Think at London Business School
Build your awareness of physical and cultural dimensions to succeed in a global business environment
By Randall S Peterson
We all know that these days, a great salary and corporate benefits package is far from enough to entice the world’s brightest and best to a job at your firm.
Today, the best professionals are much more likely to work for responsible businesses, says Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School. Here’s how your organisation can stand out in the crowd.
The most ambitious new players in global business expect a high level of sustainability from their employers. As millennials – and now Generation Z – become a bigger chunk of the workforce, attracting, hiring and retaining the best of them is crucial. Millennials not only research the issues a company supports, but the extent that it actually supports them too. In other words, they know whether or not a company’s sustainability policy is a PR smokescreen or the real deal.
A recent study found that 75% of millennials would rather take a pay cut than work for a socially irresponsible company. They want authenticity, a fit between the company and the causes it champions, and a real commitment to them. But there’s a big ‘but’: no one size fits all. For instance, most male millennials believe a company should only get involved with causes that are relevant to their brand. Most females, however, do not. So while men and women want their organisations to be involved in the social good, they don’t agree on how exactly they want that to happen.
Dr Ioannou says: “Millennials are having a triple effect on the sustainability strategies of today’s organisations because first they’re entering the product marketplace as customers, then they enter the labour market as employees, and thirdly we know there’s going to be a big transfer of wealth to millennials. In a few years’ time they’ll ask ‘Where is my fund money being invested? Where is my pension money being invested?’ They’ll want those investments to be in socially responsible companies.”
Remember Volkswagen’s emissions scandal? As probably the biggest – or at least the most famous – sustainability scandal of all time, it still looms large in corporate memories.
Volkswagen hired a head of CSR who fulfilled their appointed duties to keep the company’s reputation clean, but didn’t mind that their cars were poisoning the earth by belching out 40 times the nitrogen oxide limit. As a talent leader, it’s 100% your responsibility to make sure you know the inner workings of your firm’s sustainability efforts because if you don’t, your hiring pool could be about to shrink before your eyes.
It’s impossible to underestimate the impact that business now has on society. “Out of the 100 largest economies in the world, 69 are companies and 31 are countries,” says Dr Ioannou. “The footprint of the organisation is growing exponentially. In the 1980s the world’s top 1000 companies provided 21% of global GDP. Now it’s over 75% and growing.
“The costs of business to society are more noticeable than ever. It’s not just about individual awareness now, there’s extensive collective awareness of social and environmental issues, so when there’s a problem with your brand or in your supply chain or your own practices, collective awareness more easily becomes collective action, such as consumer boycotts or employee walkouts.”
Talent leaders have an important role to play because they control the first interactions an employee has with an organisation. Talent leaders should be creating environmental and social goals alongside the rest of the leadership team, and deciding how to balance these objectives with the more traditional financial ones.
Corporate values, sustainability strategies and ensuring that employees implement the strategy consistently across the organisation is an L&D job because they are the ones who have the power to create a workforce that has the trust, values, skills and motivation to do it right.
Make your sustainability priorities clear in job descriptions and ask about potential employees’ views on sustainability at interview. Put it in all your job offers and make sure it’s part of your performance metrics.
"75% of millennials would rather take a pay cut than work for a socially irresponsible company"
“The global companies who are making sustainability a success are the ones with differentiated strategies,” says Dr Ioannou. “That means they’re distinguishing themselves by trying innovative, pioneering things. If you lag behind on sustainability best practice it’s very likely that not only your operational but also, that your stock market performance will suffer after.
When you differentiate you can become best in class. Yet, a lot of companies put a lot of effort into merely catching up on common practices. They fall into the ‘That’s good enough’ trap. If you want to lead the pack, it’s not. It won’t be easy, but the best companies lead by adopting more innovative, explorative strategies that capitalise on environmental and social issues as growth opportunities.
Dr Ioannou added that, if your organisation is a market leader, the way you craft your sustainability strategy matters more than ever, because others will very likely follow you and look up to you to legitimise such initiatives.
“Often enough, there might not be an obvious win-win”, says Dr Ioannou. “Companies with the most innovative solutions are likely to be the most successful ones in dealing with the underlying trade-offs, yet innovation is also not a panacea. Companies need to learn to live with the inevitable trade-offs, and understand where the trade-off comes from through profound engagement with stakeholders.
Becoming comfortable with trade-offs also means that companies can structure their experimentation or even their partnerships and collaborations with an eye towards the future, when new technologies for example could emerge that better address the trade-offs.”
Don’t overspend on PR and marketing to boast about all the great things your company might or might not (!) be doing with sustainability. According to Dr Ioannou, it’s an all-too-common mistake. “I see it over and over again,” he says.
“The commitment and the communications need to be both internal as well as external. And internal is equally important for achieving not only employee buy-in but also for inspiring, for motivating your workforce to achieve the moon-shot objective of becoming a sustainable company. There needs to be alignment between externally and internally facing initiatives.
"Shouting about your company’s superior sustainability status just to get more customers might be understandable if it didn’t create more potential problems than it solves: When you read past mission statements, core values and CEO quotes drafted by PR teams, you can see that many sustainability strategies are façades.
"In reality, many sustainability strategies are drafted by teams – sometimes from outside the company – that a CEO may know little about, leading to weak decisions that crumble under pressure. Your sustainability strategy must pervade every corner and level of your organisation, because if your people don’t have the time and resources to practise what it preaches, guess whose team is going to hurt the most? Yours!"
Dr Ioannou teaches on both degree and executive education programmes at London Business School, including the new Sustainability Leadership and Corporate Responsibility programme.
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