How is your Human Resources department stepping up to the challenge in a world where business sustainability is a necessity?
Sustainable HR might still be a new concept to some organizations, but at its core, it represents a shift in human resources.
Sustainable HR aligns corporate goals with the well-being of employees and the larger community while striking a delicate balance with profitability. The CPID defines sustainable HR Management as “thinking beyond the performance imperative of strategic HRM and instead considering a more holistic, multi-stakeholder model is gaining traction in academic circles.” So, when we look at it this way, it's like we're taking the 'S' in ESG and really bringing it to life.
Looking Inside The Company - The Changing Role of HR
In the bustling corporate ecosystem, HR is much more than a department. It is the heartbeat of an organization and an opportunity for better sustainability outcomes. According to The World Economic Forum, 90% of executives know the importance of sustainability, yet only 60% of organizations implement sustainability strategies.
Incorporating sustainability into business strategy is needed to address increasing investor demands, consumer consciousness, and new regulatory requirements. This multistakeholder pressure means that all departments are involved in implementing sustainable change.
How are you leveraging your HR function to future-proof your company’s goals?
Image Credit: Unsplash
The Challenge: A Myriad of Modern HR Functions
Let's bust a myth: HR isn't just about hiring, firing, and running payroll. It's like discovering your favourite superhero has more powers than you thought. Nowadays, HR teams are juggling more than ever - it's about keeping employees engaged and employable, the company in good shape and anticipating the future needs, such as incorporating sustainability.
On top of this, the HR function is increasingly influenced by deep trends, including:
The emergence of mental health: quiet quitting, burnout, and the great resignation are just a few trends that have shaped the workforce in recent years. Each one of these requires a different approach for HR. A Deloitte survey found that 83% of U.S. employees reported work burnout negatively affecting their relationships. The Straits Times reported that 52% of Singaporeans are burnt out.
New generations, new expectations: younger workers seek purpose-driven jobs, career changes, and are experiencing various career breaks. A survey conducted by Gartner points out that Employees seek to gain more value from their jobs. They are also looking for more flexibility and to integrate some aspects of their personal life, for example, childcare options or flexiwork into their work life.
Accelerated skills evolution: the introduction of AI into the mainstream, the never-ending search for Talent, and the emergence of new skills are shaping the needs of workers. McKinsey & Company discusses how Gen AI will transform jobs and requires a different approach to talent management, reporting that 87% of organizations had skill gaps or were expected to face them in the next 5 years, even before the emergence of Gen AI.
Managing social and reputational risk: brand, social reputation, and business results are just some risk areas companies must now navigate. This situation can lead to “peoplewashing” - a term we use at EDLT.Global to define the situation where people are enticed to join or stay at a company that does not deliver on its ESG promises to employees. The prevalence of peoplewashing, similar to greenwashing in its many shades, and the need for better transparency therefore requires a cross-divisional focus and understanding of sustainability. The Harvard Law School Forum on Corporate Governance further highlights this point. It states that organizations face challenges in validating socio-environmental claims and the lack of consistent ESG-related capabilities among staff can lead organizations to inadvertently greenwash or peoplewash.
This raises an important question: how can we overcome these challenges, and what are the benefits of sustainable HR strategies?
The Benefits of Embracing Sustainability in HR
Despite these emerging trends and challenges, embracing a sustainable HR strategy can lead to multiple benefits for companies of all sizes. Here are just some ways sustainable HR practices can benefit your company:
Retention and knowledge preservation: implementing strategies to avoid the loss of critical knowledge and increase employee retention, thereby maintaining organizational intellectual capital.
Cost efficiency: reducing rehiring costs, improving productivity, and reducing accidents and sick days.
Risk management: effectively managing legal and financial risks associated with non-compliance to environmental and social governance standards.
Innovation: creating a culture of innovation is needed to adapt to and stay ahead in rapidly evolving markets.
