Elissavet Angeliki Psilou - Squarespace
Transcript of Elissavet Angeliki Psilou - Squarespace
Incentives for Effective Employee Engagement
in Corporate Sustainability
Elissavet Angeliki Psilou
A Thesis in the Field of Sustainability and Environmental Management
for the Degree of Master of Liberal Arts in Extension Studies
Harvard University
May 2011
ii
Copyright 2011, Elissavet Angeliki Psilou. All rights reserved.
iii
Abstract
Corporate sustainability has become very important in business practices. Research
shows that to successfully integrate the economic, environmental and social
responsibilities of sustainability into every business process, effective employee
engagement is necessary. This is an elusive objective even for organizations recognized
for their sustainability efforts. Companies need to improve their incentive frameworks to
enhance employee engagement in the corporate sustainability programs. The research
studies the significance of sustainability in modern business and the role of employee
engagement in the successful implementation of a sustainability strategy. The incentives
for employee engagement in corporate sustainability of four financial institutions are
presented. These frameworks include activity in four key areas; education on
sustainability, public demonstration of sustainable practices, activation of employee
involvement and rewards for sustainability achievement. The analysis and comparison
proves that there is a lack of performance incentives, which supports the hypothesis that
organizations committed to sustainability could benefit from establishing performance
incentives geared to foster effective employee engagement in the sustainability program.
Companies need to link performance evaluation criteria to sustainability targets so that
the employee reward system can be aligned to the sustainability strategy.
iv
Dedication
This thesis is dedicated to my late father, Dr. Diomedes D. Psilos, who showed
me that the most valuable tools in life are fearlessness and good research skills.
v
Acknowledgments
I would like to express my gratitude to my thesis director Dr. Robert B. Pojasek,
Adjunct Lecturer on Environmental Science at the Harvard School of Public Health. A
unique expert in the field of corporate sustainability, he pointed me toward new research
angles on current topics and exceptional sources of information. He kindly and patiently
gave me invaluable guidance and support, without which, this research could not have
been completed. His forward-looking mentality made this an enlightening experience.
I would also like to thank the sustainability professionals interviewed during my
research effort, for taking the time to discuss this interesting topic. They provided me
with important insight on the implementation process of corporate sustainability
programs.
Lastly, I would like to thank my family especially my husband Dimitris for
providing the multi-faceted support needed to complete this thesis and the ALM in
Sustainability and Environmental Management.
vi
Table of Contents
Abstract iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables viii
List of Figures ix
Definition of Terms x
I. Introduction 1
II. Background 8
Introduction 8
Corporate Sustainability 8
Adopting a Higher Set of Values 10
Operational Performance 10
Building Reputation 11
Implementation Impediments 12
The Importance of Effective Employee Engagement 14
Achieving and Maintaining an Engaged Workforce 17
Education 18
Incentives 19
Enhancing Employee Motivation 22
III. Research Methods 25
The Case Method 25
Research Design 24
Data Collection 30
Case Selection 30
vii
Interviewing Process 33
Interview Questions 34
Analysis Method 36
Limitations 36
IV. Results 39
Case Findings 39
Case 1 42
Case 2 50
Case 3 57
Case 4 57
Cross-Case Analysis 62
Interview Findings 67
V. Discussion 71
Introduction 71
Misleading Workforce Engagement Assessments 72
Corporate Sustainability Incentive Frameworks 73
Obstacles to Effective Employee Engagement in Sustainability Programs 74
Enhancing Incentives for Engagement in Sustainability Programs 76
Linking Performance Incentives to the Sustainability Targets 78
Recommendations for Further Research 80
VI. Bibliography 83
viii
List of Tables
Table 1: Case Characteristics 31
Table 2: Sustainability Incentives 66
ix
List of Figures
Figure 1: Research Protocol 29
x
Definition of Terms
sustaining and enhancing the environment, social and economic resources needed for the
environmental considerations in business strategy and practices (Strandberg Consulting,
2009).
performance on the job. These can be monetary--like fixed and variable pay--or non-
monetary, in the form of recognition, awards or additional time off.
ers by which companies assess
employee performance.
social and environmental goals, such as
measurable waste, pollution and energy reduction targets, community contribution,
olume.
1
Chapter I
Introduction
Recent surveys have found that sustainability is increasingly becoming part of the
way business is conducted. A variety of drivers--consumer concerns, employee interest
and government regulations--have all contributed to this trend (MIT Sloan Management
Review, 2009) of balancing the economic, social and environmental considerations in
strategy and practices (Strandberg Consulting, 2009). By making sustainability part of
what every employee does every day, it is possible for organizations to operate more
efficiently, improve risk management, enhance value (Pojasek, 2007a) and build
reputation. At the same time, they can contribute to the conservation of natural resources,
pollution prevention as well as multiple aspects of social equity. While the details of
planning and implementation of corporate sustainability programs differ according to the
-
(MIT Sloan, 2009, p.5).
To successfully implement a sustainability program, company commitment
should drive the effort for continuous improvement, permeating every operation. The
hierarchy. However, most methods for involving the workforce are not effective in
creating this top to bottom employee involvement. Traditionally, companies engage
employees in a sustainability program by instructing them to act differently and educating
2
them on how to do so. Studies demonstrate that this is simply not enough. Employees
often resist change and remain disengaged from the new programs. This poses a major
impediment to program success (Miles, 2010).
Business leaders in approximately seventy countries have adopted the principles
of national performance frameworks. The general purpose of these programs is to provide
standards and criteria to guide continual improvement (Pojasek, 2007a). They cover
strategy and planning practices, safety and fairness in the working environment and
efficiency of processes, among other principles (Pojasek, 2007a). Studies have shown
that organizations using framework criteria tend to financially outperform their peers by
more than two to one (Pojasek, 2009c). Also suggested, is seeking the involvement of
employees from the planning stages of a sustainability program. Such an approach
should include feedback mechanisms and the assignment of distinct responsibilities and
authority. Sustainability professionals need to embrace these proven performance
methods to ensure the engagement of employees when working to have a company act
responsibly in all three sustainability dimensions: environmental, social and economic
(Pojasek, 2010). The successful operation of any business depends significantly on the
level of engagement of its employees (Pojasek, 2008), especially so during corporate
transformation efforts.
Business performance frameworks and management systems are in widespread
use to help companies involve people in environment, health and safety as well as social
responsibility programs. These systems also provide guidance on how to address
employee incentives and recognition in process improvement programs. For any
3
organization seeking sustainability, this should be a priority. Research has identified
incentives as one of the key drivers of employee engagement, resulting in higher levels of
involvement, innovation, productivity and profits (Castellano, W. G., 2009).
Sustainability programs could benefit from including the right incentives as leading
indicators of employee engagement, and clearly linking them to the metrics that are
When establishing two-way
communication with employees, managers should find ways to improve planning a
sustainability program by establishing appropriate incentives toward the new goals. But
exactly how could organizations committed to sustainability improve their incentives for
effective employee engagement in corporate sustainability?
Recent research makes it evident that corporate incentive plans that influence
workforce objectives should stem from the business goals (Gordon & Kaswin, 2010).
Additional research points out should be applied
to performance evaluation as well as management (Hamdouch & Zuindeau, 2009). A
recent study on the assessment of sustainability integration in corporate strategy
advocates the establishment of concise incentive/disincentive and monitoring systems to
that end (Hallstedt et al., 2009). Meanwhile, research Green
in sustainability (Fleischer, 2009).
In sustainability management systems, the three responsibilities--environmental,
social and economic--should be integrated in every standard and operation of the
organization. This should include the set of values that companies use as measures of
4
employee performance. However, research shows that in most companies today, the
change in performance expectations is not evident through the corporate incentives that
drive the daily effort of employees. There is yet to be a widespread alignment of
incentives with the change strategy for sustainability. (Economist Intelligence Unit,
2010). In other words, in the vast majority of organizations, evaluation criteria have not
progressed to reflect the new measures of success. These higher standards are no longer
merely profit-related, but now include specific environmental and social targets, most of
w
principles and increase the chances of the successful and timely implementation of a
corporate sustainability program. Linking evaluation criteria to sustainability targets
would promote the desired behaviors throughout the organization and ensure the
alignment of individual advancement goals with the corporate sustainability strategy.
Therefore, the hypothesis of this research is that organizations committed to
sustainability could benefit from establishing performance incentives geared to foster
effective employee engagement in the sustainability program, as a way to provide
motivation to help internalize sustainability in everything employees do, fostering
continual improvement. It is crucial that employees, this key stakeholder group, address
the three responsibilities in every corporate task, extend the mentality of sustainability to
their personal lives and eventually influence external stakeholders accordingly.
To prove the hypothesis, this research used the case study method (Yin, 2009). A
cross-case comparison of five organizations with accredited sustainability programs
within the financial sector was conducted. Sustainability success was assessed according
5
to an organi
been established as a means of benchmarking, as company sustainability information and
rankings increasingly influence investment companies in their allocation of capital
(Delmas & Doctori Blass, 2009).
To safeguard against inaccurate data, the companies selected for this research are
all publicly traded, multi-national companies. Published sustainability reports were used
to determine how these companies create frameworks for employee involvement in
corporate sustainability. The employee incentives for engagement in the sustainability
program within each of these organizations served as the unit of analysis in this research.
A review of the literature, including surveys, articles and peer-reviewed papers,
provided the findings regarding employee engagement, sustainability and change
management practices, which is presented as background information. It should be noted
that the practices of corporate sustainability are rapidly evolving. Therefore, the literature
review is as current as possible, considering the time constraints of this study.
To further investigate the matter, ten short interviews were conducted with
sustainability officers and consultants in the United States and Europe. In compliance
with the initial research design (Yin, 2009), the data collected was analyzed according to
the research protocol. This is described in detail in Chapter III (Methods) of this paper.
The facts from the individual case studies and the cross-case comparison are
presented in Chapter IV (Results). The evidence, its significance and the validity of the
Hypothesis is discussed in detail in Chapter V (Discussion), as are potential research
implications of the findings.
6
The researcher reviewed incentives that were implemented to engage employees
in corporate sustainability. The priority given to employee engagement and how it is
measured within organizations was also studied. Various actions and initiatives that aim
to involve the workforce in practices of sustainability were recorded. An effort was made
to identify patterns in employee involvement plans and to determine whether
performance evaluation and reward systems are indeed inconsistent with the commitment
to the sustainability strategy. Any conclusions derived from the analysis of the research
findings could be generally applied to most corporate environments. Therefore, this work
could help researchers in the area of sustainability learn how to increase the probability of
its success, by strategically avoiding employee resistance to change. It could also help
resolve the still widespread contradiction of rewarding contributions to value increase
rather than rewarding response to all three responsibilities of sustainability. This research
could also help in the development of corporate incentives that will support organizations
in their pursuit of sustainability, provide information on how to successfully integrate it
into every-day operations as well as how to develop effective measures of accountability.
Other outcomes of the research could include enriching knowledge about what drives
employees; for example, interesting questions could be raised about how to create a more
satisfied workforce and strengthen the employer-employee relationship. In addition, this
information could be applied to similarly motivate other important stakeholder groups.
The transition to the higher set of values that sustainability proposes has been
generally introduced to the corporate world. However, it can only be effective if people
7
are provided with powerful incentives to become involved and, eventually adopt the
mentality of sustainability in an all-inclusive manner.
8
Chapter II
Background
Introduction
Over the past decade, the concept of sustainability spread beyond forward-
thinking organizations. It is now encountered in most businesses that want to remain
competitive. This section seeks to familiarize the reader with the concept of
sustainability. A presentation of the definitions, theory and practices of corporate
sustainability will be followed by an overview of currently implemented strategies for
addressing employee engagement.
Corporate Sustainability
Sustainability--sometimes referred to as Corporate Social Responsibility (CSR),
Corporate Responsibility (CR), or even Responsible Competitiveness (Network for
Business Sustainability & Canadian Business for Social Responsibility, 2010)--has
become very important to management theory and practices, while the perceived risk of
inaction is increasing (MIT Sloan, 2009). A 2008 survey among executives from twenty-
five countries and forty industries showed 70% of the participating companies already
having or developing a sustainability program (Vandiver Group, Inc., 2009). Stakeholder
demands have enhanced this trend, as have data that demonstrate the influence of
sustainability programs on stock profits (Dow Jones Sustainability Index, & SAM,
9
2011a). By striving for sustainability, organizations aim to fulfill their needs and those of
their stakeholders
p.81). Sustainability can benefit a business in both the short and long terms because it
embodies a systemic approach that helps retain competitive advantage, enhance
reputation and foster stakeholder trust (Strandberg Consulting, 2009).
