable development in your everyday work: how it can help your business address its strategic goals and generate long-term value; and what you can do to make this happen.

In short, how can you make sustainable development good for your career and good for your company?

Driving Success describes three critical challenges facing human resource professionals today – practical problems identified and debated by HR managers themselves.

Recruiting and retaining top talent (pp 4-7)

Creating incentives for exceptional performance (pp 8-11)

Enhancing critical competencies (pp 12-15)

Driving Success is not an A to Z manual on HR and sustainable development, but it does provide a starting point to think about the key issues in your company today.

The briefing guides you through a series of questions – summarised on pp 16-17 – which take you from the broad challenge of sustainable development to some practical actions.

3

“CSR – HR = PR.

If employees are not

engaged, Corporate

Social Responsibility

becomes an exercise

in public relations.

The credibility of an

organisation will

become damaged

when it becomes

evident that a

company is not

‘walking the talk’.”

Adine Mees and Jamie Bunham, Canadian Business for Social ResponsibilityDriving Success highlights a variety of ways in which

companies are beginning to respond to sustainable development opportunities.

The cases are distributed throughout the briefing, and are supplemented by a set of further resources on pp 18-19.

Recruiting and retaining top talent

Companies can only succeed in the long-term if they recruit and motivate people who are able to respond to and shape the challenges of the future. These are the individuals with the capacity to create competitive advantage from the opportunities presented by changing markets, with the desire to learn from customers, consumers, suppliers and colleagues, and who possess the ability to build and influence long-lasting and effective partnerships.

The recruitment of new employees helps to demonstrate a company’s

aspirations, highlighting the skills and attitudes to which it attaches

the highest priority. The choice also provides a major opportunity to

communicate the values and successes of the organisation – to explain

why the company offers the most attractive place for a person to

develop their career.

Yet this competition for top talent is nothing new; and if the challenge

for HR managers is to spot the best people and win their favour, what

then is the role of sustainable development in recruitment and retention?

HR managers answer this question in two main ways, addressing (as the

cartoon illustrates) the expectations of both employees and employers.

4

Society’s expectations of business are changing, and an increasing number of applicants pre-assess the social and environmental performance of companies before choosing an employer.

The pride shown by the winners of employee benchmarking initiatives – such as Fortune magazine’s Best Companies to Work For index and the Great Place to Work survey – highlights the importance attached to workplace issues as a source of corporate reputation.

Whilst there’s little evidence that people apply for jobs on the basis of company ranking, the quality of performance on benchmark issues – including intellectual interest, job security, respect and rewards, learning opportunities and the organisation’s contribution to society – are important criteria for more and more people.

For example, three-fifths of the graduates and potential employees surveyed by Accenture in 2004 rated ethical management as an important factor in their job search.

Similarly over two-thirds of the students (68%) in a global survey by GlobeScan in 2003 disagreed that salary is more important than a company’s social and environmental reputation when deciding which company to work for.

And a KPMG survey found that among workers who feel their bosses lack integrity, only 20% would recommend the workplace to recruits. In comparison, 80% of the respondents who believed their company had strong ethics would recommend their organisation.

5

“Pride in one’s

employer is a grossly

underestimated factor.

Of course there is a

lot of talk about pay

and conditions, but

don’t forget the dinner

party factor.”

HR Manager, Ashridge/WBCSD survey

Skilled people are becoming business’ most valuable resource, and a sustainable development perspective may prove to be a vital component in a leader’s set of competencies.

Major differences have emerged in recent years between the market value of companies and the book value of their physical assets. This gap is typically explained by the increased importance of intangible assets – the value of a company’s people, its brands, its relationships and its ways of working.

As people matter more to business success, the competencies that companies seek are becoming increasingly related to the management of relationships – to people’s ability to network, to partner and to innovate. These skills may go far beyond the immediate requirements of a functional position, to a new recruit’s ability to support the entire company in the longer-term.

But where can such flexibility and creativity be found? One rarely considered source is those people with a strong awareness of social and environmental issues. Some HR managers believe that these individuals possess a powerful understanding of the challenges facing business today, and frequently command the skills to engage with a wide diversity of institutions and people – including other businesses, governments, universities and not-for- profit organisations, as well as cross-functional teams in their own companies.

As one HR manager recently commented, “A sustainable development mindset pushes us to be better – it has encouraged a focus on performance, a consistent eagerness to improve and continual learning.”

Weighing up the evidence

But do these arguments add up? Most importantly, how do they affect your company and its recruitment challenges?

In thinking about these issues, consider the following questions and examine the case studies on the following page.

Does your business need individuals with a strong capacity to build relationships with a wide range of stakeholders?

Are applicants really concerned about the ethics of your company and its social and environmental impacts; or do candidates only care when a buoyant employment market gives them the luxury to pick and choose?

Are these concerns relevant for your business, or just for other companies in more controversial product sectors?

Is social and environmental screening only evident amongst the graduate intake, or are these values also significant for senior recruits?

