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
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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.
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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.
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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.
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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.
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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
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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
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List of Tables
Table 1: Case Characteristics 31
Table 2: Sustainability Incentives 66
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List of Figures
Figure 1: Research Protocol 29
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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.
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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
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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
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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
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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
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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
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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.
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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
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are provided with powerful incentives to become involved and, eventually adopt the
mentality of sustainability in an all-inclusive manner.
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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,
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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.
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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
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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
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(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
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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).
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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
N. Financial Rewards Linked to Sustainability Targets
O. Non-Financial Rewards Linked to Sustainability Targets 45
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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
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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.
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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
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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.
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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
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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.
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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.
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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.
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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
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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
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