However, another survey that also focused on executives from a wide range of
industries showed that among the 92% of respondents who address sustainability, only
the more adept acknowledge the full range of related responsibilities (MIT Sloan, 2009).
It is not yet widely understood that the very concept of sustainability encompasses three
dimensions that can help each other advance when addressed simultaneously. The
economic responsibilities are now complemented by more complex environmental and
social sets of duties. The environmental tasks include respecting the limitations of natural
resources, preventing pollution and safeguarding ecosystem functions. The social tasks
effective community contribution (Dyllick & Hockerts, 2002). The newly added
corporate responsibilities of environmental stewardship and applied social well-being and
equity are rapidly altering the way business is conducted. With this new approach to
generating value well under way, it is evident that corporations have the opportunity to
provide a significant example of a sustainable way of life--to governments and
individuals alike.
10
Adopting a Higher Set of Values
By adopting the principles of sustainability, professionals offer the promise of a
future of cultural prosperity, social equity and natural wealth (Dyllick & Hockerts, 2002).
position regarding the new code of ethics that sustainability proposes. More professionals
realize that, particularly in difficult financial times, transparent operation and clear
accountability are crucial for retaining a place in the market (SAM & PWC, 2010). It is
also now apparent that sustainability targets are more connected to long-term financial
success rather than immediate gain (Economist Intelligence Unit, 2010 and Dow Jones
Sustainability Index & SAM, 2011a).
Furthermore, evidence points out that screening for positive action influences
institutional investors in their choices (SAM & PWC, 2010). As of December 2010, more
than USD 8 billion were allocated to DJSI companies by asset managers (Dow Jones
Sustainability Index & SAM, 2011a). Sustainability is perceived as an indicator of sound
enlightened and disc
Sustainability Index & SAM, 2011b).
Operational Performance
The journey to successfully implementing a sustainability program often begins
with methodical improvements in the organization Starting in the
11
late 1980s, numerous performance frameworks were established to that end. These
frameworks offer principles for successful management that provide leading indicators of
an organizations performance. They incorporate standards for process organization and
human resource management, focusing on process improvement. One important
(Pojasek, 2008).
Some of the most prominent performance frameworks currently in use are:
- Criteria for Performance
Excellence (National Institute of Standards and Technology, 2010).
- SAI G The Business Excellence Framework (SAI Global, 2011).
- The
Fundamental Concepts of Excellence (2003).
respons
create a strong foundation for sustainability (Pojasek, 2008). This basis can lead to
further operational efficiency and innovation, as well as stronger ties with stakeholders
(NEEF, 2009).
Building Reputation
An organization committed to sustainability can steadily improve its reputation by
exercising transparency and contribution. However, it is necessary to keep stakeholders
informed. One way to do this is with the regular reporting of progress toward
12
(GRI) Sustainability Reporting Guidelines can facilitate this process, because they
include economic, environmental and social metrics (GRI, 2006). This form of public
reporting provides a way to benchmark against peers, track the progress of sustainability
efforts and demonstrate the transparency of operations to stakeholders.
In addition, recently established sustainability indices like the Dow Jones
Sustainability Index World 80, the Corporate Knights Research Group Global 100 and
the FTSE4GOOD Global 100 evaluate and list companies with exceptional performance
in all areas of sustainability. Inclusion in such indices is becoming a coveted corporate
To further improve their standing, an increasing number of companies are
officially adopting structured codes of operation and investment ethics like those of the
Equator Principles or the United N Principles for Responsible Investing (PRI).
Implementation Impediments
In practice, numerous difficulties impede the successful implementation of
corporate sustainability programs. Limited knowledge is one of the greatest obstacles,
according to
always have the case-specific facts on how to identify the range of sustainability changes
way in their companies, more than 70% have no clear business case for it. Interestingly,
however, the survey concludes that a fixed mentality (MIT Sloan, 2009) is probably the
13
most difficult barrier to overcome. Findings from a different survey among sustainability
p
cited three times more often than a weak business case as sustainability obstacles
(Brokaw, 2009, p. 34). Another problem noted was the slow spread of sustainability
education (Brokaw, 2009). The same survey pointed out a delay in understanding that
the rest attributing sustainability leadership to other positions or groups (Brokaw, 2009).
Inconsistent synchronization of employee evaluation metrics with the corporate
sustainability goals has also become noticeable (Way, 2010). Sustainability professionals,
consultants and academics suggest a number of strategic practices for addressing such
impediments.
It has been identified that the more people know, the more opportunity they see in
sustainability (MIT Sloan, 2009). Therefore, systematic education and training seems to
be the right way both to build a convincing economic case and to spread the know-how of
Orgain &
Nunez, 2010, p. 3). The result should be a workforce that is not only able to practice but
also to enrich the ideas of sustainability (Orgain & Nunez, 2010). Regarding the elusive
cultural change, the Network for Business Sustainability and Canadian Business for
Social Responsibility propose improvements in five key areas: structure, processes,
strategy, people and rewards (Network for Business Sustainability & Canadian Business
for Social Responsibility, 2010).
14
The consensus is that as in any attempted operational change, the human element
is the most likely to cause failure, eventually compromising the credibility of the
objectives (Palmer, 2004). Therefore, corporate sustainability requires stakeholder
engagement, and employees, as a key stakeholder group, should be thoroughly and
effectively involved in all stages of the process (Pojasek, 2008), including the definition
of performance goals (Argyris, 1998). As Yahoo director of climate and energy strategy
Chris Page noted, people enjoy being part of the solution (MIT Sloan, 2009).
The Importance of Effective Employee Engagement
Employee involvement is one of the key enablers for business success (Pojasek,
2008). An engaged individual will go beyond the ordinary call of duty to serve the goals
of the organization (Orgain & Nunez, 2010). What employee engagement programs
ultimately aim to achieve is operational effectiveness (Castellano, 2009) that will lead to
a competitive advantage (Schiemann & Kostman, 2005) that is more enduring and easier
to maintain (Pfeffer, 2005). By motivating employees towards a better outlook and
improved efficiency, companies become able to produce better and more innovative
products in less time (Riordan, Vandenberg & Richardson, 2005). By effectively
engaging employees, an organization can proceed from theory to practice of their
corporate commitments (World Business Council for Sustainable Development, 2010). It
is a strategic way of conducting business (Gallup, 2010).
A Gallup study of over one hundred and fifty organizations proved that
companies can earn a per share growth rate that is 3.9 times more than their competitors
15
if they achieve successful engagement (Gallup, 2010). Best Buy provides one other
successful example, as a 2% increase in engagement at one outlet equals a $100,000
annual rise in sales (Orgain & Nunez, 2010). Further findings based on thirty years of
research involving seventeen million employees, indicate that engagement influences
employee productivity and loyalty (Gallup, 2010). It has even been found to enhance
safety performance (Williams, 2008). Meanwhile, it has been estimated that about US
$300 billion worth of productivity is lost per year because of a lack of engagement in
occupation (Gallup, 2010).
Employee engagement is especially important in corporate transformation efforts.
In such cases, it is common for employees to react by distancing themselves from the
new processes (Argyris, 1998), especially for those who stand to be affected the most
(Palmer, 2004). Change management seeks to minimize the effects of this expected
resistance (Way, 2010). Therefore, it is important for leadership to assign specific
responsibilities so that the workforce can become motivated and engaged (Miles, 2010).
This should not be done by telling people what to do, but rather by involving them
beginning with the planning and implementation stages of the program (Pojasek, 2008).
When targets stem from a group effort they feel more familiar to employees (Mager &
Sibilia, 2010).
Employee engagement is an area where even performance frameworks lack in
content, as they focus more on customer-related standards (Pojasek, 2008). Even though
the importance of effective involvement is addressed and encouraged in management
systems and sustainability reporting protocols, none provide a sufficiently clear,
16
comprehensive and easy to implement recipe for effective employee engagement in a
corporate effort. Yola Carlough, Burt
sustainability targets for 2020 (Smart Planet, 2010). Despite this fact, there are successful
examples of employee engagement to be found in the corporate world.
A number of distinguished organizations are set apart by their human capital
management strategies (Pfeffer, 2005). Companies like Intel, Stonyfield, Wal-Mart,
General Electric Inc., PepsiCo, Nestle, Interface, Patagoni
Coffee, Xerox and Molson Coors are a few noteworthy examples of such organizations.
Furthermore, they have all applied measures, to different extents, to promote
sustainability through an engaged workforce. This can be achieved by providing a safe
and pleasant corporate environment, respect for personal life, fair compensation, rewards
that directly correspond to the corporate goals and the establishment of channels for
employee comments and input (Network for Business Sustainability & Canadian
Business for Social Responsibility, 2010). In certain cases, engagement promotion comes
from the employees themselves, in the form of voluntary groups that influence and act
ischer, 2009).
A sustainability program can succeed only if its values become embedded in the
throughout the workforce is crucial. Once involvement has started, a positive feedback
cycle can begin, as sustainability and engagement enhance each other, urging employees
to identify with something meaningful (Resnick Consulting, 2009).
17
Achieving and Maintaining an Engaged Workforce
The traditional guidelines on how to organize, educate and motivate the
workforce come from the principles of organizational behavior. Basic experimental
knowledge originating from centuries of observation is currently applied to the
management of people within the business context. As competition among organizations
human capital. The performance standards that help organizations identify problems and
opportunities for improvement in occupational health and safety or environmental
management, also help in the area of human resources.
The following are some examples:
- ISO 14001,
Environmental management systems (2004) and AS 8003, Corporate
Social Responsibility (2003).
- ISO 9001, Quality
Management Systems (2008).
- ISO 26000, Guidance in
Social Responsibility (2009).
- OSHAS 18001, Occupational Health and
Safety Management Systems (2007).
- Improving Business Performance
(http://www.investorsinpeople.co.uk/Pages/Home.aspx).
18
Despite this available guidance, data from a 2005 survey by Towers Perin found
only 14% of employees to be engaged (Attridge, 2009). A more recent global study
showed 21% of the workforce to be engaged (Gallup, 2010). This could indicate a trend
towards improved levels of involvement that could be attributed to the expansion of the
mentality for sustainability. Recently developed tools like the Gallup Q12 survey (Gallup,
2010) help companies track engagement and could also have contributed to this upward
trend. However, there is still a long way to go before an engaged workforce becomes the
common model. The aim of organizations committed to sustainability is to reach a ratio
of engaged to disengaged employees that is at least 8:1 (Gallup, 2010), which poses a
very challenging threshold.
There are many strategies and practices through which this can be worked on,
however. Providing sustainability education along with incentives is believed to be the
most effective way to advance the corporate goals (Orgain & Nunez, 2010 & NEEF,
2010) and train employees for long-term decision-making (World Business Council for
Sustainable Development, 2010).
Education
Management system standards and performance frameworks all address the
requirement for appropriate education and training of employees. Companies committed
to sustainability have to begin by defending the reasons for the changes to their
workforce (Castellano, S., 2000). Employees then need to learn how to alter their
behavior (Way, 2010). For these purposes, the appropriate resources need to be allocated
19
(Castellano, S., 2000) so that companies can offer lectures and multimedia presentations,
printed communication material and intranet sites (Balch, 2010). All these media can
facilitate the communication of facts, statistics and case studies to help employees
acquire and spread the knowledge required (Castellano, S., 2000) or become familiar
with new skills that may be needed (Bertels, Papania & Papania, 2010). In terms of
content detail, different approaches are used. For example, at Nike, general environmental
information is presented for employees to use wherever they think applicable, whereas at
BASF Corp
position (Makower, 2010).
The most common complaints regarding the processes of corporate education
highlight the need for custom training tools as well as ways of assessing the effectiveness
of these programs (NEEF, 2009). It has also been suggested that employers consider how
interested employees are in the topics (World Business Council for Sustainable
Develo
mentoring employees should not be neglected because it can provide beneficial
encouragement to sustainability novices (Bertels, Papalia & Papalia, 2010).
