How Workplace Culture Can Support Sustainable BusinessPietro Ferrero Chair in Sustainability and Director of the Center for Sustainable Business at European School of Management and Technology, Berlin Senior Sustainability Scientist at Arizona State University Partner at Mercer Career Senior Associate at Mercer Career
The importance of workplace culture is growing fast — in terms of job seekers looking for conscious workplaces and in terms of companies seeking to communicate their values externally. We’ve seen how common toxic work cultures can be and how they’ve led to real consequences for business’ reputations and, thus, bottom lines.
Some companies are choosing to incorporate sustainability practices into their culture in an effort to gain a competitive advantage while contributing to social good. A culture of sustainability can protect business operations for the long term, for example, by acknowledging the risk of biodiversity loss and the role it plays in supply chains. On a larger scale, it contributes to the United Nations’ Sustainable Development Goals.
What Is Organizational Culture?
Culture arises in a group of people from a series of understood notions that are validated by repetition over time and then passed on to a wider group of employees or those who are new to an organization.
The concept of a “sustainability culture” implies that sustainability principles are embedded at all levels of the organizational culture, including its values and underlying assumptions. While many researchers believe that particular organizational cultures are more suited to achieving sustainability goals, others argue that sustainability principles can be embedded within all organizational culture types and, thus, create a diverse set of sustainability cultures.
How Do We Identify Culture?
One of the most widely used frameworks to determine organizational culture is the Competing Values Framework. This framework identifies the four culture types of Clan, Adhocracy, Hierarchy and Market, which can coexist within a single firm.
A clan culture can be thought of as group culture. It values and rewards trust and commitment, and decision-making is usually decentralized and achieved through cooperation. Companies with this culture style include New Belgium Brewing Company, Google, Zappos and Tom’s of Maine.
Adhocracy culture implies a development culture. It values growth and resource acquisition. There is a focus on innovation and external orientation, and there is an emphasis on informal coordination and control. Facebook, Google and Apple represent this type of culture.
Hierarchical culture values conformity, enforcement of rules, achieving stability and control, precise communication and data-based decision-making. There is an emphasis on vertical communication, and compliance is enforced through rules and regulations. McDonald’s, the DMV and Ford Motor Co. use the hierarchical framework.
Market culture reflects a rational-goal culture. It values efficiency, productivity, goal-setting, instructional communication and centralized decision-making. There is an emphasis on goals and outcomes. Walmart, Uber, Apple and Amazon exemplify the market framework.
How Does Culture Impact Sustainability Strategies?
Each organization, depending on its culture, would likely be predisposed to certain types of sustainability strategies. That is to say, they would be more likely to succeed at the implementation of certain strategies that are more aligned with their culture, as opposed to others.
Here’s how these dispositions would play out in the four frameworks: Clan-culture organizations tend toward employee-related initiatives, education and training, diversity and inclusion, and equity and fair work; adhocracy-culture organizations tend toward creating new green products and services and sustainable innovation; hierarchical-culture organizations tend toward eco-efficiency, value creation and resource efficiency; and market-culture organizations tend toward stakeholder engagement (suppliers and customers), community development and differentiation strategies.
Sustainability initiatives are quite removed from the core business and are not as value-generating as they could be, so the objective should be to have sustainability embedded across the organization’s core.
How to Develop a Sustainable Culture
Companies leading the sustainability charge around the world have endowed their employees and other stakeholders with a sense of sustainability ownership — such that sustainability is everyone’s job — no exceptions. CB Bhattacharya, professor at the University of Pittsburgh and author of the book Small Actions Big Difference: Leveraging Corporate Sustainability to Drive Business and Societal Value, has developed a “Sustainability Ownership Model” that is designed to instill a shared sense of responsibility for sustainable efforts throughout organizations of all sizes. It includes the three following phases:
- Incubate: A solid sustainability plan starts by being incubated with the leadership team. Contour the sustainability domain by answering fundamental questions about the purpose of the business: Who are we? Why do we do what we do? Articulate how the firm creates value beyond shareholders’ pockets. Then, define concrete goals by answering questions such as: How big is our ecological footprint? What are its main contributors? What do our stakeholders want? Generate a list of material issues across the entire value chain and prioritize them by biggest potential impact.
- Launch: Company leaders must educate stakeholders about the connections between business and sustainability goals and give them the tools needed for success. Show stakeholders that sustainability is an opportunity to contribute to the future well-being of the company and the world. Enable ownership by putting systems, structures and training in place that lower the costs and increase the benefits of acting sustainably. And give stakeholders the tools, confidence and freedom they need to contribute to sustainability goals.
- Entrench: Finally, leaders have to make sustainability part of the everyday routine — something people just do. Demystify stakeholders’ contributions to the achievement of sustainability targets by measuring key performance indicators and providing ongoing feedback on sustainability targets so they learn how sustainability works and how they are contributing to achieving goals. Developing events and practices will keep the focus on sustainability fresh and relevant, along with committing to “the three Cs”: co-creation, communication and celebration. Expand feelings of ownership by building broader industry collaborations to address the tragedies and common problems of sustainability, such as deforestation.
In each phase, sustainability is given status and prestige, and stakeholders have the opportunity to gain a deep understanding of, make creative contributions to and invest themselves in sustainability. These efforts will ultimately create the systemic changes that our planet, its people and our businesses need.
Common Issues in Developing a Sustainability Culture
All too often, different business units have their own ideas of what sustainability is and how it should be managed. In many other cases, sustainability initiatives are in place at the organizational level; however, these responsibilities fall within a small number of people who largely operate independently from the rest of the organization.
Sustainability initiatives are, therefore, quite removed from the core business and are not as impactful and/or as value-generating as they could be. The objective should be to have sustainability embedded across the organization’s core — including business strategy, people management and operational practices.
Where to Start?
Assess the current-state — the extent to which strategy, people management and practices are currently aligned to sustainability. A prioritization phase can then ensue, whereby the most pressing barriers to sustainability are targeted as initial areas for improvement.
For example, perhaps executives are purely incentivized toward short-term gains — this can be detrimental not only to the sustainability agenda, but also to shareholder returns. Revisiting executive compensation and performance management strategies may be a good place to start for certain organizations.
Regardless of what areas are seen as priorities for required improvement, be it executive compensation, defining the organization’s purpose or more carefully managing suppliers, the change must then be managed as any other organizational change initiative would be: with effective change management and in collaboration with teams across the organization.
This includes gaining sponsorship from the CEO and support from respected change champions throughout the business, putting in place effective governance to manage the change, planning for effective communication, delivering required trainings and adapting HR programs as needed to better support the change. These HR programs could include compensation and performance management, as well as managing the employee lifecycle, from pre-recruitment to termination. It is also important to help people across the organization understand their role in advancing sustainability — consider what is relevant to people in risk management, in marketing, in procurement, in site management and in finance, etc.
Consider the alignment of your organization’s culture to desirable sustainability attributes on an ongoing basis. Measurement tools can provide insight into tracking progress toward organizational sustainability, as well as the level of maturity an organization has in embedding sustainability into the core business.