Developing an Organizational Culture of Sustainability - Example

Developing an Organizational Culture of Sustainability Steve Randolph McAllister Walden Developing an Organizational Culture of Sustainability Organizations are being compelled by the social, economic, and environmental challenges facing humanity to develop cultures of sustainability. Organizations are now expected to develop cultures that provide for the sustainability of their products and processes so that the needs of future generations are not compromised to satisfy the market needs of the present. Different theories have shown that there are many factors to consider in developing an organizational culture of sustainability, including the interests of internal and external stakeholders, organizational structures, and the influence of organizational cultures on sustainability strategies. This paper will highlight some of the important issues and challenges that sustainability raises in shaping organizational culture and how these can be addressed. Analysis of the Field The field of sustainability has assumed greater importance in the business context because of the increasingly globalized nature of the economy. Greater interdependence among the economic, social, and environmental spheres has been recognized in recent years as a result of research conducted to establish the link between business, society, and the environment. Concerns such as working conditions in off-shore facilities, greenhouse effect, and global warming and natural resource depletion have increased demands of sustainability by corporations. Some important issues have emerged in the present scenario as a result of these pressures. Organizations are taking steps to incorporate sustainability at the systems level by encouraging collaborative efforts at every level of the organization and developing systems to quantifying the social and environmental impact of its products and processes (Gabriel, Tschandel & Posch, 2014). Employees are becoming increasingly aware of sustainability practices and expect their organizations to take proactive and visible steps to implement sustainability. Thus, organizations are coming up with innovative ways to engage employees through meaningful work that contributes positive to the environment and society while bringing economic benefits to the organization. On the other hand, organizations are also faced with the challenge of encouraging investors and owners to embrace sustainability. In order to do this, they need to establish a clear relationship between sustainability and economic benefit or profitability. They need to explain to owners that the improved public image and social acceptance have long-term benefits for the organization. It ensures the sustainability and growth of the organization as well as continued cooperation of all stakeholders. The extent to which sustainability is practiced in organizations depends on a number of factors. The organizational structure as well as the organizational culture influence how sustainability is carried out. According to a report by Deloitte (2010), technology is the most important component of organizational sustainability. In a survey conducted by the company, 79% of the respondents placed technology as the biggest enabler of sustainability in their organizations. Access to internal stakeholders emerged as an equally important enabler of sustainability. Other important enablers of sustainability were budget allocations and dedicated workforce at 68% and 64% respectively. These figures point to the crucial role that technological, financial, and human capital plays in sustainability. Hence, organizations that possess sophisticated technology, a motivated and engaged workforce, and adequate financial resources are better able to create an organizational culture based on sustainability. In the present situation, organizations emphasize the most on issues such as energy efficiency, transportation and alternative energy when they develop sustainability programs. The least importance is placed on water and land/soil related issues. Technology, telecommunications and automotive industries placed the greatest emphasis on energy efficiency, possibly due to the highly competitive nature of these industries. Land/soil and water issues received the greatest attention from industrial process and consumer product industries because of the resource-intensive nature of their products and production processes (Deloitte, 2010). This reveals that each industry develops its own sustainability priorities based on its products, operations and the kind of technology used. As the environment evolves, organizations can be expected to pursue invest more in technology and human capital to enhance their sustainability practices. Research Topic This paper discusses factors in the contemporary business environment that guide efforts at developing an organizational culture of sustainability. As sustainability emerges as one of the most important issues for business from a global perspective, the relationship between organizational culture and sustainability has assumed increased importance. From a social, economic, and environmental perspective, organizations need to widen their strategic vision to understand, assess, communicate, and manage sustainable development strategies in light of their potential impact on individual, group, and global levels (McAllister, 2014; Shumba et al. 2011). Background of Sustainability Building an organizational culture based on sustainability has become an important concern of contemporary organizations in a globalized world. The concept of sustainability gained widespread popularity when it was used in the 1987 report by the Brundtland Commission (Dash, 2013). The report envisioned a future where stakeholders would collaborate for a sustainable future regardless of the level of economic development or economic systems in place. The need for sustainability was felt because the limited nature of natural resources was being acknowledged. The environmental consequences of unbridled consumption such as the greenhouse effect and the ozone layer were also becoming prominent. Sustainability is based on the principle that development to meet the needs of present society should not compromise the ability of subsequent generations to use those resources (Dash, 2013). Sustainable development also incorporates the extent and nature of sustainability in society as a function of the