Incentives
It has been observed that motivation for sustainability is subject to
motivational hierarchy
concerned with the next levels of motivation, safety, belonging, esteem and self-
actualization--where individuals can identify with common ideals and goals (Mager &
20
Sibilia, 2010). Therefore, in corporate sustainability programs, remuneration, benefits and
identification with sustainability values can be expected (Mager & Sibilia, 2010).
Meanwhile, research shows that about 10% of any workforce is self-motivated, another
10% cannot be influenced, while the remaining 80% can be motivated towards behaviors
desired by management (Mager & Sibilia, 2010). To reach that available audience, there
is no clear method of choice of motives and performance incentives. Companies
committed to sustainability have applied many different strategies, ranging from practical
instigation incentives like subsidizing public transportation and walking shoes (Brighter
Planet, 2010) to publicly celebrating employee recognition.
In some companies, like Investa, employees can earn a diploma at the end of their
sustainability training (Economist Intelligence Unit, 2010). Campbell Soup established
environmental sustainability and community impact (Economist Intelligence Unit, 2010).
Hewlett-
The benefits of such incentives often translate to visible gains for the company. The
Xerox
million in addition to 2.6 million pounds of waste (Kaye, 2010).
In other cases, companies approach personal habits first. 2007
Orgain & Nunez, 2010).
Others build on community contribution like Nike
21
where 1,000 employees dedicated half a day to that cause (Makower, 2010). Simple
things like starting a trivia game to induce learning or installing a popcorn machine in the
recycling room, as was done at , can also prove very effective for changing
behaviors (Makower, 2010).
It seems that incentives are usually effective in view of the expected
corresponding reward (Castellano, S., 2010). Some believe that in sustainability
practices, recognition is enough to drive performance (Castellano, S., 2010). Others argue
that sustainability should become embedded into corporate rewards structures (Network
for Business Sustainability & Canadian Business for Social Responsibility, 2010) if it is
to become integrated in every-day business. Studies of corporate environmental programs
have shown that in order to align management incentives with organizational goals, top
deiro & Sakris, 2008). Governance
Metrics International (GMI) has recently begun screening for long-term sustainability
incentives in executive compensation (GMI, 2010). However, management research
findings indicate that if all gains from company efforts only benefit the top tiers of
management and shareholders, employees can become discouraged (Pfeffer, 2005). It
among the workforce. Recent evidence does suggest that as sustainability commitments
are rising in priority and a prompt workforce response is sought, companies are
increasingly linking sustainability targets to financial rewards (Economist Intelligence
Unit, 2010).
22
Hence, at Intel all bonuses depend on environmental performance (Fleischer,
2009). Employees at Stonyfield Farms devise plans toward sustainability goals within
progress made towards that goal (Stonyfield Farms, 2010). This approach resulted in
success for most goals (Stonyfield Farms, 2010). Glaxo Smith Kline managed a
significant reduction in energy use by linking the goal to bonuses (Network for Business
Sustainability, & Canadian Business for Social Responsibility, 2010). IBM offers $50,000
environmental awards that motivate employees from many disciplines to compete
(Makower, 2010).
These effective incentives schemes are, however, still limited to a few examples.
It seems that sustainability plans, like many prec
this case, the contradiction is the lack of alignment between corporate incentives and the
change strategy for sustainability. (Economist Intelligence Unit, 2010). This big
losing credibility.
Enhancing Employee Motivation
With the appropriate integration of recent findings and survey results,
customizing working environments, rewards and recognition could yield the sought
engagement results (Bardwick, 2010). Recent evidence points out that while workforce
,
23
less engaged employees need extrinsic motivation (Way, 2010, p. 13). This can be
accomplished with small incentives like attention from management (Network for
Business Sustainability & Canadian Business for Social Responsibility, 2010),
promotions, money or special benefits (Bertels, Papalia & Papalia, 2010). In these efforts,
it is imperative that the set targets are achievable and clearly measurable (Bertels, Papalia
& Papalia, 2010).
Findings from the discipline of psychology could also be considered in incentive
design (Kazdin, 2009), providing the missing link of knowledge about how to motivate
employees toward the desired configuration of sustainability goals. Research from Yale
University shows that incentives are more effective when they are presented as
challenges (Kazdin, 2009). Findings from a multi-year study at Harvard Business School
identified the feeling of having made progress as the number one motivator (Amabile,
2010). Other research shows that friendly competition among employees yields effective
motivation (Brighter Planet, 2010).
Furthermore, it should be taken into account that in these times of financial crisis,
engagement has been negatively affected by decreases in remuneration (Chamberlain,
2010). Sophie Rahm, head of research at European Sustainable Investment Forum
(Eurosif) observes that organizations are now searching for ways to associate pay with
long-term accomplishment (Gardner, 2010). It is believed that adding sustainability
parameters in employee performance evaluations could help toward that end (Bertels,
Papalia & Papalia, 2010).
24
This research proceeds to study examples of how incentives for sustainability are in
effect in four financial institutions. The methods of data gathering and analysis are
presented in Chapter III (Methods), immediately following this section.
25
Chapter III
Research Methods
The Case Study Method
To explore the structure of employee incentives that are currently implemented
for engagement in sustainability, this researcher used use the case study method (Yin,
2009). This method is especially effective in investigating social phenomena that a
researcher cannot control, as in this case, employee motivation (Yin, 2009). In addition,
the methodical procedure that the case study method proposes is ideal for building an
argument while safeguarding the validity of the study (Yin, 2009).
For this purpose, four multinational, publicly traded financial institutions were
selected for study. These organizations are well on their way to surpassing performance
excellence goals for achieving sustainability, as indicated by their standing in prestigious
indices that rank value, reputation and sustainability eminence. The data gathered from
the cases will be used to conduct a multiple descriptive case study, thus enabling a cross-
case comparison of the incentive practices in effect within these organizations (Yin,
2009).
Research Design
The research question arose after a study of the implementation of corporate
sustainability programs and the discovery of the importance of effective employee
26
engagement therein. It was evident that workforce involvement could stand significant
improvement; therefore, it was logical to ask the question, how could organizations
committed to sustainability improve their incentives for effective employee engagement in
corporate sustainability?
After an initial literature review, the hypothesis that organizations committed to
sustainability could benefit from establishing performance incentives geared to foster
effective employee engagement in the sustainability program was derived. It seemed that,
even in organizations that promote sustainability across many platforms, the connection
between performance criteria and sustainability goals was weak, if present at all.
Following the theory development of the research question and hypothesis, the
literature review was conducted and then focus shifted to the research design of the study.
The researcher identified the criteria for case selection and the embedded unit of analysis
within the cases as the incentives for employee engagement in corporate sustainability of
each organization. These can either be actions that create a framework for engagement or
performance rewards. Specifically, the researcher was looking to identify whether
monetary or non-monetary incentives were connected to the sustainability targets.
A research protocol was then designed to serve as a road map for the study
(Figure 1). Following the steps of this protocol, a literature search on the subjects of
corporate incentives and employee engagement in sustainability followed the initial
review. A detailed consideration of the widely accepted benchmarks for corporate
sustainability success followed to identify common standards for the final case selection.
After the cases were selected, interview candidates were identified and the interview
27
questions were compiled. Ten interviews were conducted among sustainability
professionals to shed further light on the research question. The information gathered
supplemented the literature and case data, providing valuable insight into the obstacles
and facilitators of effective employee engagement in modern organizations striving for
sustainability. These conversations were especially useful in identifying trends for future
changes that have not yet been documented in published literature. Guidance for the
interviewing process was obtained from the book Interviewing: Principles and Practices
(Stewart & Cash, 2008).
The data collection that followed included a detailed study of the four cases, the
development of a matrix for the classification of data. The case reports were composed
and cross-case analysis conducted. Subsequently, the relevant findings from the interview
transcripts and the literature review were classified according to the matrix.
Finally, the researcher reported on the cross-case analysis and interview findings.
After the integration of the literature data, it was time to question whether the initial
theory needed modifications. To build an argument that supported the claimed
proposition, a logical connection had to be made between the case data regarding
employee incentives for engagement in corporate sustainability and the hypothesis (Yin,
2009). The evidence had to prove the notion that in most organizations distinguished for
their sustainability efforts, the framework of incentives and rewards is not adequately
initial theory
28
was still valid and could be proven using the findings. Therefore, no changes were made
to the research question and hypothesis.
The same logic was replicated in examining all cases to draw generalized
conclusions. It was attempted to identify patterns across the cases (Yin, 2009) that
logically lead to an explanation of the effectiveness, or lack thereof, of the incentives
toward engagement in the corporate sustainability program. The discoveries made should
help identify gaps in strategy when planning a sustainability program and help
recommend further research into new or unanswered questions. Safeguarding the
reliability, construct validity, as well as internal and external validity of the research
design (Yin, 2009) was a primary concern during the entire process.
29
Figure 1: Research Protocol
30
Data Collection
To understand the importance of effective engagement in sustainability programs
and to best explore the organizational phenomenon of employee motivation, a multi-
disciplinary search was conducted using several databases available through the Harvard
University library system.
The evidence collected came from documents (peer-reviewed journal articles,
professional white papers, published articles authored by sustainability professionals, and
published corporate reports), archival records in the form of survey results, and focused,
short-time interviews featuring questions prepared according to the research protocol
(Yin, 2009). The multitude of sources ensures the construct validity of the research
design (Yin, 2009). Data were gathered and carefully organized in a database to maintain
Case Selection
To apply the theoretical replication logic and to obtain the anticipated results
within a satisfactory number of cases, four organizations were selected (Yin, 2009). They
were all chosen within one market sector to facilitate comparison of practices. Their
parallel operations and processes ensure a similar workforce mix and human resource
indices are available that screen for the characteristics needed for this research. To ensure
the reliability of the study (Yin, 2009), the corporations chosen are all multinational,
31
publicly traded companies that are legally obliged to publish accurate data. The financial
institutions that were compared in this research are Barclays PLC (Barclays), BNP
Paribas, Credit Suisse Group (Credit Suisse), HSBC Holdings PLC (HSBC). These
banks excel in the banking sector, confirming the positive influence of sustainability
practices on value building. Their standing is validated by their high ranks in lists such as
the
Brand Finance (Bank Finance Brand Directory, 2011) and
r, 2011).
Employees Countries Rank by
Assets Rank by Safety
Rank by Value of Banking Brand
Rank by Financial Brand
Case 1: Barclays
144,000
60
4
34
7
10
Case 2: BNP Paribas
210,700
80
1
18
12
6
Case 3: Credit Suisse
46,600
54
26
26
15
20
Case 4: HSBC
300,000
83
17
19
3
1
Table 1. Case Characteristics
32
The following sustainability-related indices and frameworks were also referred to
for the final case selection:
The Dow Jones Sustainability Index (DJSI) World 80: this service
-
driven
portfolio managers with valuable information (DJSI & SAM, 2011a).
dimension (anti-crime policies, brand management, customer service
management and stakeholder engagement), environmental dimension
(business opportunities financial services/products, business risks large
projects/export finance, climate change governance, environmental
policy/management system, operational environmental footprint) and
social dimension (code of ethics in investments/financing, occupational
health & safety, social value added: financial inclusion/capacity building,
the following awards on this index: (DJSI & SAM, 2011b):
- HSBC: SAM Bronze Class
- Barclays: SAM Silver Class
- Credit Suisse: SAM Bronze Class
- BNP Paribas: SAM Bronze Class
FTSE4GOOD Global 100:
companies that meet globally recognized corporate responsibility
33
Global 100 list (FTSE, 2011).
The United Nations Environment Programme (UNEP) Financial
Initiative, of which all four banks are members, encourages sustainable
practices in financial sector activities (UNEP Financial Initiative, 2011).
The Equator Principles: a code of ethics, to which all four banks are
signatories, that ensures social and environmental responsibility in project
financing (The Equator Principles, 2010).
Interviewing Process
Those interviewed were selected among available sustainability officers of
companies striving for sustainability. After receiving the exemption from the Harvard
University Committee on the Use of Human Subjects in Research, a number of
professionals were contacted for interviews. A brief communication with the ten
representatives who were willing to be questioned took place before the interviews were
scheduled. Two appointments were held in Boston, MA, one in Vevey, Switzerland, and
the rest were conducted using Skype or telephone. Four of the subjects are sustainability
officers at financial institutions and three are officers from public multi-national
companies known for their sustainability accomplishments. The last three are consultants
in the field of corporate sustainability based in the United States.
