Organizational Sustainability - Essay Example

Organizational sustainability xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Organizational sustainability Sustainability and corporate social responsibility are increasingly becoming crucial issues in modern organizations. Although the term ‘organizational sustainability’ has received a variety of definitions across borders and over time, in essence it means the ability of an organization to meet the current needs of its customers and not compromising its future prospects of satisfying its customers (Khan 2010). Increasing societal demands and regulatory pressures for greater social and environmental responsibility have ultimately redirected the focus of many organizations towards sustainable enterprises. Liebowitz (2010) defines a sustainable organization as one that simultaneously contributes to the triple bottom line of social, environmental and economic benefits to the larger society while at the same time ensuring its long-term survival. Employees and investors endorse a sustainable organization as a good corporate citizen and as one able to create value for its stakeholders. Research studies indicate that firms focused on sustainability are more likely to accrue positive corporate and financial performance. In organizations pursuing sustainability, the HR has a crucial role to play. Its function is uniquely positioned to establish and implement sustainability strategy. Furthermore, the HR function is to develop and achieve social and environmental goals while simultaneously striking a balance of these objectives with metrics of traditional financial performance. The HR is a key partner in determining the needs of the organization as well the feasibility of sustainability strategies and corporate values. Being in close contact with employees, the HR plays a crucial role in ensuring that strategies are consistently implemented by all members of the organization. Generally speaking, a sustainable HRM is one with the ability to attain a profitable triple bottom line through creation of a workforce that has motivation, skills, values and trust (Savitz and Weber 2006). A compelling example of a sustainable HRM is one that encourages its employees to acquire knowledge concerning environmental pollution through training and development programs. Sustainable HRM also entails expounding the HR function in the organization. As sustainability strategies are constantly being changed by changing business environments, the HR must be flexible in terms of transforming the way it performs its core responsibilities and revising its own mandate. Of importance in ensuring sustainability is to create a HR manager who is conceived as an enabler and mediator between the organization and the sustainability strategy. This essentially means taking up perspectives and roles that were initially not part of the HR brief. For instance, the HR must reconsider who the organizations stakeholders are so as to formulate sustainability strategies that comply with the needs of each of these groups. Royal, C, and Daneshgar (2003) contend that only through the realization of increasing demand for sustainable companies can the HR function safeguard its own survival and become an indispensible corporate and business partner. Several studies reveal that a HRM that is sufficiently sustainable can significantly contribute to simultaneous achievement of social, environmental and economic goals. Majority of these researches have linked this finding on the use of HR functions such as training and development, rewarding, communication and good selection methods. “Green HRM” has been recently coined to describe this phenomenon. The term basically describes the role of the HRM in enabling employee creativity, motivation and engagement in finding new ways of improving quality, designing eco-friendly products and reducing inputs (Royal and Daneshgar 2003). Toyota achieved tremendous profitability and was actually termed as a distinguished sustainability leader in 2005 for its astounding innovation of a hybrid car model that was designed to use less fuel than other conventional models (Staunton et al 2006). The company exemplifies a sustainable HRM that encourages its employees to explore innovative strategies to develop the company. Supervisory support designed to encourage employees has been found to influence employees’ actions towards the environment. Besides that, effective communication of the pro-environmental contribution of the company in addition to adopting a sustainable HRM has a positive reputational effect. This serves to attract a pool of highly experienced and competent employees which ultimately lowers training and recruitment costs and adds value to the financial bottom line. The basic role of the HRM in achieving social sustainability is to ensure that commitment, job satisfaction and trust are sufficiently high throughout the organization through establishment of sustainable HRM policies. Social sustainability can also be achieved by changing the mindset of the leadership to address issues external and internal to the company. Leadership development is another critical area in the sustainability architecture. Leaders should inherently offer leadership development opportunities for their high potential employees. Besides training and developing them in relevant areas, managers ought to involve these employees in corporate and business decision making processes (Doppelt 2003). Liebowitz (2010) maintains that organizational sustainability goes beyond physical actions of the organization towards the physical environment. Insufficient sick days and vacations, curtailed access to healthcare and workplace