Is HR ready for the future, and is it in a position to ensure that it delivers sustainable long-term value?

So, you may think that Sustainable HR is about addressing environmental issues or perhaps a wider corporate social responsibility. While this is a part of it, what sustainable HR is also about is taking a broader view of multiple stakeholders and a long-term view of how HR will deliver value.

This is being driven by investors and key business people:

‘Companies must ask themselves: What role do we play in the community? How are we managing our impact on the environment? Are we working to create a diverse workforce? Are we adapting to technological change? Are we providing the retraining and opportunities that our employees and our business will need to adjust to an increasingly automated world? Are we using behavioural finance and other tools to prepare workers for retirement, so that they invest in a way that will help them achieve their goals?’ 

Larry Fink, Chairman and CEO BlackRock, in his 2018 letter to CEOs.

Many sustainability commentators welcomed his letter, recognising that for too long businesses have worked mainly for one type of stakeholder: Shareholders which is often for short-term gain. Many of the issues highlighted by Larry Fink are the responsibility of HR, but are we ready to deliver to this?

What is Sustainability?

The practice of meeting the needs of the present without compromising the ability of future generations to meet their own needs.

(Brundtland Report, “Our Common Future,” 1987 World Commission on Environment and Development)

Taking this further Sustainable HR is about recognising that organisations have a wide range of stakeholders i.e. employees, trade unions, suppliers, community groups, global institutions and societal and government bodies, that they must increasingly interact in a positive way. 

There are also an increasing number of measures and standards that organisations should adhere to, including the UN sustainability Goals, the ISO standards of assessment and IFRS, among others. This is in addition to other corporate social responsibility commitments all companies have.  

The future is not just about making money to deliver to shareholders; the focus now is delivering to numerous stakeholders. in the long term for the benefit of people and the planet. 

What is Sustainable HR?

To understand the role of sustainable HR, you need to change your ‘mental model’ of HR and its role in the organisation. HR is often viewed in terms of its functional responsibilities, as it tries to influence the corporate strategy and provide people with solutions to meet business needs.

That is one-dimensional. To truly be sustainable, HR needs to understand the various needs of a broad range of stakeholders and provide solutions to ensure the organisational sustainability of people, profit and plants. 

The following key characteristics will help HR more effectively meet its present needs while ensuring it has the resources to achieve a sustainable competitive advantage in the future.

Sustainable leadership

The practice of leading an organization, function, team or project in a manner that is ethical, inclusive, adaptive, and has stakeholder impact, ensuring long-term success, while considering the well-being of all stakeholders, and promoting environmental, social, and economic responsibility.

There is a growing argument that corporations can be a force for good and balance. people, planet and profit.  HR needs to grasp this leadership role and deliver an HR strategy that will support this leadership approach and engage senior management in delivering it across the business. To do this HR executives must show leadership beyond HR.

Focus on stakeholders

Organisations have many stakeholders and increasingly it’s a difficult job to balance their various needs.  If organisations are to be sustainable over time, they must understand the needs of these varies stakeholders and balance what maybe be conflicting demands, to address their needs more equitably than they are doing now. 

Think long term

When making decisions we need to take a longer-term view of the impact of those decisions on various stakeholders. This will need a change to a sustainable mindset and developing and utilising skills, such as ‘mental models’, design and critical thinking and an ‘outside in’ perspective. This will of course go hand in hand with being far more business savvy, without being myopic on owners\investors. 

Increased reporting

There is also an increasing number of measures\standards that organisations should adhere to, including the UN sustainability Goals, the ISO standards of assessment and IFRS, as well as regulators such as Corporate Sustainability Reporting Directive and the US Securities and Exchange Commission.  This is in addition to the many commitments to an organisation’s corporate social responsibility.  Organisations and HR needs to understand the required standards and deliver to, and report on, them.  

Outside In perspective

As a function we need to take a broader perspective in developing strategies and solutions by looking what is happening outside the organization, from a wider business, social, political and market context.  HR needs to learn and apply some of these perspectives rather than looking at everything through the HR lens. This will build knowledge, confidence and ultimately the credibility of HR.

Deeply understand the business

HR in the past has had a basic understanding of the business, but to be sustainable and to be taken as a valued contributor to business success, we need to understand how the business adds value.  To this end, HR needs to understand the financials to the point where they can question and challenge the data, while using it to build a business case for HR.

In addition, HR should spend more time with other heads of function to understand their challenges from their perspective, as well as spending time on the ground with employees, suppliers, consultants and customers, if need be, to get a different perspective.  

Deep expertise in HR

We still need to be experts in all the areas of HR, to the point that we can play a role in the development of initiatives and know how to position HR as a business contributor.  Having the depth of expertise with a sound knowledge of the business and its financials, with the ability to look at these solutions though the lens of other stakeholder.  This will ensure our solutions are viable, understood by management and seen as being strategic to the business.

Influence

HR leaders like to think they are key influencers with the CEO and the senior management team.  While this is happening with some organisations, there are many where HR struggles with its credibility amongst key decisionmakers.  This is in part because of a lack of influencing skills, and it has an impact on the confidence of HR leadership. 

HR needs to stop looking at all situations through the HR lens.  If you take an ‘outside in’ approach and look at the business challenges from management perspectives, you can influence and tailor sustainable solutions.  If you can do this, it will strengthen your influence with the senior team and build back your personal confidence.

I will leave you with this thought, there is a lot for HR to take in, but we need to develop our skills beyond the reemit of the functional areas of HR and start.  

To this aim Informa Connect has launched a Certificate of Sustainable HR, which covers all the points above and many more. This will involve developing new skills, helping you to see the role of HR differently and building back confidence, so HR has a sustainable and successful future.