All subjects were informed about the details of the process in advance and were
presented with a consent form, as per the instructions provided by the
34
Committee. The consent forms assured the subjects of anonymity, confidentiality and the
destruction of interview records after the grading of this thesis (Yin, 2009). At the time
of the actual appointments, conversation occurred based on the ten questions previously
approved by the Human Subjects Committee. During the interviews, notes were
handwritten by the researcher and later classified in a confidential database.
Interview Questions
Questions to sustainability officers:
1. Which sustainable practices do you consider most important for your business?
2. How do you educate employees on these practices?
3. Does this education ensure their participation? If not, in what ways do you seek to
improve their engagement in the sustainable practices?
4. Can you give me examples of non-financial motivation towards sustainability? Are
any implemented in your company?
5. Can you give me examples of non-financial rewards for sustainability? Are any
granted in your company?
6. What metrics do you -or would you- use to assess the effectiveness of employee
engagement in corporate sustainability?
7. By those standards, how effective is the engagement that you have achieved?
8.
employees are judged by? Are any of these linked to the sustainability targets?
9. Are company salaries and bonuses associated to any non-profit results?
10. What do you consider the biggest obstacle for engagement in sustainability to
be? Do you have a strategy to overcome this obstacle?
35
Questions to sustainability consultants:
1. Which sustainable practices do you consider most important in businesses today?
2. How would you educate employees on these practices?
3. Do you think that this education ensures their participation? If not, in what ways
would you seek to improve their engagement in the sustainable practices?
4. Can you give me examples of non-financial motivation towards sustainability?
5. Can you give me examples of non-financial rewards towards sustainability? Would
you recommend their implementation?
6. What metrics do you -or would you- use to assess the effectiveness of employee
engagement in corporate sustainability?
7.
employees are judged by should be linked to the sustainability targets? If so, can you
provide some examples?
8. Do you think company salaries and bonuses should also be associated with any non-
profit results? If so, which ones?
9. What do you consider the biggest obstacle for engagement in sustainability to be? Do
you have a strategy to overcome this obstacle?
10. o implement a
corporate sustainability program?
36
Analysis Method
After collection, careful analysis of the data followed the case study protocol. A
matrix was developed to facilitate classification of the literature review findings
according to their content in relation to the hypothesis.
Following the literature review, the case studies were conducted. Corporate
reports were studied for activities that encourage engagement in sustainability, either by
educating, demonstrating the practice of sustainability, actively encouraging
participation, or providing rewards for sustainability accomplishment. These activities
were listed and grouped for each case. A cross-case analysis was then compiled,
comparing the combination of activities in all four cases, synthesizing an explanation that
supports the hypothesis (Yin, 2009). Interview transcripts were then analyzed and the
main conclusions set aside to complement the case study findings in the Discussion
section of this thesis.
The analytical strategy was based on the theoretical propositions inferred in the
stated hypothesis (Yin, 2009). Using the pattern matching technique, comparison of the
data gathered with the predicted hypothesis (Yin, 2009) strengthened its validity.
Limitations
Certain limitations and biases that had to be dealt with during the research
design, data collection, and evidence analysis stages of this study. Specifically, the
37
judgment, available time and access. The intention was to cover all relevant credible
sources that were published by the time the case analysis was conducted. Furthermore,
the accuracy of the published corporate reports that the case study analysis depends on
could be challenged, as corporate reports are impossible to verify. However, the fact that
the specific data the conclusions were based upon were not quantitative should be taken
into account. To minimize the risk of basing the study on faulted information, the
organizations selected for study are all publicly traded companies with a responsibility to
their shareholders to publish accurate data.
reason, useful guidance was obtained by relevant literature (Stewart & Cash, 2008),
course material and the director of this thesis, Dr. Robert Pojasek.
The companies selected for the case studies presented may not accurately
represent conditions in the corporate world in its entirety. Even if accurate, the
generalizations made reflect the business environment during the time shortly preceding
data collection. Numerous factors may have changed between that time and the writing of
the thesis.
The interpretation of data regarding corporate employee programs could have
made to avoid personal bias affecting the interpretations and conclusions presented in the
Discussion section.
ee programs was based on the
facts included in the most current sustainably reports and website pages. It is quite
38
mentioned. However, the cross-case discussion was based on the material that each bank
chose to publicize for 2009, therefore, it should have yielded a fair comparison. Special
effort was made to avoid personal bias infiltrating the interpretations and conclusions
presented in the Discussion section.
39
Chapter IV
Results
Case Findings
The case studies began by noting certain descriptive characteristics, such as
geographic spread of operations and size of the global workforce. Consequently,
ied. These are
voluntary surveys used to assess employee engagement in all four organizations, and
such surveys are a widespread corporate practice in general. Answers from the
icipation
employee engagement. All of the studied organizations had satisfactory participation
rates, but none reached 100%.
Finally, each of the four cases was studied specifically for identification of the
offered incentives for employee engagement in the corporate sustainability program.
These were catalogued and then organized in four categories, listed in the order of
motivational strength. The list of categories starts from the weakest incentive practices,
which are the educational activities on sustainability issues. Following are the activities
the activities that employees can participate in directly. The list ends with the strongest
incentives, which are any straightforward rewards for sustainability achievement.
40
Rewards were also screened for non-financial kinds, as researchers believe that strong
corporate sustainability is often distinguished by the use of many different tools, not just
monetary standards (Hamdouch & Zuindeau, 2009).
The four categories are as follows:
Education Sustainability education and training programs for employees, separate
from traditional job training. This category includes all activities
designed to educate or train employees in practices related to
sustainability.
Demonstration Sustainability action without employee participation. This category
lists all example-setting initiatives for sustainability, such as
community financial support, membership in welfare organizations/
initiatives and awards won. By publicly and consistently promoting
social and environmental sustainability, these actions foster behavioral
changes in the workforce. Practices that are considered standard, such
as regulatory compliance on workforce diversity and just labor
practices were excluded from the lists.
Activation Sustainability action with employee participation. Action that enlists
the help of employees on a mandatory or voluntary basis. These
activities are designed to promote environmental, social and economic
sustainability in the community. Studies have shown that employees
across all levels
41
Rewards Employee financial and non-financial rewards linked to sustainability
targets. Rewards and bonuses related to sustainability metrics provide
the strongest incentive for employee engagement in the corporate
sustainability program. Making the performance-reward link obvious
ensures that organizations are reinforcing performance standards
(Riordan, Vandenberg & Richardson, 2005) towards the sustainability
targets. According to research by Experts in Responsible Investment
Solutions (EIRIS), only 15% of the top banks link salary with
environmental, social and governance metrics (Gardner, 2010).
However, progress in that area is becoming apparent. At global
depended on sustainability progress (Gardner, 2010).
All incentive practices listed were numbered in ascending order, to facilitate their
comparison of the four cases. It should also be noted that some actions were credited to
more than one category. Where the number is in bold typeface, it is to indicate a wider
program of numerous actions, the analysis of which is beyond the scope of this paper
(e.g. a multi-faceted environmental footprint reduction program).
corporate annual/sustainability reports and official websites. The most recent edition to
42
date was used in all cases, representing data and activity of the year 2009. The cases are
presented in alphabetical order.
Case 1: Barclays
Barclays has a workforce of 144,000 employees and offices in 60 countries
(Barclays, 2010a).
Following are the main incentives in effect for engagement in the sustainability
(2010a):
Education
1. Coaches business and credit risk teams worldwide through the Group
Environmental Risk Management Team.
2. Revised t
include training on human rights considerations.
Demonstration
3. Holds membership in the UNEP Statement by Financial Institutions on the
Environment & Sustainable Development.
4. Is a member of the UNEP Finance Initiative (co-chair, human rights).
5. Is a member of the Business Leaders Initiative on Human Rights.
43
6. Participates in the Change
Board.
7. Won the Energy Risk Award
(Barclays Capital).
award by
Charity Times.
9. Received the Clarion award for a video on climate change (Southern Africa).
10. Achieved Platinum status in Business in the Community.
11. Achieved gold status in the standard.
12. Was voted as one of the top fifty places where women wan to work
(The Times, UK).
Report (Barclays, 2010b, p. 5).
14. Issued the Group Sustainable Supply Chain Statement.
15. Implemented
16. Launched Gconomy Visa in the United States: donates part of the
earnings to green schools and rewards domestic recycling.
17. Has Environmental and Social Impact Assessment lending controls.
18. Promotes investments in natural resources through Barclays Natural Resource
Investments.
44
19. Works in the renewable energy market through The Alternative Energy Group
(Barclays Capital) and The Natural Resources Team (Barclays Corporate).
20. Set up the first dedicated carbon-trading desk (Barclays Capital).
21. Sponsored the climate adaptation report presented in Poznan.
22. Produced Storm Shelter, a report assessing climate change effects in Africa.
23. Participates in the
24. Promotes financial education for disadvantaged people through the Banking
on Brighter Futures program.
25. Supports investing in local initiatives through the Local Communities
program.
26. Targets a reduction in the company's environmental footprint through the
Barclays Climate Action program.
27. Published The Green Guide for Business, a carbon reduction handbook
distributed for free to 5,000 corporate customers.
28. Participates in the Protecting Eastern African Resources and Livelihoods
program.
29. Promotes the United Nations Millennium Development Goals through
programs like the Katine project for improving maternal healthcare (Uganda) and
partnerships with the Emerging Africa Infrastructure Fund, Junior Achievement
Worldwide, CARE International and Plan International.
30. Is active in fundraising for housing through the Social Housing Team
(Barclays Corporate).
45
31. Donated 10 million GBP towards basic banking services (Africa, Asia and
South America).
32. Offers Barclays Money Skills for disadvantaged people (UK).
33. Tested Power Perfector at nine retail centers (UK).
34. Supports female employees though the Women in Management course as well
as the Barclays Wealth and Talking Talent programs for senior executives.
35. Publishes the Smart Living magazine for female customers.
36. Promotes Disability Inclusion, with programs that raise awareness, provide
support and work environment adjustments.
37. Published a Guide for Integrating Human Rights into Business Management.
38. Reports on Global Reporting Initiative (GRI) guidelines (produces a level
B+, Self Declared report).
39. Reports greenhouse gas (GHG) emissions through the Carbon Disclosure
Project.
40. Has been carbon neutral in banking operations since December 2009.
Activation
41. Supported My Money Matters program with volunteers offering financial
management advice to the elderly.
42. Encourages employee volunteering through the Charity Begins at Work
program (58,000 active volunteers and fundraisers in 2009).
43. Encourages online input of employees' improvement ideas (Barclays
Corporate).
46
44. Conducts an annual employee survey.
Rewards
45. Established the global for employee community
contribution.
Case 2: BNP Paribas
BNP has a workforce of 201,700 employees in over 80 countries. The BNP
As mentioned
(BNP, 2010), the main incentives for engagement in sustainability are the following:
Education
1. Trained 163 project-financing professionals on the Equator Principles.
Demonstration
2. Holds membership in the UNEP Statement by Financial Institutions on the
Environment & Sustainable Development.
3. Participates in the UN Global Compact.
4. Is in the steering committee of the Equator Principles.
5. Signed the Principles for Responsible Investment.
6. Is a member of the International Investors Group on Climate Change (BNP
Paribas Investment Partners).
47
7. Is a member of Institutional Investors Group on Climate Change (BNP Paribas
Investment Partners).
8. Is a member of the Principles for Responsible Change (BNP Paribas
Investment Partners).
Energy
Business.
10. Re Diversite label
11. Received the ISO 14001 certification for its Welcome and Services branch
model.
12. Received the Finansol for three socially responsible funds (BNP Paribas
Investment Partners).
13. Received the Novethic certification for three socially responsible funds.
14. Established the BNP Paribas Foundation that supports medical research,
heritage protection, the arts, education, job opportunities for the disadvantaged
and environmental protection.
15. Supported 29 French charities (2009).
16. Was the first bank to open a solar-powered branch (Alexandria, Italy).
17. Installed efficient equipment to reduce energy use.
18. Sourced 96% of the paper used from sustainably managed forests.
19. Has invested over 2 billion Euros in renewable energy.
20. Will help finance the largest wind farm in Sub-Saharan Africa, in Ashegoda,
Ethiopia.
48
21. Signed two strategic cooperation agreements with Russian oil company TMK-
BP under the Kyoto Protocol.