Competitive advantage through certifications: using sustainable certifications, such as Ecovadis and B-Corp, to differentiate from competitors and appeal to a growing environmentally and socially conscious consumer market.
Enhancing customer satisfaction and loyalty: building stronger relationships with customers through demonstrable commitments to sustainability.
Cost management: streamline operations and reduce costs by adopting more sustainable and efficient business practices.
Employee attraction: according to a 2023 Esker Study on sustainability in the workplace, employees “increasingly consider a company’s commitment to sustainability in choosing where they want to work — with younger workers leading the charge.” Overwhelmingly, 71% of respondents stated a commitment to sustainable practices as a value they sought when seeking a new employer.
Image credit: Esker, 2023.
Do you need help with your sustainable HR strategy? Contact me for a free 30-minute consultation to find out more.
HR's Role in Driving Sustainability
As an HR consultant, I have witnessed first-hand HR's transformative power in driving sustainability.
My experience has shown me the transformative role that HR teams play in driving sustainability within organizations. HR is uniquely positioned at the intersection of company policy, employee engagement, and organizational and cultural change, giving it a powerful role in developing sustainability initiatives.
HR is able to support leadership by developing and implementing a corporate culture that values conscious business practices. This is where companies can attract the best candidates and those passionate about sustainability at large.
One example of this is Patagonia. The company's unique hiring process emphasizes cultural fit and a shared passion for the outdoors over traditional corporate backgrounds. With open-plan offices and a trust-based work environment, Patagonia empowers open communication and an egalitarian culture, leading to a remarkably low staff turnover rate of only 4%. This highlights the importance of HR in the broader ESG agenda.
The Role of HR in The ESG Agenda
Source: https://edlt.global/
Practical Tips on Developing Sustainable HR Functions
Now that you are keen on getting started, here are some broad actionable steps when starting your journey:
Redefine the Job Scope: Incorporate ESG metrics into job descriptions and performance reviews across your organization.
Advocate for a holistic view of Employee Wellness: Develop a culture and programs that support mental health and work-life balance.
Strategize for the Future: Engage in HR strategy development that aligns with long-term sustainability goals and harmonious business development.
Shift the focus of HR from gathering ESG data to proactively addressing broader social and governance concerns.
Participate in your organization’s ESG communication strategy that stands out positively against your candidates, employees, suppliers, customers, and competitors.
Stay informed about cutting-edge ESG trends and regulations and anticipate their evolution over the next decade.
Conclusion
As we navigate the evolving landscape of HR and sustainability, it’s clear that integrating sustainable practices in human resources is not just an option but a necessity for future-proofing businesses. The journey towards HR sustainability has many hurdles from redefining HR roles to embracing ESG metrics. This transition from traditional HR functions to strategic sustainability champions is pivotal in steering a company toward environmental stewardship, social responsibility, and governance excellence.
As we conclude, ask yourself: Are your HR strategies ambitious yet flexible enough to succeed in a future where sustainability is a must-have for your business?"
As a seasoned HR policy consultant, I'm here to guide your transition. I help organizations and individuals on their growth journey in building sustainable change both at micro and macro levels. Reach out for a consultation, and let's craft the best HR strategies tailored to your vision of sustainability and success. Because when people thrive, business does too.
Further Reading and References
Esker Survey. (2023). Sustainability in the Workplace. Esker. Retrieved from https://www.esker.com/blog/esker-news-culture/2023-esker-survey-sustainability-workplace/
HR Executive. (2023). Are you ready for HR's increasingly significant ESG role? Retrieved from https://hrexecutive.com/are-you-ready-for-hrs-increasingly-significant-esg-role/
McKinsey & Company. (2021). "The New Possible: How HR Can Help Build the Organization of the Future." Available at: https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-new-possible-how-hr-can-help-build-the-organization-of-the-future
McKinsey & Company. (2023). "The State of Organizations 2023." Available at: https://www.mckinsey.com/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/the%20state%20of%20organizations%202023/the-state-of-organizations-2023.pdf