Although sustainability is a popular concept in the modern world, it has no single widely accepted definition. A variety of interpretations arose due to the concepts’ origins rooting in a number of different disciplines. First ideas related to sustainability, long before the term itself was coined, emerged mid twentieth century when ecologists started to warn the global society about the impending natural disaster that would be a result of pollution and abuse of natural resources linked to a rapid industrial development. Along with ecological concerns, later in the 1980s, such social issues as human rights and poverty started to gain weight and appeal to governments and industries with demands for a new approach to development, which we now know as sustainable development.
In 1987, the Brundtland Commission of the United Nations defined “sustainable development” as a “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Setting human needs and well-being as the main objective, the UN linked sustainability to the simultaneous achievement of environmental balance, social justice and economic success. Thus, this definition discerns three specific dimensions of sustainability – environmental, social and economic.
Such understanding of sustainability became widely accepted by leaders in business, politics as well as NGOs. Applying the concept to organizational context, they introduced the notion of “corporate sustainability” that implies “the adoption of business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future”. It highlights challenges in the field of conservation and ways to operationalize the idea of sustainability on a business level while pursuing financial objectives.
Taken the multi-faceted nature of the concept and its complexity, more definitions and related terms appeared in attempts to clarify the essence of sustainability and make it more applicable on practice. One of such notions was derived by Elkington from the sphere of accounting. It is called the “Triple Bottom Line” (TBL) and seen as a fundamental step towards understanding sustainability.
The rationale behind the concept of the TBL is that economic performance (profit) is not enough for a company to prove sustainable. Environmental and social performance should be seen as equally important indicators of success. The approach lies on the idea of balance between Profit, Planet and People, the so-called 3P. To continue its existence, it is crucial for an organization to be profitable. Yet, giving priority to economic sustainability alone yields desirable results only in the short term. To be sustainable in the long run, an organization should manage its impact on the planet and people, ensuring environmental and social sustainability.
All three dimensions of the TBL require simultaneous and equal attention as they are inter-connected and influence each other in various ways (See Figure 1). For example, a polluted environment as a result of corporate activity threatens the well-being of local communities (“people”) as well as the company’s existence due to its acquired poor reputation (“profit”).
The complexity of interaction between the sustainability dimensions points out to multiple stakeholders within the broad categories of 3P who are affected by the organization’s activities and should be accounted for. From this perspective, the introduction of the TBL in management defines a transition from shareholder value orientation to stakeholder orientation when interests of all the involved parties have to be satisfied in order to advance overall sustainability.
Building on the idea of stakeholder value, Dyllick and Hockerts define corporate sustainability as “meeting the needs of a firm’s direct and indirect stakeholders (such as shareholders, employees, clients, pressure groups, communities etc.), without compromising its ability to meet the needs of future stakeholders as well. Towards this goal, firms have to maintain and grow their economic, social and environmental capital base.” From this definition, one deduces two important implications of sustainability for HRM. First, employees are considered key stakeholders who are crucial for organization’s survival and, thus, their needs have to be met. Second, apart from stakeholder interests, the authors mention the need to sustain the company’s social capital which consists of societal and human capital. The latter is formed by employees, specifically their knowledge, skills, values and attitudes. These attributes are a source of competitive advantage and, thus, essential for an organization’s success.
These theoretical underpinnings of stakeholder theory and human capital theory are among the common grounds disclosing the linkage between sustainability and HRM. They show that sustainability issues are in the HRM’s domain since corporate sustainability is not possible without employees’ contribution. Here, HRM serves as a facilitator whose task is to manage employees in order to achieve sustainability.
Any organization, large or small, needs employees’ input to make its existence possible. In essence, people are seen as organizational resources that lead to fulfilment of corporate strategies and objectives when effectively utilized. HRM’s core responsibility is to initiate and maintain such employment relationship that can ensure productivity while adhering to legal requirements and meeting individual expectations. As a system of planned activities, HRM includes acquiring, deploying, developing and retaining employees. The aim of relevant policies and practices is to affect individuals’ attitudes, behaviours as well as performance with the intention to achieve organizational goals.