contemporary technology. Therefore, technology needs to evolve to increase sustainability levels in society. Furthermore, the needs of the poor people should be given priority more than other types of needs (Dash, 2013). As a result of sustainability, the social and economic organization of society undergoes a transformation to make the social and economic systems fairer and efficient. The most important aspect of sustainability for this paper is that it ensures that the organizations can have a positive effect on its social, economic and environmental context (Dash, 2013). A positive social and economic impact and a decrease in the negative impact on the environment through sustainable practices helps the organization become socially accepted as well as more profitable. To achieve this, the organization needs to develop a systems view of its operations and ensure collaboration between all stakeholders within the organization and outside it. Current Theories and Debates in Sustainability Several theories have shaped the concepts of sustainability as well as sparked a number of debates. The earliest of these theories is the theory of natural capitalism, which proposes a model for sustainable use of natural resources. According to this theory, sustainability involves the radical resource productivity so that maximum utility may be derived from processes through minimum energy investment (Sheriff, 2011). This theory also proposes other concepts such as an economy based on service and flow contrary to the production of manufactured goods (Sheriff, 2011). This helps to reduce the burden on the natural resources and raw materials. It also increases managerial efforts on service quality. Operations are designed to mimic natural, biological processes to become more energy-efficient while increased investments are made in natural capital along with other forms of capital (Sheriff, 2011). The Four Capital theory proposes a model where the importance of environmental capital in society is openly acknowledged (Tilley & Young, 2009). This theory proposes that along with investing in human capital, financial capital and manufactured capital, organizations should also increase investment and focus on environmental capital. This is an important theory because it asks managers to balance all four types of capital instead of emphasizing one type at the cost of the others. Not recognizing the importance of environmental capital such as natural resources and local ecosystems can result in strategies that limit the long-term growth and viability of the organization. As a result of this theory, managers can become more attentive to environmental capital and develop strategies and ways to nurture and develop it. Based on this theory, organizations can create an organizational culture based on sustainability along with profitability, innovation and efficiency. Adaptive management is another sustainability theory that is based on flexible management practices. Since environmental initiatives are affected by diverse factors, the adaptive management theory recommends flexible decision making carried out in the light of the outcomes of intermediates steps as the best way to develop strategies in an uncertain environment (Benson & Stone, 2013). Adaptive management also relies on collaboration between various stakeholders such as managers, employees, environmental groups, technology developers, and financial experts. Adaptive management enables organizations to learn from the results of their actions. Sustainability risk management helps managers to align business and profitability objectives with environmental or sustainability objectives. Managers that adopt this approach are able to monitor and assess the effects of various organizational and operational processes on the environment. Based on this information collected through the organization’s reporting systems, managers can develop strategies to make the processes more efficient so that the environmental impact may be reduced (Anderson & Anderson, 2009). As a result, both economic efficiency and environmental sustainability improve. Life cycle analysis (LCA) is another useful sustainability theory, which assesses the environmental impact of organizational products and systems throughout the life of the product. The use of raw materials and energy during the sourcing, manufacturing, use and disposal stages is calculated to arrive at an estimate of the total energy and environmental resources consumed by a product (Heidrich & Tiwary, 2013). This approach is useful in evaluating various projects for their environmental impact. However, this should be balanced with assessments for the quality and market potential for the product before making an economic decision. The eco strategy wheel is a sustainability tool that assists managers in making product development strategies from a sustainability perspective. This model is compatible with other business goals such as cost efficiency, innovative potential and effectiveness. The model emphasizes that products should perform at optimal levels and should have minimal impact on the environment (SVID, 2014). Few materials as opposed to several should be used in the manufacture. At the same time, the materials should be such that the life and durability of the product is maximized. Efficient production, waste management and distribution systems should be developed to achieve sustainable product development. Sustainability is a controversial topic and has opened up areas of debate in the community. One of the issues for debate relates to the measurement of sustainable design. A lack of consensus on what constitutes sustainability in product design can lead to disagreements about the environmentally-friendly nature of products or processes. This can be resolved, to some extent, by universal design (UD) approaches (Vavik & Keitsch, 2010). Extracting commitments towards sustainability also opens fissures about the extent of the actual impact of organizational processes on the ecosystem. The extent to which sustainability is compatible with market competitiveness and wealth generation is another arena for debate between corporate leaders (Korten, 2011). Developing an ROI measure to calculate the impact and contribution of sustainable practices to the bottom line is another challenge that stirs controversy in the field. Industries Impacted by Sustainability Culture Sustainability in organizational cultures will impact all industries. It