“We want an organisation made up of inquisitive

people, for we are seeking innovation, constant

improvements in the way people do their jobs, in all

areas of the business. Conducting business as usual

does not belong in an inquisitive culture.”

Walking the Talk, WBCSD

6

Approaches to success

In 2000, the aluminium and packaging company, Alcan, decommissioned a 91-year-old smelter in Kinlochleven, Scotland. To prepare for the closure, Alcan worked alongside its employees and the wider community to explore future opportunities for the region.

Alcan began an intensive stakeholder engagement initiative six years prior to the actual closure. Working with the local community and development agency, it donated land and buildings to the village to help its residents create alternative jobs. Its stakeholder engagement also laid the foundation for the development of eco-tourism in the region.

Deloitte Touche Tohmatsu (DTT) and its member firms use their worldwide Multiculturalism and Inclusion Initiative to demonstrate by their actions that they understand, value and benefit from the different backgrounds of their people.

In the United States, the US member firm set up the Initiative for the Retention and Advancement of Women in 1993. The programme aimed to create equal access to career building opportunities with progress towards the Initiative’s goals incorporated into senior management targets. Another goal was to provide women – and men – at the US member firm with the support they need to manage their careers, families and personal pursuits successfully.

As a result, the percentage of female partners, principals and directors has grown from 6.5% in 1993 to 17.2% in 2004 – the highest proportion of women partners, principals and directors among the Big Four accounting firms in the US, according to Public Accounting Report‘s 2004 Annual Survey of Women in Public Accounting.

Founded in 2001, Helping Hands is part of EDF Energy’s Employee Community Involvement Programme, and encourages all staff to take advantage of two days of paid work time to get involved in community projects. In 2004, more than 1,700 employees participated in Helping Hands, contributing more than 18,000 hours to community initiatives. Staff undertook 57 team challenges benefiting 20 schools and two community farms.

The programme has been enthusiastically received across all areas of operation, and 85% of those who participated say they feel better about working for the company as a result.

Making sustainable development part of the employment value proposition

7

CASE STUDY

Assessing how workforce diversity contributes to performance

CASE STUDY

Working in partnership with employees and communities

CASE STUDY

Employees are motivated by a complex mix of rewards. These range from financial security and bonuses to promotion and peer recognition, and from taking on new challenges to making a difference to the things they care about.

The challenge for HR managers is to create the opportunities and incentives

that maximise employee contributions to corporate performance – to help

the company make the most of its people’s talents.

In particular, if people can be motivated to learn on a continuing basis,

this can add immense value by enhancing the overall adaptive capacity

of the organisation – its ability to respond quickly and flexibly to changes

in its operating environment.

How, then, can a sustainable development perspective encourage

employees to make a productive contribution to their company, the

challenge illustrated by the cartoon below? And if a business has bought

into the idea of sustainable development, how can its

HR managers ensure that employee incentives are

closely aligned with these wider objectives?

Creating incentives for exceptional performance

8

Sustainable development commitments and programmes can motivate employees to perform to their highest potential.

If company and employee values are aligned – with the company operating ethically, providing a suitable work-life balance and clearly demonstrating a concern for health and safety – then staff morale and commitment will increase, reducing staff turnover and boosting productivity.

The 2002 GlobeScan International survey showed that eight in ten people who worked for a large company felt greater motivation and loyalty towards their jobs and companies the more socially responsible their employers became.

Research by MORI for a major financial brand found that 70% of staff who were committed to the values of the company said that their productivity had increased in the past year. In contrast, among those staff who were not committed to the company, only 1% had improved their productivity.

And the evidence suggests that employees will be far more effective learners if they go to work with a sense of purpose, feel that they are working within a supportive learning environment, and have the opportunity to turn their commitments into productive action.

Other data suggest that individuals who participate in community development partnerships and programmes are highly motivated by the experience. For example, a survey from the Corporate Citizenship Company indicates that employees who are involved with community programmes are significantly more likely to recommend the company, stay with it, and be motivated in their jobs. People can also learn from community partners and contribute new knowledge and leadership skills to their company.

9

Achievement: the sense that work will lead to fulfilment

through the accomplishment of work goals.

Advancement: the sense that good performance will be

rewarded by added responsibility, status or promotion in

the organisation.

Belonging: the feeling of fulfilment, pride and loyalty

obtained by working with other people on common

challenges.

Challenge: the sense that work activities will be exciting

and stimulating.

Contribution to society: the feeling that work makes a

worthwhile contribution to society, adding meaning and

purpose to everyday actions.

Involvement: the sense of ownership over work objectives

arising from the freedom to act under one’s own initiative

and to participate in decisions.

Financial reward: the sense that good performance will be

rewarded by greater financial benefits.

Growth and development: the sense that new capabilities

will result from participation in work activities.

Intellectual interest: the sense that work activities will

coincide with personal areas of interest.