The concept of HRM was predated by the notion of personnel management which is also referred to as “hard” HRM in contrast to “soft” HRM. These concepts differ in the way they view human beings and their deployment in organizations. Personnel management takes the human component out of HRs and treats them like any other factor of production. From this perspective, employees should provide the required level of input at minimal labour costs. HRs are flexibly utilized for the sake of high organizational performance while being managed under strict rules and procedures. With this approach, an organization puts a stress on quantitative output and employees’ compliance, making the management process in a way mechanical.
Personnel management has evolved into HRM, which views employees as the most valuable asset and hence a critical factor to organizational success. It is employees’ personal characteristics, knowledge and skills that add value to an organization and improve its performance. As a valuable resource, employees should be managed and developed accordingly. From the perspective of “soft” HRM, it takes more than rigorous control to unleash employees’ full potential – they should be nurtured and motivated to commit to organizational goals.
To an extent, HRM exercises both “hard” and “soft” methods as, in the core, either of the approaches has a focus on employees’ input and aspires to the ultimate goal of high organizational performance. Yet, by fostering employees’ commitment, an organization aims at long-term results. “The now extensive literature on HRM rarely differentiates between human resource management and human resource strategy, although the former would suggest the day-to-day implementation of policy while the latter is a long-term perspective”. The fact that such interchangeable use of terms occurs, emphasizes the importance of strategic approach to HRM as it plays an important role in creating and developing an organisation’s competitive advantage.
As established earlier, HRM’s ultimate goal is to ensure high organizational performance by means of HRs. In pursuit of this goal, the first task is to acquire and retain people with the right set of skills and high potential. The second task is to secure and enhance employees’ engagement and motivation to commit to the organizational objectives and use their unique set of skills in order to achieve the desired results.
While fulfilling its tasks, HRM should account for a broad range of factors that can affect the employment relationship and its outcomes. The factors include, for example, the type of corporate culture and leadership style, organization’s objectives, physical work environment or demographics of the employee pool. In accordance with these conditions, HRM practices and methods undergo adjustments in order to best meet organizational goals.
The Harvard model of HRM shows the importance of context for HRM by putting an emphasis on stakeholder interests and situational factors that directly influence HRM policies and practices (see Figure 2). When contextual factors are indeed considered, it leads to positive HR outcomes as well as long-term results of well-being on individual and societal levels coupled with organizational effectiveness. Affecting multiple contextual levels, the long-term consequences shape new operational conditions for HRM.
With sustainability issues becoming a part of modern reality, organizations are starting to look closer at the conditions that ensure their survival, and re-evaluate their organizational objectives. A shift from a shareholder to stakeholder orientation and a search for a more balanced approach to business that does not have a sole focus on economic value, poses a new challenge for all organizational functions including HRM. The next chapter will present the analysis on how HRM can meet this challenge and make its contribution to sustainability.
Taken that sustainability is a complex phenomenon, relevant for various organizational functions, there is a need for a holistic approach in implementation of corporate sustainability. Despite this condition, some scholars point out that the process of sustainability implementation is often described in isolation from HRM, one of the core departments that could make a valuable contribution. “While scholars have given increased empirical and theoretical attention to achieving a firm’s environmental goals, the role of the HRM system in that achievement has not been widely studied”.
Due to the emergent state of research on linkage between sustainability and HRM, the writings are still scarce in numbers and heterogeneous in their message. The publications differ in the focus given to specific external or internal effects of the sustainability-HRM relationship. There are scholars who analyse how HRM practices can help organizations reduce their negative environmental impact. Other authors discuss HRM’s influence on social and human sustainability inside and outside organizations (e.g. employees, communities). Within these two categories, some writings stress long-term organizational effectiveness and positive economic outcomes as a result of HRM’s sustainability efforts. Others advocate that these activities should be undertaken for the sake of social and environmental sustainability itself instead of seeing it as means to improve financial performance.
