The HR and Sustainability Nexus: An Untapped Asset?

A combination of a sustainable approach and a strong HR role may be a recipe for high performance.
John BoudreauDecember 3, 2012

The idea of “sustainability” or the “triple bottom line” (profit, planet, people) is increasingly a vital goal in financial and corporate social responsibility. What is less obvious is that sustainability and human resources may go together to contribute to high organizational performance.

In a 2003 article, Pete Ramstad and I predicted that sustainability would significantly change how human capital creates its most pivotal impact. More recently, in “The Future of HR,” Ian Ziskin and I suggested that a basic HR-sustainability connection is the “fatigue-sustainability” balance. Most organizations measure the wear and tear on tangible assets, such as mining trucks, far more than the stress on employees, such as mining engineers. Sustainable employment means optimizing “slack” in human capital, just as with other organization assets.

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How are HR and sustainability related? The first step is often to use HR programs to support sustainability. IBM incorporates sustainability projects in communities worldwide into its talent-development system. Sometimes, HR leads sustainability. The chief human resources officer at Gap, Inc. plays a leading role that started with attention to supplier working conditions and evolved to global community and environmental initiatives.

A combination of a sustainable approach and strong HR role may be a recipe for high performance. In our Center for Effective Organizations survey of global HR leaders, “Excellence in HR,” Edward Lawler and I found that “sustainable” was most frequently rated as an operating approach pursued to a “great” or “very great” extent:

  • Sustainable (agile design, focus on financial performance and sustainability): 49.2%
  • Bureaucratic (hierarchical structure, tight job descriptions, top-down decision making): 32.6%
  • Low-cost operator (low wages, minimum benefits, focus on cost reduction and controls): 9.2%
  • High involvement (flat structure, participative decisions, commitment to employee development and careers): 39.0%
  • Global competitor (complex interesting work, hire best talent, low commitment to employee development and careers): 28.0%

We found that organizations with more sustainable operating approaches were higher on a host of advanced HR dimensions. Sustainable organizations seem more “HR friendly.” For example, the sustainable organization approach was positively related to the extent of these HR features:

  • Data-based talent strategy
  • Human-capital strategy integrated with business strategy
  • Analytic support for business decisions
  • HR data supports change management
  • HR drives change management
  • Making rigorous decisions about human capital

Finally, both an extensive sustainable approach and strategic HR (measured by the index above) were positively and independently related to ratings of organization performance relative to competitors.

Sustainability goes with strong HR, and both enhance performance.

This makes some sense when you consider the disciplines that must be understood in order to pursue the triple bottom line. Certainly, finance, economics, and operations will be vital, just as they are for the traditional financial bottom line. Yet your finance, accounting, and operations experts may not be sufficient to navigate a world of sustainability. Sustainability reflects such “softer” disciplines as politics, values, attitudes, informal relationships, psychology, and even anthropology. Those are the disciplines that have long been used to predict and explain effective employment relationships and talent management. Your HR leaders should be good at such disciplines, and if they are, they can make a unique contribution to sustainability.

So look around the table at your next strategic discussion of sustainability. Is your HR leader there? Does HR play a reactive or a leadership role in your sustainability efforts? It may be worth considering whether you can better tap the HR “asset” for higher performance in a sustainability-focused world.

John Boudreau is a professor at the University of Southern California’s Marshall School of Business and research director at the school’s Center for Effective Organizations.