22. Launched three new social and environmental funds.
23. Raised 163 million Euros through a four week SRI campaign (Belgium).
24. Offers competitive interest rate loans for hybrid or low-emissions cars
(Turkey).
25. Supported medical institutions (Singapore, Morocco).
26. Replaced year-end gifts with donations to the medical Institut Pasteur.
27. Sponsored numerous initiatives to help the poor with meals, medical care,
education and employment.
28. Supports female employee through networking groups and a commitment to
have 20% women in key positions by 2012.
29. Promotes handicapped hiring through an agreement with the French
government.
30.Uses two new buildings with a High Environmental Quality certification.
31. Provided training on microfinance risk (Tunisia).
32. Lowered insurance fees for paraplegics.
33. Invested in PlaNet Finance, which promotes microfinance development.
34. Reports on the GRI guidelines (produces report of undeclared level).
35. Reports on GHG emissions through the Carbon Disclosure Porject.
49
Activation
36. Supported 62 French charities through the Coup de Pouce program, led by
BNP Paribas Foundation personnel.
37. Created the non-profit Benevolat de Competances et Solidarite to encourage
employee and retiree volunteering.
38. Created the Community & Charity program in the UK to encourage
employee volunteering.
40. Created a carpooling website to help employees reduce GHG emissions.
41. Made train travel mandatory for certain routes.
42. Launched a 13,000-employee challenge to reduce paper use by 25% (BNP
Paribas Fortis).
43. Provides funding and support to organizations in which employees
volunteer through the Helping Hand program.
44. Executed a confidential survey with 9,000 participants to assess and mitigate
employee stress levels.
45. Conducts an annual employee survey.
Rewards
In this category, no rewards linked to the sustainability targets were identified.
This does not exclude the possibility of such variable-pay links for specific
executive positions in the bank. However, this information was not available. It
50
should be noted that the organization was contacted by e-mail but did not provide
the information requested.
Case 3: Credit Suisse
Credit Suisse employs 47,600 people in 54 countries around the world. Their
Suisse, 2010).
ed in the
Education
1. Raised employee awareness on energy use through the Energy Efficiency Week
exhibition (Zurich).
2. Added a module on the environment and climate protect
interactive learning program.
3. Implemented mandatory online training programs for the optimization of
internal control processes.
4. Added an online training module on anti-discrimination to the Engaging
Difference program.
5. Made online compliance training mandatory.
6. Established a disability awareness training program.
51
7. Trained 244 employees in active disaster control through the Ready When the
Times Comes program.
Demonstration
8. Holds membership in the UNEP Statement by Financial Institutions on the
Environment & Sustainable Development.
9. Participates in the UN Global Compact.
10. Is a member and supporter of the International Committee of the Red Cross.
11. Is a member of the Swiss Association for Environmentally Conscious
Management.
12. Is a member of the Association for Sustainable and Responsible Investment
(Asia).
13. Upholds The Carbon Principles.
14. Signed the CGAP Initiative for Microfinance Client Protection Principles.
rophy for voluntary energy efficiency
improvements by Energy Model Zurich.
Singapore Building
and Construction Authority (Singapore).
Universum (Switzerland).
19. Holds top management members responsible for voluntary commitments and
reputational risks through the Reputational Risk Sustainability Committee.
52
Global
Investor magazine
21. Established the Credit Suisse Cares for Climate initiative, supporting action
against climate change.
22. Partnered with International Human Rights Forum Lucerne.
23. Monitors sector specific guidelines for business involving sensitive industries
like forestry and mining through the Public Policy- Sustainability Affairs internal
unit.
24. Established the Credit Suisse Microfinance Capacity Building Initiative to
support people in developing economies.
25. Launched the touring exhibition Microfinance-A Social Investment that
Creates Opportunities.
26. Established the sustainability-themed indices Credit Suisse Global
Warming Index, the Credit Suisse Water Index, the Credit Suisse Global
Alternative Energy Index, the Credit Suisse Global Resource Efficiency Index and
the Credit Suisse Global Nanotechnology Index.
27. Established the Credit Suisse Fund (Lux) Global Responsible Equities (2007)
and the Credit Suisse Real Estate Fund Green Property (2009).
28. Supports three client charitable foundations, covering administration and
management costs.
29. Participates as a global partner of Habitat for Humanity.
30. Sponsors sports and the arts regularly.
53
31. Established the Credit Suisse Global Education Initiative.
32. Created an award-winning park surrounding the Swiss administrative center,
hosting around 350 species of plants.
33. Endorsed a WWF letter to the Swiss Federal Council prior to the Copenhagen
Conference.
34. Supported various local climate change mitigation initiatives.
35. Sponsored the World Future Energy Summit (Abu Dhabi
36. Supported the Minergie-P Days building standard and Building for the 2,000-
Watt Society (Switzerland).
Solar Youth access to the Credit Suisse headquarter
roof.
38. Reduced paper consumption by 500 metric tons.
39. Supports education in developing countries through organizations like
Camfed, CARE, PLAN International, Room to Read and Teach for All.
40. Implemented over 220 initiatives for employee support, covering nutrition,
health and stress management.
41. Supports the research on global, economic, scientific and demographic trends
through the Credit Swiss Research Institute.
42. Publishes the Credit Suisse Worry Barometer, featuring issues of public
concern (Switzerland).
43. Implemented controls for waste management, cleaning and catering.
44. Reduced air-travel by 16%.
54
45. Restricted electricity supply to hydropower-origin (Switzerland).
46. Increased the use of FSC-certified photocopying paper to 78%.
47. Made an agreement with DeutcheBahn rail services to apply to Credit Suisse
only renewable-source powered travel.
Jubilee
Fund (Switzerland).
49. Hosted a knowledge-sharing event on environmental risks for financial
service providers and NGOs.
50. Suppo East
London Business Alliance.
51. Support education and professional training through The Global Fund for
Children (EMEA, Eastern Europe, Central Asia and the Middle East).
52. Supports the Network for Teaching Entrepreneurship that teaches life skills to
14-16 year old children (Germany).
START (Germany).
54. Supports orphans through The Big Chance (Russia).
55. Supports distance learning in orphanages through Who Else But Me? (Russia).
56. Sponsored the Asia Society Sustainability Series (Mumbai).
57. Sponsored the Swiss Equity Sustainability Day (Zurich).
58. Sponsored Cleantech- The Driver of the 21st Century (Berne).
59. Reports on GRI guidelines (produces a level A, Self-Declared report).
60. Reports on GHG emissions through the Carbon Disclosure Project.
55
61. Has been GHG neutral in Switzerland since 2006.
Activation
62. Held Accessibility Day for disability awareness.
63. Provides the opportunity for managers to share ideas for new sustainable
products and services through the Credit Suisse Green Business Initiative internal
forum.
64. Promotes a dialogue with the Executive Board on addressing current issues in
the Leadership Forum and the Senior Leadership Challenge.
65. Participates in the Junior Achievement program in numerous cities.
66. Participated in WWF Earth Hour.
67. Supported 19 local community-aid projects with cash donations and
volunteers.
68. Provides employee-assisted emergency aid through the Credit Suisse Disaster
Relief Fund.
69. Contributed about 1,700 days of volunteer work to the Mountain Forest
Project Foundation.
70. Established the Charity of the Year program, in which the employees select
the organization that will be supported (UK).
71. Raised GDP 900,000 for Place2Be, which provides school counseling (UK).
72. Allows Credit Suisse staff to dedicate one working day per year to
volunteering (B. Bischoff, personal communication, November 3, 2010).
56
73. Held employee campaigns for blood donations, disability assistance and
education on child-soldier practices (Asia Pacific).
74. Participated in cleanup of Lamma Island beach on UN World Environment
Day (Hong-Kong).
75. Supported the critically ill or elderly with nutrition help through Open Hand
(San Francisco).
76. Supported young volunteering through City Year (New York).
77. Supported reading skills through Working in the Schools (Chicago) and
Central Singapore Community Development Council (Singapore).
78. Supported Help for Victims of Hurricane Katrina (New Orleans).
79. Promoted team spirit and coordination in disadvantaged children through
(Singapore).
80. Supported the Swiss Red Cross with blood donations.
81. Provided disability support through Procap (Switzerland).
82. Promoted financial skills through Young Enterprise (Switzerland).
83. Fundraised for feeding the poor through Schweitzer Tafel (Switzerland).
84. Conducts an annual employee survey.
Employee Rewards
In this category, no rewards linked to the sustainability targets were identified.
This does not exclude the possibility of such variable-pay links for specific
executive positions in the bank. However, this information was not available. A
brief e-mail communication took place between the researcher and one of the
57
practices was not provided. It should be noted, however, that Credit Suisse
2010 (Credit Suisse, 2010).
Case 4: HSBC
This bank employs 300,000 people and operates in 83 countries worldwide. The
HSBC ation rate of 91% (HSBC, 2010).
Following are the main incentives for employee engagement in the corporate
sustainability program, as they appear in the HSBC
2010).
Education
1. Includes sustainability module included in global induction course for new
employees.
2. Offers Senior Onboarding Program (38 participants).
3. Group Graduate Development Program (393 participants).
4. Next Generation Development Program (136 participants).
5. Senior Risk Management Program (52 participants).
6. Risk Management Program (182 participants).
2009).
58
8. Trained Asia-Pacific investment teams on sustainability criteria.
9. Trained 100 relationship managers on sustainability issues.
Demonstration
10. Is a member of the UNEP Statement by Financial Institutions on the
Environment & Sustainable Development.
11. Participates in the UN Global Compact.
12. Adopted The Climate Principles.
13. Signed the Investor Statement Against Climate Change (HSBC Asset
Management).
14. Participates in the Roundtable on Sustainable Palm Oil.
15. Participates in the Malaysian Forest Dialogue.
16. Was number two on the GS Sustain (Goldman Sacks) environmental, social
and governance policy and performance list.
Hang Seng
Index by Oxfam Hong Kong and CSR Asia.
18. Obtained the SA 8000 certification for social accountability, working
conditions and labor rights by Social Accountability International (HSBC Brazil).
19. Received the British
Business Awards (China).
-in- ory of
the Best Practice Financial Services Award 2009, by Benchmark and Best
Practice magazines (Hong Kong).
59
21. Supports over 200 projects through the Future First global education
programme for disadvantaged children.
22. Sponsors Hong Kong Carbon Reduction campaign.
23. Created the HSBC Climate Center of Excellence, which published thirty
research papers in 2009.
24. Is trying a 2 kW photovoltaic system (Malta).
25. Established the Turn it Off program (North America).
26. Uses two new LEED standard buildings (Egypt and Canada).
27. Installed 617 square meters of solar panels at the London global headquarters.
28. Implemented various initiatives for disaster relief and rehabilitation in
Mumbai (charity day, for fundraising marathon, charity dinner and auction, cash
donations, disaster management workshops for citizens, helpline and ambulance
services).
29. Created the Cleantech team to advise on and finance electric vehicles, fuel
cells, solar photovoltaics, thermal products and wind turbines.
30. Invests in projects that enhance and protect the environment through the
HSBC Environment Infrastructure Fund.
31. Launched the Green & Sustainable Insurance plan, with over thirty products
providing insurance against climate change impacts.
32. Presented the effects of climate change to 1,000 clients (Lebanon).
33. Supports personal finances through the Employee Financial Education
Program.
60
34. Offers a Green House Insurance (UK, Hong-Kong).
35. Works with a number of voluntary organizations globally to help manage
personal finances.
36. Supported the Copenhagen Communiqué on Climate Change.
37. Conducts the Climate Confidence Monitor survey.
38. Introduced a sustainability questionnaire in tendering and supplier processes.
39. Assesses sustainability risks through the Vendor Management Programme.
40. Launched the HSBC Climate Partnership Programme
41.Tracks the stock performance of global companies profiting from low-carbon
activities through the HSBC Climate Change Benchmark Index.
42. Invests in sustainable water supplies through HSBC Environmental
Infrastructure Fund (Australia).
43. Implements a Sustainability Risk Rating System, which includes forest land
and forest products, mining and metals, chemicals, freshwater infrastructure and
energy.
44. Prohibits the offering of financial services to defense equipment companies.
45. Supported Haiti orphans with cash donations.
46. Works in seven cities around the world to encourage low-carbon technologies
through The Climate Group.
47. Implements a Global Environmental Efficiency Program.
61
48. Has the main HSBC buildings in compliance with the BRE Environmental
Assessment
US Green Building Council.