Depending on the chosen approach, scholars and practitioners coin different terms to reflect new facets of the HRM function. Among the most commonly used ones are green HRM, sustainable HRM, HR sustainability and socially responsible HRM. Although these terms differ in their connotations, they are often used interchangeably which causes confusion and complicates the adaptation of the concepts on practice.
Despite the general chaos in interpretations, it is possible to discern that the underlying difference in research on HRM’s role in sustainability lies in the way authors view HRM – as means to achieve sustainability or the end goal of sustainability efforts. On the one hand, HRM is meant to serve the achievement of organizational goals and, thus, it should influence employees’ attitudes and behaviours so they would contribute to sustainability objectives. On the other hand, HRM is to manage an employment relationship and, hence, sustainability principles should manifest in HRM systems themselves resulting in employees’ economic, physical and psychological well-being (social and human sustainability).
Such distinction results in two major roles for HRM to play in fostering sustainability: 1) the use of HRM practices to support the implementation of organization’s sustainability strategies; 2) the realization of sustainability principles in employment relationships. (In this paper, the given role will be referred to as sustainable HRM).
In pursuit of results in the Triple Bottom Line, organizations have to acknowledge at an early stage that “sustainability is a people issue” . To secure long-term success, employees’ beliefs and actions have to be in tune with the company’s strategic sustainability goals. In this respect, being a direct link to employees, HRM should be assigned a significant role in sustainability implementation.
There are scholars who emphasize HRM’s inherently central positioning in organisation, which makes HRM function a mediator in communication among the key stakeholders (e.g. shareholders, top management and employees). It specifically applies to cases when company’s management makes attempts to introduce such new business strategies as sustainability and instil new values related to it. Under these conditions, HRM will play a strategic role of a change agent whose task is to facilitate a dialogue between the stakeholders, translate new values to employees and manage to get them on board. Since employees are eventually the ones who need to incorporate sustainable behaviours in their day-to-day work, it is crucial to ensure that they are aware of sustainability’s importance for the company, have understanding of sustainability issues and show readiness to embrace them.
Apart from its favourable position in organization to establish communication lines, HRM is also equipped with the right skills and knowledge in people management to make this communication effective so it would have an actual impact. HR professionals can achieve this goal by tapping into both extrinsic and intrinsic motivation of employees to follow the path of sustainability. In this regard, HRM can also support line managers by providing guidance on how to reach out to their subordinates and secure their sustainable behaviours.
Another way to cultivate desired attitudes and behaviours across the company is to embed sustainability aspects into HRM systems and processes as they can convey core values and assumptions of the organization. Sroufe and colleagues concluded in their empirical study that organizations successful in sustainability had ample support from the HRM function in the implementation process. Similar results were confirmed in a study conducted by Harmon et al. who established a strong correlation between the degree of HRM’s involvement in sustainability strategy and the overall progress made by the company in this direction (r = .50). Sustainability efforts are reinforced by sustainability-oriented policies in employee recruitment and selection, training and development, performance appraisal, remuneration and reward systems as well as employee engagement. Leveraged to implement corporate sustainability, these practices send a message that the organization is serious about sustainability, considers it a core value in its operations and expects employees to adjust their views accordingly.
Such holistic approach institutionalizes sustainability and weaves it into “the company’s DNA” . Systematically attuning employees’ attitudes and capabilities, it ensures a continuous alignment of the workforce with the company’s objectives and nurtures a culture for sustainability.
This approach to HRM’s role in sustainability discusses how HRM can directly contribute to better environmental and social outcomes which, in their turn, indirectly improve financial results through, for example, lower cost of production and enhanced brand image.
Failure to engage employees and embed sustainability values in the organizational culture indicates that the change towards sustainability has been superficial and merely serves public relations of the company. As long as the company’s policies and activities contradict with its proclaimed aspirations, “the risks are high that old thinking and behavioral patterns will eventually rise up and overwhelm efforts to adopt more environmentally and socially responsible paths”. This is the reason why active and timely involvement of HRM is crucial for a successful implementation of sustainability strategy and creation of sustainability culture.