stress creates externalities and costs the same way pollution creates costs. The case of Wal-Mart clearly exemplifies this argument. The company which is at the forefront in environmental conservation seems to be less interested in the welfare of its workers. In 2005, Wal-Mart was hard hit by a scandal for lack of health insurance for its employees and their children and underpayment for associate employees. Suffering a really tainted image of a “stingy” employer caused the company to lose a great deal of customers (Davis 2007). The first step in building a sustainable enterprise is to ensure that HRM are conversant with and adopt sustainability practices detailed in leading global frameworks. There are a number of corporate sustainability strategy frameworks that exist although only a few are applicable, comprehensive and global to the majority of companies. Some of the most credible frameworks include the Global Reporting Initiative (GRI), International Standards ASO26000, SA8000, OECD Guideline for Multinational Enterprises and United Nations Global Compact. Royal and Daneshgar (2003) maintain that whichever the framework is adopted, the HR manager should ensure that its core functions relating to communication, organizational culture, compensation, safety and well-being of employee, workplace and facilities, training, development, recruitment and protection of employee rights are adequately aligned with the framework. Monitoring and evaluation are also paramount in the process of maintaining sustainability. The HR manager should preferably use metrics-based tools to measure performance parameters of HR sustainability and report this both internally and externally. In conclusion, central to attaining a sustainable enterprise is to revitalize the HRM. This is because the HRM plays a fundamental role in the designing and implementation of sustainability strategies. Being a mediator between top management and employees as well as between internal stakeholders and external stakeholders, the HRM is well positioned to ensure that sustainability policies are sufficiently communicated to all stakeholders of the organization. So as to be considered as a value added function and a strategic partner in pursuit of sustainability, the HR needs to first identify the sustainability context of the organization then align it to the new policies accordingly. Proper management of the sustainability process requires adoption of a comprehensive process of developing HR practices and policies, understanding and engaging stakeholders and tracking and reporting performance. By incorporating these processes into its mainstream functions, the HR will not only support organizational sustainability but will also align itself to leading global sustainability frameworks being used by successful Multinational companies such as Coca Cola. Corporate citizenship and climate change Climate change has indeed captured the attention of many organizations because of its actual or prospective strategic impact upon these organizations. According to Hamann (2006) the impacts are expected to affect businesses in different dimensions. Climate change presents a vast range of opportunities and risks for companies that produce fossil fuel (oil companies), those that depend on these fuels for their day-to-day running (transport and manufacturing companies) and well companies in the support industry (insurance and banks). In general, corporations will be required to develop new business ideas, avoid legal liabilities, enhance and protect their ethical images and respond to stakeholders and government regulators. These factors underpin the concept of corporate citizenship. Corporate citizenship means developing a mutually trusting, interactive and beneficial relationship between the organization and its stakeholders who include investors, NGOs, governments, suppliers, communities, customers and employees. Corporate citizenship is not a special function of the organization but is essentially demonstrated in the way an organization implements its operating practices and strategies. In this regard, good corporate citizenship means treating all stakeholders including the natural environment with utmost respect and dignity. Underpinning this concept is the organization’s realization of the potential impacts of its actions towards its stakeholders. Therefore, companies should endeavor to work with collaboration with all stakeholders in order to achieve the mutually perceived results (Kolk and Pinkse 2005). Corporate citizenship has been a key driver to corporate response to climate change by organizations across the globe. The need to retain organization’s legitimacy, improve long terms profitability, reduce costs and enhance competitiveness constitute the major motivators for corporate response to climate issues. Organizational theories contend that response to environmental issues such as climate change is factored by firm characteristics and industry structure. As such, response to environmental changes has a significantly positive effect on competitiveness as it induces long term profitability through product reliability and process efficiencies. A company that intends to achieve these process and product capabilities has to invest in new capital equipment, process intensification and green marketing. Hamann (2006) argues that as part of the corporate strategy, companies focus on resource efficiency and productivity through improved innovation thus offsetting redundant operating costs which makes the company more profitable and competitive. Of importance when designing environmentally friendly products is to comprehend customers concerns and to carefully scrutinize