49. Reports on GRI guidelines (HSBC Group produces a report of undeclared
level).
50. Is the number one financial institution for
climate strategy and carbon data disclosure.
51. Is carbon neutral since 2005.
Activation
52. Allowed 285,000 hours of employee volunteering during work time (in
53. Partnered with Foundation for Environmental Education in Eco-Schools
Climate Initiative, involving HSBC employee volunteers.
More than
Money.
55. Provides employee-supported contribution to various disaster relief and
rehabilitation programs.
56. Promotes field research on climate change through The Climate Partnership
and Earthwatch.
57. Conducts an annual employee survey.
62
Rewards
In this category, no rewards linked to the sustainability targets were identified.
This does not exclude the possibility of such variable-pay links for specific
executive positions in the bank. However, this information was not available. It
should be noted that the organization was contacted by e-mail but did not provide
the information requested. Starting in 2010, metrics having to do with water,
energy, waste, carbon emissions, travel, paper and data centers will be
evaluations (HSBC, 2010).
Cross-Case Analysis
The companies compared in this study were all chosen because they are globally
well established and successful in the financial sector. Moreover, all four have been
recognized for their sustainability achievements by widely accepted organizations that
monitor and evaluate sustainability progress.
In the effort to put sustainability theory into practice, these organizations strive to
alter many of their processes, add new activities, and improve workforce engagement
levels. In this respect, they all implement a number of initiatives meant to demonstrate
sustainable practices to employees and the community. As discussed previously, these
range from informative presentations to awards for sustainability. In the comparison of
the four cases, it is evident that all four banks have added social and environmental
63
priorities to their economic goals. As seen in Table 2, they tackle projects across the wide
General sustainability education is offered in the employee induction course as well as
three other programs that educated 567 employees. Meanwhile, risk management and
climate topics are addressed through other activities that trained 718 employees in 2009.
However, if the total workforce of 300,000 people is considered, it could be argued that
besides the induction course, the rest of the education program could be improved
significantly. Credit Suisse follows with activities aiming to raise energy-efficiency
awareness and educate on environmental and compliance issues. In 2009, this bank added
a social program on disability awareness. Lagging behind in this area are Barclays and
BNP Paribas. Barclays only trained employees on credit-related environmental and
human rights considerations, while BNP Paribas only educated 162 out of the total
201,700 of its employees on the Equator Principles.
The banks under study have spread their efforts in many areas in the
community and employees to live by. All four banks are affiliated with prestigious
organizations that promote sustainability and adhere to relevant principles of business
conduct. Sustainability-related distinctions and awards have been received by all four.
They also promote responsible investing through special investment funds and programs.
Social equity and human rights are being advanced, as is promoting sustainable
64
Hu
if one looks at the spirit of their other actions, it does not seem that they neglect these
considerations. The support of education, research, and philanthropy also attract effort
and capital. The most intense areas of activity are for all four, is the action on
sustainability and against climate change, as well as the efforts to reduce the
environmental footprint through efficiency improvements and initiatives of many kinds.
four in providing opportunities for direct employee involvement in sustainability. They
offer initiatives for new ideas on sustainable products and internal control processes.
Credit Suisse allows employees one day off per year for volunteering and provides
numerous initiatives for that to take place (Table 2). Meanwhile, HSBC reported that
volunteers supported the few available initiatives and made contributions towards disaster
relief efforts. The employee survey is mentioned as the only feedback mechanism in
place. BNP Paribas offers incentives for alternative travel, encourages volunteering
through four different programs and finances the charities that employees contribute to.
BNP Paribas also promotes responsible investing through employee savings plans. In
2009, they launched a competition to reduce paper use, and they tackled workplace stress
through a 9,000-participant survey, in addition to the standard annual employee survey.
Barclays seems to be lagging behind the other three, with an online medium for bringing
forth improvement ideas and quite fewer programs for volunteering, donating,
fundraising. Furthermore, they show no effort to influence personal sustainability habits.
65
has one sustainability-related procedure in place, the global ds that
rewards employees active in community contribution. The other three banks show no
evidence of such practices. At present, all four banks fail to demonstrate a link between
the pay and bonus structure to sustainability targets or achievement of any kind.
66
Education Demonstration Activation Rewards
Table 2. Sustainability Incentives
1. Barclays 2. BNP Paribas 3. Credit Suisse 4. HSBC
A. Sustainability Education Programs 1, 2 1 1, 2, 3, 4, 5, 6, 7 1, 2, 3, 4, 5, 6, 7, 8, 9
B. Membership in Sustainability-Promoting Organizations 3, 4, 5, 6, 23 2, 3, 4, 5, 6, 7, 8 8, 9, 10, 11, 12, 13, 14 10, 11, 12, 13, 14, 15
C. Distinctions Received for Sustainability Achievement 7, 8, 9, 10, 11, 12, 19, 20 9, 10, 11, 12, 13 15, 16, 17 16, 17, 18, 19, 20, 50
D. Promotion of Responsible Investing 17, 18 22, 23, 39 26, 27 29, 30, 41
E. Sustainability & Climate Change Promotion 13, 14, 15, 16, 21, 22, 25, 27 14, 19, 21, 24
18, 19, 20, 21, 23, 29, 32, 33, 34, 36, 37, 49, 57, 58,
66
22, 31, 32, 43, 35, 36, 37, 38, 39, 40, 42, 43, 44, 46
F. Environmental Footprint Reduction Efforts 26, 33, 38, 39, 40 16, 17, 18, 30, 34, 35, 41 38, 43, 44, 45, 46, 47, 59, 60, 61
24, 25, 26, 27, 47, 48, 49, 50, 51
G. Social Equity & Human Rights Action 34, 35, 36, 37 14, 28, 29 22, 50, 62 35
H. Sustainability in Developing Countries Action 28, 29, 31 20, 25, 31, 33 24, 25, 39, 42, 51, 56 28
I. Education and Reserch Support 24, 32 14 31, 41, 48, 52, 53, 55 21, 23, 33
J. General Sponsoring & Philanthropy 30, 42 14, 15, 26, 27, 32 28, 30, 54 28, 45
K. Employee Input Mechanisms 43, 44 42, 44, 45 63, 64, 70, 84 57
L. Employee Personal Sustainability Promotion 40, 41, 43 40, 66 33
M. Employee Volunteering Programs 41, 42 36, 37, 38, 3962, 65, 67, 68, 69, 71, 72, 73, 74, 75, 76, 77, 78, 79,
80, 81, 82, 8352, 53, 54, 55, 56
N. Financial Rewards Linked to Sustainability Targets
O. Non-Financial Rewards Linked to Sustainability Targets 45
67
Interview findings
As mentioned in the Methods section previously, the interviews were held
with corporate sustainability officers of multi-national corporations and sustainability
consultants in the United States.
There is a common understanding that we are at a time when business is being
reformed around a higher set of values. A sustainability strategy is also considered crucial
when organizations are interested in attracting new talent. In implementing that strategy,
on the new priorities of sustainability can be matched with what works in an
organization. Consistency and continuity of the messages are regarded as key factors in
the transformational process, because the perception of bad habits can linger for a while
after a change.
All subjects reported the yearly voluntary employee survey to be the main
engagement assessment tool, claiming that it can help management identify the units that
need to improve involvement levels. Monitoring employee participation in company
sustainability activities was also mentioned. The sustainability officers thought that the
harder employee group to engage is people over fifty years of age. Business managers
that are responsible for short-term profits were also mentioned in this category by
representatives of multi-national corporations,
latter group is important, as those are the people that will transfer the sustainability
directions from the top executives to the rest of the workforce. Other obstacles mentioned
68
were employee fatigue, due to a message and duty overload, as well as global differences
in culture that make it harder to apply certain policies around the world. The officer of a
as posing an additional impediment to sustainability policy implementation.
Regarding the educational practices of current corporations, the same executive
commented that focus has shifted past the employee education stage, as after about a
decade of exposure to sustainability, employees are now willingly becoming involved in
the corporate efforts.
In terms of strategies to improve engagement effectiveness, intra-workforce
competitions were a favorite answer. An example was provided by a large multi-national
that held a vide
according to its global sustainability director. The same subject thought it likely that
sustainability initiatives would advance faster if they were to answer customer demands,
stressing how useful customer surveys can be. Another interesting comment was that an
truly become a part of what everyone does on a daily basis. One interviewee from a
financial institution believes that engagement improvement still competes with the core
tasks of employees. All subjects agreed that the right incentives are needed to ensure
participation, while one consultant mentioned the solution of officially changing job
descriptions to include the sustainability goals, thus, ensuring participation in the new
strategies.
69
Even though all subjects thought linking sustainability targets to performance
incentives would be very motivating for employees, they agreed that it is only partially
applied, yet gaining momentum. Two of the sustainability executives from financial
Sustainability team had sustainability targets linked to variable pay. Many subjects also
should regard it as the next step in the journey to sustainability.
A sustainability manager form a multi-national corporation commented that
having no repercussions for not achieving sustainability goals stalls the success of the
program. He added that the most effective action that could be taken is to link
sustainability targets to executive-level salaries. Sustainability officers and consultants
agree that changing performance criteria and linking bonuses to corporate sustainability
targets would be a shortcut to convincing employees that management is committed to
the transformation. Such action would help cases where employees think sustainability is
a fad that will pass, due to a history of poor change management.
All subjects thought that non-financial motives are especially valuable in the
change effort. It seems that if employees are paid fairly, additional money is not a
principle motivator for excellence. In younger employees, open recognition seems to be
very effective. Gaining the feeling of participation, as well as engaging in the process of
setting up the change are regarded as effective motivators as well. Additional time off is
also offered
method of variable pay. Employees are awarded points that can be redeemed in different
70
ways. Some subjects believe that if leaders rely on financial rewards alone for too long,
they are seen as prerequisites rather than as a stimulus and, therefore, effective only in
changing short-term behavior. As the strength of monetary motives tends to diminish in
the long term, it is not thought of as an effective means to permanent behavior changes.
Lastly, some new facts arose in the Credit Suisse case after interviewing one if its
sustainability officers. It was noted that about fifty people across Credit Suisse, working
in the environmental management and supply-chain teams, do have sustainability
measures linked to variable pay. It was added that the rest of the workforce is required to
measure all actions against sustainability principles, as sustainability is one of the ten
core values of the company.
71
Chapter V
Discussion
Introduction
The hypothesis of this research was that organizations committed to sustainability
could benefit from establishing performance incentives geared to foster effective
employee engagement in the sustainability program. Performance incentives can be
monetary, such as cash bonuses, or non-monetary, like changes in job descriptions that
create ethical obligations of performance and excellence. They can also be a combination
of the two kinds, such as awarded points that could be redeemed with cash or time-off.
Competitions could be classified in either category, according to the reward given. The
literature research showed that performance incentives are highly effective in employee
engagement. Currently a limited practice in the implementation of sustainability
programs, the establishment of such motives for sustainability achievement is gaining
momentum.
son
demonstrated that rewards--the strongest performance incentive for engagement in
sustainability--could stand the most improvement. Evidence in the literature showed that
linking evaluation criteria to the sustainability targets increases interest and involvement
in the program. The interviewed subjects, experts in the implementation of such
72
programs, also stated that linking performance rewards to sustainability goals is crucial. It
is clear that it is regarded as the necessary next step to end the era of no repercussions for
missed sustainability goals.
A detailed discussion of the expected and unexpected findings, as well as how
they pertain to the question and hypothesis of this research follows.
Misleading Workforce Engagement Assessments
The researcher did not expect to find that all companies studied rely mainly on an
analysis of voluntary employee survey responses for measuring employee engagement.
The companies all seem to derive conclusions based on answers to multiple-choice
questionnaires. Yet those who take the time to answer such questionnaires, are likely
already more engaged than the non-respondents. Therefore, their answers could provide a
weak basis for improving engagement incentives. None of the companies that were
examined mentione -participants, in search of ways
to gain the attention of these specific groups.
Voluntary polls could help identify the people that are the least engaged and try to
understand the reasons for their lack of interest. It could be they were not aware of the
poll, were not provided with adequate time to complete it or did not believe their input
would make a difference. In such cases, management could improve response rates by
providing clarifications on the process and the intended use of results. With improved
participation, survey outcomes would better reflect the workforce mentality.