The next section will discuss concrete HRM practices that help build sustainable organizations. As mentioned above, those practices include attraction and selection, training and development, performance appraisal, remuneration and reward systems as well as employee engagement and empowerment. Hiring people who share organization’s sustainability values, educating employees on social and environmental issues, rewarding them for sustainable behaviours and encouraging their involvement will help foster commitment to sustainability objectives and have a positive impact on the triple bottom line.
For an organization in pursuit of sustainability, it is important to attract and screen for employees who value, or are at least open to, sustainability, as it will ensure the value alignment and help organization succeed in its environmental and social responsibility efforts. Employing people who demonstrate sustainable behaviours and have knowledge in the field, HRM makes one of its key contributions in building a culture of sustainability.
To attract candidates with the right set of skills and qualities in terms of sustainability, it is necessary to include those in job descriptions. By setting such requirements as previous work experience with sustainability issues, background in volunteering, passion for sustainability or at least understanding of the concept, the company puts a special weight on the candidate’s affinity with sustainability. Recruiters may ask candidates to explain how social and environmental health of communities relates to the organization’s operations and how these candidates would factor this in when making day-to-day decisions. Such approach demonstrates company’s strong commitment to sustainability. It also signals to the potential candidates that not only their professional qualifications should fit the job requirements but also their values must be in alignment with those of the company.
In efforts to address the pool of candidates interested in sustainability, it is also important to post the job advertisements not only on regular popular vacancy portals but also on thematic websites dedicated to sustainability issues and ESG research as well as portals for the so-called “green jobs”. On top of that, some organizations resort to creativity and engage candidates in sustainability efforts at the recruitment phase itself. For example, instead of giving away branded merchandise that is likely to end up in the trash, PricewaterhouseCoopers (PwC) asks participants at job fairs what their favourite charity is. It then makes a small donation in his or her name. This has the added benefit of helping it understand how to be more strategic with its philanthropic giving. With such complex approach to recruitment, HR professionals have better chances to hire people who fit the aspired corporate culture and will enjoy working in such environment while creating added value for the company.
Demonstrating a serious stance on sustainability, organizations not only gain like-minded employees but also enhance their employer brand. According to empirical studies, this way companies attract larger amount of applicants and, importantly, appeal to high quality workforce. In recent years, job candidates are often inclined to choose sustainability conscious employers rather than those who offer better economic security. Furthermore, survey conducted by Cone Inc in 2002 revealed that 80% of respondents would not agree to work for a company that has the reputation of a “bad citizen”. There is also evidence that employees show greater commitment to companies that care about sustainability. These facts point out to multiple ways in which HRM can benefits from sustainability: enhanced recruitment and retention as well as growth in human capital. Organization’s gains consist in lower recruitment costs, loyal personnel and improved employer brand, which offer a competitive advantage. On a larger scale, having value alignment among new employees takes the company one step further in fulfilling its sustainability strategy.
HRM’s core activities include employee training and development, which are especially important in the times of organizational changes and, thus, integral to a successful implementation of sustainability strategy. The work on employee development should start from the moment of onboarding. In orientation programmes, new-comers learn more about the company’s mission, vision, policies, sustainability efforts and expectations set for the employees in terms of their contribution to sustainable development. Early socialization sows seeds for employees’ success in their role and, as a result, increases the organization’s chances to fulfil its goals.
Regarding targeted training and development in sustainability, it may vary in its depth and objectives. On the one hand, it is necessary to raise employees’ awareness and develop their understanding of social and environmental responsibility issues. Acknowledging the impact of their actions in personal life or work, employees are more likely to change their behaviours in favour of sustainability and develop commitment to the organization’s efforts. On the other hand, apart from awareness, employees often may require technical knowledge and skills to apply sustainability principles in their day-to-day activities (e.g. methods of energy conservation, waste reduction, recycling). This way, employees acquire a concrete sense of their contribution to sustainability and company goals.