the product life cycle. FedEx is a compelling example of the effectiveness of process improvement. Replacement of its old aircrafts with Boeing 757s, through its Fuel Sense Program, has enabled the company to dramatically reduce its energy consumption by about 36% and increased efficiency by 20%. This initiative has also enhanced development of a set of software programs aimed at increasing efficiency of flight schedules as well as development of hybrid vans which are 42% more fuel efficient than conventional vehicles. The BP Deepwater Horizon disaster which occurred in 2010 provides a deep insight into the complexity of corporate citizenship with regard to environmental protection. The oil spill underscored the risk assumed by the oil and gas industry. Besides health and safety risks, oil and gas industries are bound to liability risks and reputational risks. As in the Deepwater Horizon disaster, exploration and processing of oil is often challenging in terms of technicalities involved. In actual fact, all processes involved in production of the final product including transportation are subject to human errors. In a bid to control the prevalence of risks and harm experienced in the oil and gas industries, governments have put in place laws and regulations specifying safety standards, limits on emissions of pollutants and licensing requirements (Spence 2011). Even with the existence of these regulations, societies expect the oils and gas industries to self regulate; use their own capabilities to guard the society against environmental harm rather than simply follow standards and laws. As part of its social corporate responsibility, BP acted swiftly to communicate the crisis with its key stakeholders. Coming on air through international media, the CEO announced that it had the situation under control and it had taken full responsibility for its action. By doing this, BP demonstrated an interest for the public through transparency a key factor in corporate citizenship. It became the main point of contact with the local community eliminating space for propaganda from other parties. The disaster served as a cruel reminder of the importance of corporate citizenship. Communication strategies in the organization have since been redefined corporate position that mainly emphasizes on advertisement to one that focuses on developing sustainable relationships with stakeholders. This implies clearly identifying stakeholders, knowing them betters and maintaining regular discussions with them especially over sensitive situations. Although accidents are inevitable in the oil and gas industry, government and society pressures for social responsibility will continue to mount which therefore requires companies such as BP to install better production capabilities to avert future accidents (Cherry and Sneirson 2010). In conclusion, climate change has become part of business in many organizations. This due to the actual and potential risks and opportunities involved in climate change implications. Climate change is an issue affecting companies in all industries and as such there is need for individual companies, industries and multinational corporations to work in unity to alleviate the situation. Climate change is today a key indicator of corporate citizenship in organizations as citizens expect companies to act in the most ethical manner favoring the larger society. Beside the laid down laws and regulations, companies should use their capabilities to ensure efficient production processes that are environmentally friendly. Insight into the BP Deepwater Horizon disaster provides a conceptual framework explaining the importance of corporate citizenship. Despite having remarkable corporate communication strategies, BP needs to employ powerful production and process strategies to prevent a repeat of the incident in future. References Cherry, M, and Sneirson, J 2010, Beyond profit: rethinking corporate social responsibility and governance after the BP oil disaster. Tulane law review, Volume 85, Issue 4, p. 983-961. Doppelt, B 2003, Leading Change toward Sustainability: A Change Management Guide For Business, Government And Civil Society, Sheffield, UK: Greenleaf Publishing Limited. Hamann, R 2006, Can Business Make Decisive Contributions to Development? Towards a Research Agenda on Corporate Citizenship and Beyond. Development Southern Africa, Volume 23, Issue 2, p. 176-195. Khan, M 2010, Effects of human resource management practices on organizational performance-An empirical study of oil and gas industry in Pakistan. European journal of economics, finance and administrative sciences. Volume1, Issue 24. Kolk, A, and Pinkse, J 2005, Business Responses to Climate Change: Identifying Emergent Strategies. California Management Review, Volume 47, Issue 3, p. 6-20. Liebowitz, J 2010, The role of HR in achieving a sustainable culture. Journal of sustainable development, volume 3, issue 4. Royal, C, and Daneshgar, F 2003, Facilitating organizational sustainability through exert investment systems. Electronic journal of knowledge management, Volume 1, Issue 2, p. 167-176. Savitz, A, and Weber, K 2006, The Triple Bottom Line, San Francisco: Jossey Bass. Spence, D 2011, Corporate social responsibility in the oil and gas industry: the importance of reputational risk. Chicago-Kent law review, Volume 86, Issue 1, p. 59-89. Staunton, R, Marlino, L, Chiasson, J, and Burress, T 2006, Evaluation of 2004 Toyota Prius Hybrid Electric Drive System, Oak Ridge National Laboratory Technical Report, ORNL/TM-2006/423. Davis, N 2007, Corporate reputation management, the Wal-Mart ways: exploring effective strategies in the global market place. Senior honors thesis. Read More