Job security: the sense that good performance will lead to

a more longer-lasting work opportunity.

Pride in organisation: the sense of pleasure taken in

associating with the organisation, based on its reputation,

culture and policies.

Recognition and respect: the sense that contributions will

be acknowledged and appreciated by colleagues.

Responsibility: the care and commitment flowing from the

management of people and involvement in decisions.

Work environment: the sense of well-being produced by

the physical surroundings of the workplace.

Sources of employee motivation

Source: Helping People Learn, CIPD, 2004

10

Employee targets and incentives need to be aligned with the goals of sustainable development.

Many companies have adopted an approach to business that recognises the role of social and environmental issues in enhancing commercial performance; their leaders argue, for example, that it can strengthen their reputation, enhance organisational learning and boost operational efficiency.

But if this strategy is to succeed, employees need to see the sustainable development objectives clearly reflected in their personal targets and rewards. Performance appraisal must take into account the contribution of individuals and teams to longer- term social and environmental goals as well as short-term financial objectives. For example, if all the bonuses for a procurement team are dependent on achieving lowest cost contracts, it will be no surprise if they display little interest in the working conditions of the supplier base.

One HR manager has noted the approach taken in their company: “All employees have an agreed contract with HR. It is monitored with performance bonuses based on economic, social and environmental performance. It sends a signal.”

Weighing up the evidence

But do these stories stand up to scrutiny? The published data on the motivational impact of sustainable development is almost uniformly positive, but does it ring true for your company? And how can you bring staff incentives in line with your company’s wider objectives?

In thinking about these issues, consider the following questions and examine the case studies on the following page.

Do sustainability values inspire future leaders in your company, or are such issues essentially irrelevant to productivity?

What are the most effective ways in your company to incentivise performance in line with its sustainable development objectives?

What are the right measures and indicators to assess the success of individuals and teams in contributing to sustainable development?

How can you use the knowledge of the HR department – and, in particular, your understanding of skills and working practices across the organisation – to encourage managers to incorporate social and environmental issues in business scorecards and incentives?

“My key objective for the future is to motivate

employees. It will be necessary to find synergies

with everything else going on in the company.”

HR Manager, Ashridge/WBCSD survey

11

Approaches to success

Severn Trent, a provider of water, waste management and utility services, became involved with the Cromford Venture Centre in the UK following a visit in 1995. The visit highlighted economically depressed areas that had been affected by the national downturn in manufacturing. The Venture Centre was founded upon the belief that young people respond positively to opportunities for self-development if they are offered in surroundings that provide a stimulus for new activities and experiences. The company could see that the Centre would be the ideal catalyst to help disadvantaged young people improve their prospects.

Severn Trent decided to build a strong relationship with the Centre, making an effort to understand its objectives and needs, and to involve Severn Trent employees as fully as possible at every opportunity. Severn Trent has a network of senior and middle managers who champion and support its Group-wide Employee Volunteering Programme. Employees from a variety of companies within the Group have volunteered their own time to the Venture Centre in various guises, including fundraising.

SC Johnson’s strategy to improve its environmental impact is based on being selective in the materials the company purchases to manufacture its products. The company’s approach is to classify and screen the ingredients used in all its products, and use the information to make measurable improvements in the company’s ecological footprint.

The company’s Greenlist™ provides an environmental rating for all ingredients used in its products and is used by all its chemists. Annual Greenlist™ goals are tied to the bonuses of people at officer and management level – the people who manage and impact the process directly. Further bonuses to achieve Greenlist™ goals by raw material category are set within the relevant R&D group and linked to annual merit increases.

Novo Nordisk’s TakeAction! programme aims to integrate and embed a sustainable development mindset and culture in the organisation. It informs, supports and inspires employees to engage in voluntary work within Novo Nordisk’s therapy areas.

To many Novo Nordisk employees, this approach to sustainable development contributes to their job satisfaction and supports their decision to remain with the company. In Novo’s annual survey, eVoice, employees are asked whether environmental and social issues are important for the future of the company. In 2004, the average response was 4.2 on a scale from 1-5, with 5 being the highest score.

Building awareness of the company’s sustainable development commitments and performance

CASE STUDY

Incorporating sustainable development in performance evaluation, remuneration and personal development plans

CASE STUDY

Inspiring people to learn in partnership with NGOs and local communities

CASE STUDY

Enhancing critical competencies

Companies must continually enhance their workforces’ skills to respond to the emerging demands of customers, investors and society as a whole – requirements that change with the ways that people live and work.

The challenge for HR managers is to clarify the competencies required

to deliver the company’s strategy, as well as to cope with changing

competitive circumstances.

Success will depend on identifying the most effective means of building

these competencies, whether through formal training programmes,

mentoring, peer-to-peer learning, or involvement in community

programmes.

Amidst this variety of approaches to building employee skills, illustrated

in the cartoon below, what then is the value of learning programmes

on sustainable development? And who should be the target of

these initiatives?

12

Sustainable development provides a

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