Since sustainability is not merely a technical issue but also a matter of developing a broader mind-set, training should address development of capacity for collaboration, ability to see a global perspective as well as to think strategically and holistically. For example, popular retailor Gap provides coaching for its managers on how their decisions can have unintended impacts on suppliers. For instance, when a “hot” product requires a rapid restock, they are taught to consider whether a supplier will have the capacity to fill the order without using excessive overtime, underage workers, or creating unsafe work conditions.
To sum up, complex cross-disciplinary nature of sustainability requires the same approach in learning and application of the concept.
In addition to helping employees develop skills and knowledge related to sustainability, it is equally important to engage them with the way their performance is evaluated and incentivized. It is possible to do it by linking sustainability to personal goals and compensation, as well as considering sustainability in promotion decisions. It is “important as the internalization of sustainability in an organizational culture requires that appropriate behaviours get appraised, appreciated as well as rewarded”. Including sustainability goals in the performance appraisal system signals organization’s serious intentions and makes employees accountable for the results while a desirable reward serves as a motivation to act sustainably. A clearly delineated attainable goal itself can give a strong impulse for action since it adds “purpose, challenge, and meaning” to work and, thus, triggers intrinsic motivation.
Many scholars establish that, for the appraisal and reward system to be effective, it has to be transparent and based on specific metrics that serve as indicators of the organizations sustainability performance. Linked to the measures, personal goals can be both quantitative and qualitative. The key here is that the organization’s sustainability goals are translated down to the individual level, and that these goals are evaluated and updated on a regular and ongoing basis. It is also crucial to establish a clear relationship between the sustainable outcome and the appointed reward. Incentives can be both monetary and non-monetary, for example, offering additional leave days, gift certificates, flexible work hours or mere recognition.
Some scholars emphasize the importance of linking CEO’s as well as senior and middle management’s compensation to the company’s sustainability performance, specifically on environmental standards. DuPont, Intel and Nestle are among the companies that implemented this practice and find it effective. It is another way to make a public statement about the company’s dedication to its sustainability agenda. Moreover, it can be inspirational for the employees who have their performance evaluated against the sustainability goals, and drive desirable behaviours.
Employee involvement and empowerment are essential for the successful implementation of sustainability strategy. They offer multiple benefits and can take on various forms. According to several theoretical research studies, mere communication of the values through new policies and procedures positively affects employee engagement in the organization’s sustainable efforts.
United Nations Environment Programme proposes two further effective practices for employee engagement that are applicable both for the environmental and social dimension. First, it is necessary to establish a two-way communication with employees (top-down and bottom-up) and encourage employees’ input in form of concerns or suggestions. HR professionals can facilitate the dialogue, for example, through forum discussions on the company’s intranet, surveys, open meetings, Q&A sessions, suggestion boxes, etc. Free flowing exchange of information and opinions boosts creativity and innovation as well as employee’s engagement. Second, employees with more knowledge on sustainability should be involved in the development of sustainability strategies. Given a say and certain degree of autonomy in the implementation process, employees gain a sense of ownership, greater meaning to their work and can offer a valuable contribution. It may not only increase engagement but also have a direct positive impact on the organization’s productivity and profitability. Moreover, involving employees in decision-making can trigger greater engagement and mind-set transformation of other organizational members.
Along the above-mentioned practices, almost all leaders in sustainability use volunteer programmes to engage employees. The initiatives can include both internal and existing community programs. “Such volunteer projects enhance the employees’ pride in improving the community, teamwork in working with their coworkers, and pride in their employer.” Moreover, more and more employers like PwC, Nike or Timberland entitle their employees to a paid time off in order to participate in volunteer projects of their choice. Connecting the local community or natural environment, employees are likely to review their values in favour of sustainability and adopt appropriate behaviours.