73
As a practice, however, employee polls are a lagging indicator of employee
engagement. Organizations on a path to sustainability should have well-established
procedures to ensure that engagement acts as a leading indicator of the sustainability
ldrige National Quality
Program, 2010, p.18). An effort towards operational excellence through performance
frameworks and management systems would ensure this practice with the implementation
Investors in People, SAI global or
Baldrige guidelines. It could be argued that the companies studied do not have a strong a
management basis for sustainability to build on. It is important that they improve this
ropriate policies, systems,
processes and tools ensure that people are engaged and make a meaningful contribution
Corporate Sustainability Incentive Frameworks
The literature review and case studies showed that companies which succeed in
sustainability begin their journey by establishing educational processes of different kinds.
findings show that the organizations studied are serious about
demonstrating the practice of sustainability by altering company strategy and operations.
These companies are active in charity and sponsoring of various initiatives aimed at the
support and development of their local and global community.
74
Furthermore, these companies have all created weaker or stronger frameworks of
activities in which employees can participate and experience sustainability in action. This
provides good follow-up to theoretical training and opportunity for employees to identify
with something meaningful. This experience should also help create a mindset for
To encourage participation and innovation further, some companies offer rewards
for sustainability achievement. These are most often found as awards in competitions
and, in a limited number of cases, monetary compensation.
activation and
system overall. However, to further improve the effectiveness of employee engagement
and, therefore, the corresponding incentives, each of the previously mentioned categories
could be enhanced.
Obstacles to Effective Employee Engagement in Sustainability Programs
Besides an outdated mentality and a failure to justify the business case for
sustainability, the interviews revealed an important obstacle to employee engagement that
was not obvious in the research. This was the identification of the employee groups that
as people over fifty years of age. This was surprising to the researcher, as the more
experienced employees should be in a better position to appreciate the benefits of
sustainable practices. Having seen the degradation of our environment and natural
75
practices over the last decades, people in this group should be the strongest advocates for
sustainability. However, it seems that the difficulty to change long-established habits
dominates their stance. In addition, older employees may think the sustainability trend
will soon fade away. Consequently, their longer work experience bears additional weight
on their adaptability to new practices.
The study identified business managers who are responsible for short-term profits
as the second group that is hard to engage in the corporate sustainability efforts. It is
annual financial targets. Therefore, it is natural for them to resist any policy or activity
that would have a negative effect on that outcome, even if it would be profitable in the
long-term. Middle managers were also named as generally unwilling to pass down the
expectations of the three responsibilities of sustainability. The employee fatigue that was
mentioned earlier could also be contributing to this phenomenon.
After completion of the literature review and case studies, it was clear that there is
achievement. Currently, that connection exists only rarely and in most cases is limited to
executives with environmental responsibilities. The fact that employees do not expect to
could be why it is difficult for them to effectively engage in sustainability practices.
76
Enhancing Incentives for Engagement in Sustainability Programs
All interview subjects agreed that employee involvement could be enhanced if
well-designed incentives were in place withi
participation in a sustainability program, these would have to be specifically tailored to
cater to the mix of each workforce. Naturally, a prerequisite is for management to know
exactly which groups need specific attention.
The first stage after an accurate employee engagement assessment would be to
improve the educational opportunities offered within the company. Many organizations
could benefit from establishing additional talks and presentations, seminars or hands-on
training on new practices. This would help enhance the consistency and continuity of the
sustainability messages, as experts recommend.
for sustainability. That could be because it provides the most visibility, bringing public
praise and recognition to the organization. This consequently enhances reputation and
leads to value increase. Therefore, the incentive category that provides behavioral
examples to employees is also the most popular with management because it brings
immediate acclaim and yields indirect financial benefits. Companies could further
attention should be paid to selecting actions with long-term effect, even if they would
provide less publicity outside the company. It is likely that such a policy would be
77
influence on motivation towards personal sustainability efforts inside and outside the
workplace.
objective is simple: companies should
seek to engage everyone. They should try to increase opportunities for volunteerism by
setting up activities in a wide range of times, locations and functions, to facilitate
participation. Careful monitoring of the turnout in these activities should provide a very
good estimate of employee engagement, as mentioned by experts questioned in this
study. An analysis of the non-participants would help companies adjust the structure of
the activities in order to provide everyone with the right opportunity for involvement.
Increasing intra-workforce competitions also seems to be an effective strategy for
increasing involvement.
In addition to receiving incentives in the form of education, examples or
activities, employees should expect rewards for their sustainability accomplishments like
neglected area of incentives for engagement in corporate sustainability program. It is
crucial to reward employees for their achievements in any change management effort.
The researcher in this study could not come to a satisfactory conclusion regarding the
extent to which rewards are linked to sustainability targets at present. It is evident that
specific positions within certain organizations are evaluated and rewarded for
sustainability progress, but this is not a widespread practice. The interviews verified that
it is common for environmental managers to have certain sustainability-target-to-pay
links, but the practice is limited to a few people within a company. Companies would
78
benefit from expanding this practice to the entire workforce. Sustainabilit
business in one way or another. The intention of HSBC to include environmental metrics
in the performance evaluations of its Chief Technology and Services officers starting in
2010 is an indication that this strategy is gaining ground. Credit Suisse will also
demonstrate a way to enhance engagement in the sustainability program by adding
Another interesting concept that arose during the interview process has to do with
le of management for sustainability. It was suggested that
sustainability teams should remain small in size, so that they are forced to simply
coordinating tasks, leaving the execution to be evenly spread among the workforce. This
strategy would eventually make the responsibilities of sustainability constant
considerations for every single employee.
Linking Performance Incentives to the Sustainability Targets
In the effort to improve incentives for effective employee engagement in
corporate sustainability, organizations should establish appropriate monetary and non-
and rewards ensures that these issues are discussed, gaps and training needs identified,
and that people are incentivized to pursue sustainability objectives through their
performance incentives to sustainability targets as a solution to the most significant
obstacles to workforce involvement--a crucial element in the success of a corporate
79
sustainability plan. Where certain groups, such as younger employees, may only need to
be given a sustainability strategy, a medium for feedback and open recognition as a
reward, older employees need the special attention of management and possibly strong
performance incentives, especially designed to foster their engagement in the
sustainability program. Middle managers and executives responsible for short-term profit
success should be approached in a similar manner. Linking performance incentives to
sustainability strategy should prove an effective way to address the needs of all
disengaged groups and enhance workforce interest in general, helping to integrate
sustainability tasks in every operation. Sustainability officers and consultants also believe
that changing performance criteria and linking bonuses to corporate sustainability targets
would help convince employees that management is committed to the change.
The research shows that a widespread implementation of performance incentives,
such as competitions, awards, and variable-pay allocation for sustainability achievements,
would increase employee interest in the program. Implementation could begin with
official changes to employee job descriptions. If measurable sustainability targets were
added, participation in the new strategies would become an obligation by contract.
, 2011, p. 10). In addition, the consideration for engagement
-
Changes to performance criteria would have to follow, giving these employees strong
motivation to join the company efforts towards sustainability. This practice would also
facilitate the implementation of sustainability practices in many different countries and
80
cultures, and across large workforces in volume. Multi-national corporations like Shell,
TNT and NovoNordisk are already using a number of sustainability measures in their
performance assessments (WBCSD, 2011).
The importance of non-financial motives and rewards was evident during the
literature review and interviews and should not be neglected. It is believed that if
employees are paid fairly, additional money is not a principle motivator for excellence.
Receiving additional time off, gaining the feeling of empowerment and participation, as
well as engaging in setting-up the change effort are regarded as more effective
motivators. Ensuring these conditions bears no cost to companies and should be
implemented from the planning stages of a sustainability program.
The effective alternative of a mixed monetary and non-monetary reward that
emerged in the research was a point system that serves as a method of variable pay.
Employees are awarded points that can later be redeemed with time-off, cash or various
other benefits. This method provides the gratification of a bonus, with a lesser financial
cost to the company and would be especially useful in times of financial crisis.
Recommendations for Further Research
The findings of this study could assist other researchers in their efforts to find
ways to improve workforce engagement in sustainability programs. By pointing out the
weaknesses of current incentive structures, new motivational strategies can be designed
to cover the needs of the entire workforce. These changes in employee incentives would
help those who are interested in facilitating the implementation of sustainability programs
81
and should be applicable to any corporate change effort. Furthermore, the effectiveness of
different educational practices should be studied to optimize the content, frequency and
combination of stimuli.
Human resource professionals could also use the findings of this work to better
understand employee survey results for engagement improvement. By identifying the
groups within a workforce that are harder to engage, they could also alter the recruiting
process--where the law allows--ensuring that there is an interest in receiving
sustainability education in people over fifty. The same process should be implemented
when hiring middle managers or executives in positions responsible for short-term
financial results.
Economic, social and environmental criteria should be equally represented in the
to sustainability goals. Only then would employee performance incentives foster effective
engagement in the corporate sustainability program. However, what is the most effective
way to link performance incentives to the sustainability targets? To this end, the author
recommends that further research take place in the area of employee motivation towards
sustainability.
Questions to be studied would include the following: How could all sustainability
targets be measured so as to facilitate progress monitoring? What would be the most
effective way to link those targets to employee variable pay? How can a corporation
reward lower-level employees who are only paid a fixed salary? The motivational
strength of monetary versus non-monetary rewards poses great interest here. How can the
82
effectiveness of non-financial motives be assessed? Do they bare a hidden cost to the
company? What would be an effective ratio of monetary and non-monetary rewards?
The answers to these questions by future researchers would benefit the efforts to
implement sustainability programs in the business community. Especially in these times
of economic distress, it would be useful to evaluate and implement customized motives to
could use employee engagement in a sustainability program as a leading indicator of its
success.
83
Chapter VI
Bibliography
Amabile, T. (2010). What Really Motivates Workers. Harvard Business Review, January-February 2010, 69-75.
Harvard Business Review, May-June 1998, 98-105. Attridge, M. (2009). Measuring and managing employee work engagement: A review of the research and business literature [Electronic version]. Journal of Workplace Behavioral Health, 24(4), 383-398. Baldrige National Quality Program. (2010). 2009-2010 Criteria for Performance Excellence. Retrieved September 10, 2010 form www.baldrige.nist.gov/.../2009_2010_Business_Nonprofit_Criteria.pdf
October 5, 2010 from http://www.bankersalmanac.com/addcon/infobank/bank-rankings.aspx
Barclays PLC. (2010a). Barclays PLC 2009 Responsible Banking Review. Retrieved October 5, 2010 from http://group.barclays.com/Sustainability/Reports-and-Publications/Sustainability-Reports Barclays Bank PLC. (2010b). Barclays Bank PLC Annual Report 2009. Retrieved October 5, 2010 from http://group.barclays.com/Investor-Relations/Financial-results-and-publications/Annual-Reports?tab=1225803115078
Bardwick, J. M. (2010). Capturing hearts and minds [Electronic version]. Leader to
Leader, 2010(57), 24-28.
Baumgartner, R. J. (2009). Organizational culture and leadership: Preconditions for the development of a sustainable corporation [Electronic version]. Sustainable Development, 17(2), 102- 113.
Bertels, S., Papania, L., & Papania, D. (2010). Embedding Sustainability in Organizational Culture (Network for Business Sustainability Report). Retrieved January 12, 2011 from http://www.nbs.net/knowledge/culture/systematic-review-organizational-culture/
84
BNP Paribas. (2010). Report on Environmental and Social Responsibility 2009. Retrieved October 5, 2010 from http://media.bnpparibas.com/invest/rapport_rse/BNPParibas_RSE_English/default.htm Brand Finance Brand Directory. (2011). The Brand Finance Banking 500. Retrieved on February 12, 2011 from http://brandirectory.com/league_tables/table/banking_500_2011
Brokaw, L. (2009). Does Sustainability Change the Talent Equation? [Electronic version]. MIT Sloan Management Review, Fall 2009, 33-34.
Brighter Planet. (2010). Employee Management Survey- An Analysis of the Extent and Nature of Employee Sustainability Programs (Report). Retrieved on October 19, 2010 from attachments.brighterplanet.com/.../employee_engagement_2009.pdf?
