One of the bigger COVID-19 consequences is definitely the change in business and management standards. The awareness that the social component is key for reaching long-term results and well-being has strengthened. HR plays a crucial role, as it holds all cards to encourage and manage the implementation of sustainable business strategies.
Working in HR means being aware of the (possible) influence on and actively contributing to sustainability. With the organizational competencies, possessing knowledge on managing changes and taking care of the organization’s culture, it plays a key role in establishing, implementing, and performing sustainable strategies. The HR function has access to all key stakeholders, it’s entangled into all organizational levels, and can influence organizational models, systems, and processes.
Higher purpose is key
Investors, clients, and candidates (mostly younger generations) are now interested in companies’ promises to the environment, their people, and managing the company at a more ethical and sustainable level in accordance with the higher purpose – calling. Millennials and Gen Z individuals want to work in companies that share their values which go beyond the profit and where they feel that they can leave their mark according to their calling. HR has both the task and the opportunity to sync the company’s purpose going beyond just the profit in a way that attracts all employees (and other stakeholders). It can help make sense of the employee’s work and shed a positive light on the company and each employee by nurturing the company’s values and purposefully directing the company culture. Through the mission, vision, and values of a company, it helps implement sustainability into all aspects of business, management, and operations.
4P model
The HR function mostly holds the opportunity to connect different stakeholders: Employees, leadership teams, owners, and external stakeholders. The HR function can support leadership teams and help ask the right questions. There are many different models and the 4P is the most prominent in Slovenia. It focuses on the influences of doing business according to the company’s mission, building on influence, affecting the planet, and generating profit.
It can support decisionmakers in deciding about the following:
- What would you like to achieve? Why are you here and what does your positive influence look like?
- How will the solution/decision benefit the people – employees, suppliers, clients?
- Why is profit important to you, what are you doing with it?
- How does this decision affect the planet, nature, the environment?
This model helps with responsible decision making in all areas important for sustainable success.
Sustainability and internal processes
For a more effective sustainability, HR has the power to encourage the following:
- Obtaining sustainability certifications (such as the “Socially responsible employer” certificate)
- Assigning an authorized sustainability employee and educating said employee (i.e. through the IRDO institute)
- Including sustainable topics into mandatory development programs for managers and/or employees
- Creating employee opportunities to broaden their positive influence in the company – internally or externally
- Including the company’s efforts into implementing sustainable practices (i.e. lowering the carbon footprint, etc.) into an upgrading map for management, employees, or specific departments that have the biggest influence. Global trends point towards the inclusion of sustainable metrics into management bonus maps (79% in Europe).
The interest of stakeholders for sustainable metrics is on the rise
The rise of questions pertaining to sustainable business asked by investors, owners, suppliers, partners, and new clients points to the importance of environmental, social, and wider influences. The HR function has an opportunity to present all collected data, analyses, and reports to upgrade their processes and lead strategies that create opportunities for employees and build a joint positive influence.
Some of the most visible sustainable initiatives that HR departments have been addressing for many years pertain to the social effects of companies – especially employees, contractors, and students. Many known social questions at the workplace that investors use to measure company success are indivisibly connected to the following:
- Employment status. Successful companies include employees based on legal forms of work, as they are aware of the importance of securing an employee as the weaker client in a working relationship. If there are elements of a working relationship present, companies have to take care of a legally-binding working agreement with an adequate contract and should not encourage precarious employment. In the spirit of ethical business practices, companies should implement firm measures and best practices to protect employees and those included in the wider supply chain.
- Fair compensation: Remuneration is one area that investors, employees, and clients take into consideration to evaluate how ethical the payment practices are in a company: Whether a company implements payments according to valid regulations, if there are discrepancies based on gender, race, or disabilities, and how companies handle them. This area also includes the question of management remuneration, key employees’ rewards, and the bonus system.
- Diversity and inclusion. A diverse and inclusive working environment appreciates different perspectives and brings along a wide array of skills and experience which would be otherwise unattainable. This leads to a better understanding of the clients, a strengthened feeling that everyone counts – no matter the gender, age, education, race, etc. This raises employee retention, which positively affects the reputation, success, and profitability of a company.
- Mental health and overall well-being. The Covid-19 pandemic has emphasized the need for awareness and addressing the importance of mental health and employee well-being. Companies should create working environments that encourage health and well-being, as it decreases sick days and has a positive influence on motivation and productivity.
- Managing the work-life balance. The Covid-19 pandemic has also emphasized the need for a deeper understanding of the importance of separating the work-life balance, as work from home has stepped into the dynamic of business and living. Companies should take care of the proper organizational measures with which they ensure adequate WFH control, support syncing the work-life balance, and support employees with maintaining or improving productivity when working in modified circumstances.
- Keeping and nurturing the commitment of the existing employees. Employee commitment is a known and established factor of business, which affects employee fluctuation, sick days, motivation, and productivity, which consequentially affect the reputation, success, and profitability of a company.
- Searching for candidates and managing the employer brand. Developing a clear employer brand and employing and working according to it, as well as to the values addressing the wanted culture is becoming increasingly important. Sustainability is a part of the employment ethics of a company, organization, their culture, and also a key tool for the talent market when acquiring candidates.
- Corporate social responsibility. Most companies have implemented social responsibility programs, such as volunteering at local organizations and initiatives for collecting funds for purposes in accordance with the company’s values. It is important that they keep supporting their communities and invest in projects that have value for employee engagement and the company’s reputation as well.
- Environmental responsibility. Companies are aware of their environmental impact and have implemented support mechanisms to responsibly take care of the environment, ensure employee education, and respond to employee initiatives to responsibly take care of the environment. They address energy and water use, control the emissions and waste together with all resources they use and influence.
- Responsible business. At the integrated ethical business and working according to corporate management guidelines levels, companies have implemented compliance programs that entail the Code of conduct, IT security, GDPR, a whistleblowing mechanism, ethical business practices, and anti-bribery policies. Responsible businesses are based on the culture of business integrity and ethical management, an important aspect of a sustainable business strategy.
Looking into the future and the increase in stakeholders’ interest in sustainable questions show new challenges for companies and the HR function. The latter brings a wave of optimism, as it entails a clear overview of the future and a more responsible approach for the future generations.
Author: Katarina Primožič Ramoveš, People and Culture manager at NIL d.o.o. and Head of the project group for Corporate social responsibility at Conscia
This article was first published in HRM revija Magazine, #39, April/May 2022.