In the previous section it was elaborated in detail on how to embed sustainability strategy through HRM activities. Yet, for a company to be truly sustainable, alongside explicit integration of sustainability orientation into HRM activities, it is also important to assess what impact HRM systems have on employees. Specifically, one needs to see whether work conditions and work relations have positive or negative effect on employees’ physical and psychological health. Moreover, the design of the company’s HRM can have an outreaching impact on the employees’ personal relations, their families as well as on whole communities in which the company operates. These speculations introduce the concept of sustainable HRM that has implications not only for the social dimension of sustainability but also for economic and environmental.
To discuss how sustainable HRM can contribute to corporate and overall sustainability, it is first important to explore the drivers and rationale for this new way of people management.
4.1. Drivers for Sustainable HRM
Over the past few decades, rapid changes in social and organizational environments have transformed the idea of organizational effectiveness. It poses new challenges for business and puts HRM under the spotlight as it has to re-access its objectives so they could speak to the new demands.
In academic writings on the topic, it is possible to identify a few trends that drive HRM to a more sustainable approach in people management. One of the common themes is a change in workforce demographics predetermined by the aging population in developed countries. For organizations, it results in the need for action on two fronts – among their existing and potential employees. A growing number of older employees in a company may require adjustments in their work conditions and workload as well as seek ways to maintain their qualification. In terms of recruitment, an aging society means that the pool of viable and available human resources is shrinking, forcing organizations to compete for employees. Now a job is expected to offer some added value that goes beyond steady work arrangements and competitive pay. Among other factors contributing to the fight for top talent, scholar point out globalization and new technologies allowing to carry out work distantly. These conditions combined point out to the general shortage of human resources as a challenge for HRM and a reason to re-evaluate its practices.
Scarcity of human resources is aggravated by the negative effects of HRM on employees and labour markets in general. Ultimate focus on short-term financial results mostly leads to disregard of employees’ needs and exhaustion of human resources. On organizational level, negative effects of this approach include employees’ job dissatisfaction, lack of motivation, stress and lower performance. On the level of labour markets, unsustainable HRM practices ensue mistrust in employee-employer relations, increase in unemployment and financial load on social institutions. Such consequences are unfavourable for employees, employers as well as communities, raising moral and economic concerns.
The described trends change the labour market and the idea of employment relationship itself, demanding for a more sustainable approach to the HRs.
To understand how HRM can operationalize sustainability principles in its practices, it is important to discuss the rationale for sustainability in HRM. As mentioned earlier, interpretations of sustainability are heterogeneous and, as a result, one finds different meanings attributed to sustainable HRM as well. Particularly useful are three types of rationale for sustainability in HRM formulated by Ehnert: normative, efficiency-oriented and substance-oriented.
The normative approach is based on the Brundtland Commission’s understanding of sustainability as a moral value. The underlying idea is that sustainability is not a means to achieve better economic results but a moral obligation. This interpretation implies that stakeholders’ interests are important and should be respected for their own sake. From this perspective, HRM’s objective is to weigh in employees’ needs and take care of their well-being.
The efficiency-oriented interpretation considers sustainability from a practical point of view. If resources are scarce, it is rational to try and prolong the time these resources are available. This can be achieved through a lower usage of the resources and their efficient utilization. With regards to HRM, the implication is to minimise a negative impact on the HRs and decrease their utilization. Thus, the underlying idea of this approach is optimization of resource usage rather than concern for the employees.
Substance-oriented interpretation is another approach to sustainability based on an economic principle. Its objective is to sustain the resource base by balancing its consumption and reproduction in the long term which can ensure organization’s survival. From the HRM perspective, HRs are a valuable resource that can be regenerated through organizational support of their well-being and development within an organization. At the same time, it is important to invest into organizational environments that provide human resources and are seen as “sources of resources” . Those are training and education institutions that prepare human resources and determine their quantity as well as quality.