BSI British Standards. (2007). Occupational Health and Safety management Systems Requirements (OSHAS 18001:2007). London: BSI British Standards. Castellano, W. G. (2009). A New Framework of Employee Engagement. (White paper). Retrieved July 15 from www.chrs.rutgers.edu/.../EmployeeEngagementWhitePaperFinal.pdf Castellano, S. (2009). (White paper). Retrieved July 15, 2010 from http://www.sustainabilityconsulting.com/white-papers/?currentPage=2
Chamberlain, L. (2010). Companies struggling to attract skilled workers. Personnel Today. October 2010. Retrieved October 14, 2010 from http://www.personneltoday.com/articles/2010/10/13/56713/companies-struggling-to-attract-skilled-workers.html
Cordeiro, J. J., & Sarkis, J. (2008). Does explicit contracting effectively link CEO compensation to environmental performance? [Electronic version]. Business Strategy & the Environment, 17(5), 304-317.
Credit Suisse Group. (2010). Corporate Citizenship Report 2009. Retrieved October 5, 2010 from https://www.credit-suisse.com/citizenship/en/index.jsp
Daily, Bonnie F., Huang, Su-chun. (2001). Achieving sustainability through attention to human resource factors in environmental management [Electronic version]. International Journal of Operations & Production Management, 21(12), 1539-1552.
Delmas, M., & Doctori Blass, V. (2009). Measuring Corporate Environmental Performance: the Trade-Offs of Sustainability Ratings [Electronic version]. Business Strategy and the Environment, 19, 245-260.
85
Dow Jones Sustainability Index (DJSI), & SAM . (2011a). Setting the Standard for Sustainability Investing [Electronic version]. Zurich: Dow Jones Sustainability Index (DJSI), & SAM). Dow Jones Sustainability Index (DJSI), & SAM . (2011b). Sustainability Investment. Retrieved February 7, 2011, from http://www.sustainability-index.com/07_htmle/sustainability/sustinvestment.html Dow Jones Sustainability Indexes (DJSI) in Collaboration with SAM. (2011c). Dow Jones Sustainability Indexes in Collaboration with SAM. Retrieved February 8, 2010 from http://www.sustainability-index.com/ Dow Jones Sustainability Indexes (DJSI) in Collaboration with SAM. (2011d). Dow Jones Sustainability World 80 Index Fact Sheet. Retrieved February 8, 2010 from http://www.sustainability-index.com/07_htmle/publications/factsheets.html
Dyllick, T., & Hockerts, K. (2002). Beyond the Business Case for Corporate Sustainability [Electronic version]. Business Strategy and the Environment, 11(2), 130-141. Economist Intelligence Unit. (2010). Managing for Sustainability (Report). Retrieved July 15, 2010 from http://www.eiu.com/site_info.asp?info_name=enel_sustainability&page=noads&rf=0 Fleischer, D. (2009, December 7). Green Teams: Engaging Employees in Sustainability Retrieved July 15, 2010 from http://www.greenbiz.com/topic/green-team?utm_source=GreenBuzz&utm_campaign=872c069749-GreenBuzz-2010-07-06&utm_medium=email FTSE The Index Company (FTSE). (2010). FTSE4Good Index Series. Retrieved October 5, 2010 from http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp FTSE The Index Company (FTSE). (2011). FTSE4GOOD Tradable Constituents Index Data. Obtained Directly from FTSE on February 24, 2011. Gallup. (2010). Employee Engagement: A Leading Indicator of Financial Performance. Retrieved December 15, 2010 from http://www.gallup.com/consulting/52/employee-engagement.aspx Gardner, S. (2010). Paying for Keeps [Electronic version]. Ethical Corporation. September 2010. 37-39.
86
Glo2010. Retrieved October 5, 2010 from http://www.gfmag.com/tools/best-banks/10533-worlds-50-safest-banks-2010.html#axzz1DqmUlEdI Global Reporting Initiative (GRI). (2006). Sustainability Reporting Guidelines. Amsterdam: Global Reporting Initiative. Governance Metrics Internationl (GMI). (2010, September 27). Environmental Sustianability Metrics for September 2010. Retrieved December 2, 2010 from http://www.gmiratings.com/Announcement20100927.htm Gordon, A. A., & Kaswin, J. L. (2010). Effective Employee Incentive Plans: Features and Implementation Processes [Electronic version]. Cornell HR Review, May 2010. Retrieved July 15, 2010 from http://cornellhrreview.org/2010/05/31/effective-employee-incentive-plans-features-and-implementation-processes/
Hallstedt, S., Ny, H., Robèrt, K., & Broman, G. (2010). An approach to assessing sustainability integration in strategic decision systems for product development [Electronic version]. Journal of Cleaner Production, 18(8), 703-712.
Hamdouch, A., & Zuindeau, B. (2010). Sustainable development, 20 years on: Methodological innovations, practices and open issues [Electronic version]. Journal of Environmental Planning & Management, 53(4), 427-438.
Hollender, J., Orgain, A., & Nunez, T. (2009). What is Sustainability? (White paper). Princeton: Kaplan Eduneering.
HSBC Holdings PLC. (2010). Sustainability Report 2009. Retrieved October 5, 2010 from http://www.hsbc.com/1/2/sustainability/2009-reports International Organization for Standardization (ISO). (2008). Quality Management Systems Requirements (ISO 90001). Geneva: International Organization for Standardization. International Organization for Standardization (ISO). (2009). Guidance in Social Responsibility (ISO 26000). Geneva: International Organization for Standardization. Investors in People. The Framework. Retrieved February 15, 2010 from http://www.investorsinpeople.co.uk/Needs/Framework/Pages/default.aspx
November 3, 2010 from http://www.smartplanet.com/people/blog/pure-genius/the-buzz-at-burts-bees-is-sustainability/1552/
87
Kazdin, A. E. (2009). Psychological science's contributions to a sustainable environment [Electronic version]. American Psychologist, 64(5), 339-356.
Triple Pundit. November 15, 2010. Retrieved November 20, 2010 from http://www.triplepundit.com/2010/11/green-xerox-save-10-million/
Kostman, JT, & Schiemann, A. (2005). People Equity: The Hidden Driver of Quality [Electronic version]. Quality Progress. May 2005, 37-42. Mager, D., & Sibilia, J. (2010). Street Smart Sustainability. San Fransisco: Berrett-Koehler Publishers, Inc. Makower, J. (2000). Ten Keys for Educating and Engaging Employees. (Green Biz Report). Retrieved on December 29, 2010 from http://www.greenbiz.com/business/research/report/2000/11/09/ten-keys-educating-and-engaging-employees
[Electronic version]. Harvard Business Review, January-February 2010, 69-75. MIT Sloan. (2009). The Business of Sustainability: Findings and Insights from the First
Project (Report). North Hollywood: MIT Sloan Management Review. Retrieved June 29, 2010, from http://www.mitsmr-ezine.com/busofsustainability/2009#pg1
(Report). North Hollywood: MIT Sloan Management Review. Retrieved February 22, 2011, from http://sloanreview.mit.edu/special-report/sustainability-advantage/ National Environmental Education Foundation (NEEF). (2009). The Engaged Organization. (Report). Retrieved October 17, 2010 from http://www.neefusa.org/business/report_2009.htm National Environmental Education Foundation (NEEF). (2010). The Business Case for Environmental and Sustainability Employee Education. (Report). Retrieved July 15, 2010 from http://www.neefusa.org/business/index.htm National Institute of Standards and Technology. (2010). 2009-2010 Criteria for Performance Excellence. Gaithersburg, MD: National Institute of Standards and Technology. Network for Business Sustainability, & Canadian Business for Social Responsibility. (2010). Embedding Sustainability in Organizational Culture (Report). Retrieved
88
December 2, 2010 from http://www.nbs.net/knowledge/culture/systematic-review-organizational-culture/
paper). Princeton: Kaplan Eduneering.
Palmer, B. (2004). Change Management: Overcoming resistance to change [Electronic version]. Quality Progress, 37(4), 35-39. Pfeffer, J. (2005). Producing Sustainable Competitive Advantage through the Effective Managemenet of People [Electronic version]. Academy of Management Executive. 19, 4, 95-105 Pojasek, R. B. (2006). Is Your Integrated Mangement System Really Integrated? Environmental Quality Management. Winter 2006, 89-97. (Provided by author). Pojasek, R. B. (2007). A Framework for Business Sustainability. Environmental Quality Management. Winter 2007, 81-88. (Provided by author). Pojasek, R. B. (2008). Creating a Complete Business Management System. Environmental Quality Management. Summer 2008, 87-95. (Provided by author). Pojasek, R. B. (2009a). Sustainability Performance: Addressing the Now With Attention to the Future. Environmental Quality Management. Winter 2009, 77-93. (Provided by author). Pojasek, R. B. (2009b). Using Leading Indicators to Drive Sustainability Performance. Environmental Quality Management. 17, 87-93. (Provided by author). Pojasek, R. B. (2009c). Conforming to a Management System-And Complying at the Same Time. Environmental Quality Management. Autumn 2009, 79-86. (Provided by author). Pojasek, R. B. (2010). The Three Responsibilities. Environmental Quality Management. 19, 87-94. (Provided by author). Riordan, C. M., Vandenberg, R. J., & Richardson, H. A. (2005). Employee Involvement Climate and Organizational Efectiveness [Electronic version]. Human Resource Management, Winter 2005, 44, 471-488. Resnick Consulting. (2009). Making Sustainability Stick with Employee Engagement. Retrieved July 25, 2010 from http://sustainabilityengagement.com/RC_SEE_100209/index.html
89
Royal Bank of Canada (RBC). (2010). 2009 Corporate Responsibility Report and Public Accountability Statement. Retrieved October 9, from http://www.rbc.com/responsibility/reports/
SAI Global. (2011). The Business Excellence Framework. Retrieved February 19, 2011 from http://www.saiglobal.com/Improve/ExcellenceModels/BusinessExcellenceFramework/ Sustainable Asset Mangement (SAM), & Price Waterhouse Coopers (PWC). (2010). The Sustainability Yearbook 2010. (Report). Zurich: SAM & PWC. Stewart, C. J., & Cash, W. B. Jr. (2008). Interviewing: Principles and Practices. New York: McGraw-Hill. Stonyfield Farms. (2010). Our Roadmap: MissionAction Program. Retrieved December 2, 2010 from http://www.stonyfield.com/healthy_planet/what_we_do/our_roadmap/index.jsp Strandberg Consulting. (2009). The Business Case for Sustainability. (Power Point Presentation). Retrieved November 20, 2010 from http://corostrandberg.com/category/publications/tools The Banker. (2011). The Top 500 Banking Brands. February 2011, 14-28. The European Foundation for Quality Management. (2003). The Fundamental Concepts of Excellence [Electronic version]. Retrieved February 3, 2010 from http://excellenceone.efqm.org/Default.aspx?tabid=465
from http://www.equator-principles.com/ United Nations Environment Programme (UNEP) Financial Initiative. (2011). About UNEP FI. Retrieved February 8, 2010 from http://www.unepfi.org/about/index.html Vandiver Group, Inc. (2009). Global Sustaainability Strategy Survey Results. (Report). Retrieved December 3, 2010 from http://www.vandivergroup.com/index.php?option=com_flexicontent&view=items&cid=93:industries-holder&id=215:sustainability&Itemid=147
December 2, 2010 from http://bestpracticesforbusiness.com/2010/07/30/informal-incentives/
90
What? (White paper). Retrieved November 19, 2010 from http://www.sustainabilityconsulting.com/white-papers-list/sustainability-change-management-weve-had-the-green-auditnow.html Williams, J. H. (2008). Employee engagement [Electronic version]. Professional Safety, 53(12), 40-45. World Business Council for Sustianable Development (WBCSD). (2010). People Matter- Engage. (Report). Retrieved November 20, 2010 from http://www.wbcsd.org/Plugins/DocSearch/details.asp?DocTypeId=25&ObjectId=38793&URLBack=%2Ftemplates%2FTemplateWBCSD2%2Flayout.asp%3Ftype%3Dp%26MenuId%3DODU World Business Council for Sustianable Development (WBCSD). (2011). People Matter- Reward. (Report). Retrieved March 1, 2011 from http://www.wbcsd.org/Plugins/DocSearch/details.asp?DocTypeId=25&ObjectId=39241&URLBack=%2Ftemplates%2FTemplateWBCSD2%2Flayout.asp%3Ftype%3Dp%26MenuId%3DODU Yin, R.K. (2009). Case Study Research: Design and Methods. Thousand Oaks: Sage Publications, Inc.