has been explained in the beginning of this report that sustainability encompasses all kinds of economic systems and development states. Hence, sustainability cannot be restricted to a particular industry or sector. However, in this section, the forces that will intensify for certain industries are highlighted to illustrate some of the demands posed by sustainability on various industries. The manufacturing industry is heavily dependent on the economies of scale to keep costs low. Cost is a vital competitive strategy in the manufacturing industry because of competition from global rivals. The most pressing challenge for this industry relates to location and working conditions (Chen, Olhager, & Tang, 2014). This issue was highlighted in the global media when a garment factory manufacturing products for western clients, including Walmart collapsed killing hundreds of poor workers. Pressures for increasing sustainability in the supply chain in contrast to lowest labour costs have intensified since the incident. Another industry especially affected by sustainability is the oil industry, especially at the primary levels of the value chain. Non-governmental organizations such as Greenpeace have been pointing at the environmental hazards posed by deep-sea drilling and criticizing the measures taken by oil exploration companies to reduce and control oil spills; one of the most significant events in recent times occurred in the BP oil spill in the US Gulf in 2010 (Harzl & Pickl, 2012). Organizations will be expected to invest in cleaner technology for oil exploration, extraction and transportation. They will also be expected to invest in alternative energy development. The hospitality and tourism industry will also be expected to incorporate environmentally-friendly construction, leisure activities, energy-efficient operations, and waste management practices to cater to an environmentally conscious market (Roe, Hrymak & Dimanche, 2014). Responses to the Sustainability Pressures The positive impacts of sustainability offer greater acceptability in the community and cooperation from stakeholders. In order to maximize these positive impacts, organizations can implement measures to engage their employees with the organization. This is more necessary for employees who are already environmentally-conscious. These employees should be involved in sustainability programs and be offered the opportunity to demonstrate initiative and innovation. The organization should create a governance structure that values sustainability. Senior management should also signal commitment to sustainability through actions, reward systems, and policies. The life cycle analysis and eco strategy wheel discussed above can be used to facilitate such engagement. Organizations can also benefit from the positive impacts of sustainability by investing in technology that supports sustainability. This includes a range of initiatives from installing filters that reduce carbon and sulphur content released into the atmosphere to using solar energy and green construction to meet lighting and ventilation needs for the office facilities. While these large-scale investments can facilitate sustainability goals over the long term, the organization an also initiate short-term technology changes such as redesigning production systems that reduce waste and improve efficiency. Technology has been identified as a major enabler of sustainability. It can facilitate the development of energy-efficient products as well as the designing of productive production processes. Therefore, organizations need to consider it as a strategic investment for the long-term growth of the organization. Organizations can also mitigate some of the negative impacts of the sustainability trend. The most important way is to follow all the sustainability regulations applicable to their industry. In this way, they can avoid getting penalized for non-compliance. The challenge of distracting the organization from its primary function can be overcome by aligning sustainability with the organizational strategy. Sustainability goals, timelines and metrics can be aligned with other business and functional level goals and strategies. Future Directions The topic of sustainability in organizational culture requires further research from several aspects. In the coming years, researchers will need to focus on developing the right kind of remuneration packages and incentives for the organization that reward commitment to sustainability. Research needs to consider how such remuneration packages should be structured in order to appeal to a diverse workforce. Generational cohorts and a demographically diverse workforce require different financial and non-financial incentives. Furthermore, the organization needs to consider that different generational cohorts hold different attitudes towards sustainability. Formal practices that can encourage fulfillment and innovation behavior (Bertels, 2010) require further research because these can help to create a formal structure and system to institutionalize sustainability in the organizational culture. Sustainability in the organizational culture will affect future research by encouraging a study of how organizational values and norms can be shaped to communicate commitment to sustainability to a diverse set of internal and external stakeholders. This paper has highlighted some of the important issues and challenges that sustainability raise in shaping organizational culture. The present topic will encourage managers to develop innovative ways of engaging employees in the sustainability effort and harnessing their enthusiasm and concern for the environment. This topic will also stimulate research on how economic and social/environmental goals can be reconciled to make the organization profitable as well as socially responsible. Conclusion This paper discussed the challenges and issues facing the development of an organizational culture based on sustainability. These challenges were discussed in the light of various theories of sustainability such as the four capital theory, the sustainable risk management theory and the eco strategy wheel. Sustainability has become an important issue for business managers because it affects the sustainable growth of the organization in the communities that it operates in. In addition, sustainability also contributes to profitability as shown in the four capital theory. 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