All three rationales have their benefits and deliver insights as to how sustainability in the broad sense and sustainable HRM can be operationalized. Application of each approach in isolation will simplify the phenomenon of sustainability and offer only limited results in attempts to build a sustainable company. Therefore, an integrative approach should be implemented, encompassing aspects of responsibility, efficiency and regeneration at once.
Common to all three rationales is that HRM contributes to the maintenance of the HC in a company. Yet, different focus of the rationales discloses duality in the nature of sustainable HRM. On the one hand, it should fulfil its social responsibility towards employees, making their needs the centre of sustainability concern. On the other hand, HRM serves an organization and has to supply qualified motivated workforce that helps to achieve organizational goals. Here, HRM accounts for the employees’ needs mainly for the sake of the organization’s success in which HRs are merely a medium. Despite the conflict of the ethical and economic underpinnings, sustainable HRM pursues the ultimate goal of employee well-being that encompasses economical, physical and psychological aspects.
According to Zaugg et al., to ensure employee well-being, HRM has to work on the following objectives: 1) improvement of employees’ employability, 2) enhancement of employees’ individual responsibility through participation and 3) creation of conditions for their work-life balance. Ehnert adds to the list the necessity to reduce the negative effects of HRM practices, which include, for example, a burnout as a result of high work intensity or lack of career progression due to discrimination. This idea is overarching for the effects on employees’ economic, physical and psychological well-being and, thus, extends the objectives proposed by Zaugg et al.
To identify specific areas of HRM where it could address the set objectives, it useful to employ international standards and guidelines that promote sustainability including employee well-being as a part of the social dimension. Among those are the ISO26000 and SA8000 standards, the United Nations Global Compact guidelines or the Global Reporting Initiative (GRI). These guidelines reflect the normative interpretation of sustainability and, when referring to employees, they make their needs the centre of attention. The needs are understood from a universal ethical perspective, implying that employees as human beings share fundamental ethical values as to how they should be treated by their employers. Therefore, the above-mentioned international standards and guidelines are relevant in different organizational and cultural contexts, offering indicators against which organizations can evaluate their sustainability performance.
With the GRI disclosure framework being the most widely accepted across international organizations, its HRM-related indicators will be further analysed to identify the areas of HRM’s impact with regards to employee well-being.
Both economists and sustainability scholars reiterate that health is an integral part of well-being. “Health and safety performance is a key measure of an organization’s duty of care.” There are two aspects to the issue of health that are equally important. On the one hand, employees may be exposed to actual physical threats in their job (e.g. heavy machinery, chemicals or contagious diseases) which are issues of occupational safety. On the other hand, negative effects of work on private life and job-related stress affect employees’ mental health, which may result in psychosomatic disorders, injuries on the job and even death. “…Health functions as a kind of social accountant. If health suffers, it tells us that human needs are not being met.”
Concerning both physical and mental health issues including those arising from poor work-life integration, it is HRM’s responsibility to implement effective health and safety management practices and ensure their official status. The GRI guidelines pay much attention to employee training on health and safety issues as well as formal involvement of the workforce in creation and control of safety practices as it helps to facilitate and develop “a positive health and safety culture”.
Empirical studies prove that the amount of control employees exercise over their job activities and career have a direct effect on their psychological and physical health. If employees have little or no discretion over the pace and content of their work as well as possibilities of their growth within the company, they experience stress and, consequently, lower motivation and productivity. That’s why HRM should ensure an appropriate job design for every employee and foster transparency in career progression schemes.
Another facet to employees’ control over their work is their involvement in changes and decisions on organizational level. There are degrees to the employees’ engagement – they can be merely informed, asked for feedback or have a say by means of workforce representation. The third alternative should be aspired to as it reflects true employee inclusiveness. Collaboration and timely consultation with employees in situations when their interests may be infringed, show that management cares for employees’ well-being. In times of organizational changes, this approach maintains mutual respect in employee-employer relations. It enhances employees’ satisfaction and commitment, reduces negative effects on local communities as well as lowers turnover and operational disruptions.
Even if a company does not pursue sustainability, formal employee training and performance appraisals are an integral part of any full-fledged HRM system. The objective is to fill the gaps in employees’ knowledge and skills, which will result in their enhanced capabilities and performance beneficial for the company. However, from sustainability perspective, the ultimate goal is employees’ well-being and, thus, initiatives in professional and personal development should primarily aim to increase employees’ value as active stakeholders and improve their employability. Developing employees’ knowledge and competences throughout their tenure, the employer makes sure that their employees are able “to adapt to a rapidly-changing labour market and to participate actively in all spheres of economic life”.
In terms of outcomes, this approach enhances employees’ personal value and, thus, financial security. It contributes to employee satisfaction, motivation, loyalty and productivity. For the organization, more capable workforce means growth of human and economic capital. Moreover, there are benefits for the society: larger amounts of employable workforce equipped to meet the challenges of a dynamic labor market, lower unemployment levels and related costs for the society.
Discrimination of any kind – be it based on gender, age, religion, race or other factors – is unethical and has negative impact on employees’ economic, physical and psychological well-being. It is HRM’s duty to promote equal opportunity and diversity in the workplace through relevant policies in various aspects of employment relationship and regularly monitor the results. It is possible to detect signs of inequality by breaking down employees into diversity categories and calculating their percentage in general workforce population, management level as well as in rates of new hires and turnover. Such approach will give insights into the issue from different angles and help respond appropriately. HRM should also look out for disparity in such aspects as remuneration levels between men and women or return to work and retention rates after parental leave by gender. More men taking advantage of leave entitlements has a positive effect for women in taking such leave without prejudicing their career path. Equality of remuneration is a factor in retaining qualified employees in the workforce.
Encouraging diversity and equality, organizations contribute to various beneficial internal and external outcomes. For employees it means better security, high morale and job satisfaction. Organizations in their turn achieve increased recruitment and retention of qualified staff. On top of that, they benefit from a richer human capital as diverse human resources have more capabilities to offer. In particular, it applies to hiring locals who have “insider” knowledge. For local communities it ensures optimal utilization of available labor and, as a result, lower unemployment rates and reinforcement of local economy.
The given array of objectives and corresponding areas of impact show how sustainable HRM can ensure multiple benefits for employees, organization and society while serving the higher goal of employee well-being. To see specific real-life examples of sustainable HRM practices, the next chapter will deliver a case study of Sustainalytics, a company deeply committed to sustainability.
Sustainalytics strives to promote the health and wellbeing of employees and to encourage high levels of performance and attendance. The company recognizes the importance of balancing employees’ personal and professional lives and provides policies, programs and a work environment that support employees dealing with necessary absences from the workplace as well as maintain employees’ physical and mental health.
The flexible work arrangements allow employees to work remotely up to two days per month under certain circumstances. Regarding the office hours, employees can agree with their manager to arrive later and leave later or the other way around. As Birenbaum, Senior HR Manager at Sustainalytics says, “We’re not punching in and out. We’re focused on results”. Also, taken the great national diversity of every office, employees working abroad can spend two weeks per year working from their home country. Additionally, there is a policy supporting employees to transfer to another company’s office abroad, for professional or personal reasons.
Other work-life integration practices include flexible return-to-work for employees who are on maternity or parental leave; wellness subsidies (for example, in the Singapore office employees are entitled to SGD $64 per month to spend on sporting activities and in Timisoara, the company pays for gym memberships) and the Employee Assistance Programme, which is a company-paid, confidential counselling service.
Due Sustainalytics’s core business in ESG-research, it tends to attract people with sustainability values. Taken this factor, its HRM function adds another facet to work-life integration, stating that it “also means tapping into employees’ motivations for working with a company like Sustainalytics. To that end, programmes such as our annual Global Volunteer Day, employee exchanges […], and various social events connect employees with their passion for sustainability, entrepreneurialism, and desire to be a part of something more than just a workplace.”
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