Introduction
Organizational sustainability can refer to leadership’s responsibility of generating enough revenue to keep an organization running, social responsibility, environmental responsibility, and human rights. Some organizations have created specific leadership positions dedicated to formulating and implementing sustainability programs. Other organizations integrate the responsibilities related to sustainability into other leadership positions. The practice of sustainability in organizations is varied according to the level of importance organizations place on it. The organization’s values can also influence how and when sustainability is practiced and implemented. Some organizations focus on environmental sustainability initiatives, while others hone in on initiatives designed to advocate for social justice.
The amount of organizations implementing sustainability practices are relatively small, but those that do implement these practices often do so out of a reflection of the organization’s core values. Leaders within these organizations obviously feel that it is part of the organization’s mission to practice environmental, social, and/or financial sustainability (Eccles, Loannou, & Serafeim, 2012). In fact, the practice of sustainability can become an organization’s primary or secondary advantage in the marketplace. In other cases, it becomes central to the organization’s identity. If organizational culture determines whether a firm practices sustainability, to what degree does leadership have an obligation to uphold those cultural values? Furthermore, does leadership simply uphold a firm’s cultural values in terms of sustainability or does a firm’s leadership create those values in the first place? Are there certain models of sustainability that have proven to be more successful than others? Has the field emerged enough so that standardized business models of sustainability been established and put into place by leaders of various types of organizations? Or is sustainability still a concept and practice that is in its experimental stages? Do leaders feel a moral responsibility to practice sustainability in order to serve the firm’s or the marketplace’s needs?
Analysis of the Field
The field of sustainability appears to be quite varied in practice. While some firms take the stance that sustainability is the responsibility of all of its members, others devote entire positions and teams of professionals to the practice (Pitchford, 2015). Some question whether firms practice sustainability out of a desire to be socially responsible or because it will generate a competitive advantage in the marketplace. In other words, does leadership in some firms simply give the marketplace the impression that those firms practice sustainability in order to appear trendy or capitalize on consumer values? Researchers have posited that strategic decisions related to sustainability are driven by three main sources: performance drivers, stakeholder drivers, and motivation drivers (Fairfield, Harmon, & Benson, 2010). Performance drivers can be defined as using sustainability initiatives to enhance or increase the firm’s financial performance, stakeholder drivers relate to meeting the needs of investors, and motivation drivers entail extrinsic needs related to the firm’s reputation, and/or intrinsic needs related to cultural values and ethics (Fairfield et al., 2010).
The idea that strategic decisions related to sustainability are driven by either performance, stakeholder or motivation factors is probable given that these factors tend to drive the majority of a leader’s strategies. In the private sector, it is well-known that the primary objective of organizational leadership is to maximize shareholder wealth. Yet, it is just as easy to surmise that financial stakeholders in an organization have needs that extend beyond the financial realm. For example, angel or private investors in a firm may very well have specific sustainability needs they want to vicariously fulfill through an organization. This is particularly prevalent in the nonprofit sector. Nonprofit organizations, by definition, are not motivated by profit and are instead in existence to fulfill a higher social cause (Downey, 2013). While the particulars of those social causes can vary, leadership within the nonprofit sector has identified four elements that enable the successful practice of sustainability. Those four elements include focus, the right people, partnerships and unrestricted funds (Downey, 2013).
The four elements that the nonprofit sector have identified as integral to the implementation of sustainability initiatives further elaborate on the three main drivers related to performance, stakeholder interests and motivational factors. Focus refers to concentrating on the principles that the organization is founded on (e.g. mission and vision), the right people refers to placing the correct people in the correct positions, in addition to forming strong relationships between board and staff members. Partnerships entails the ways that organizations form relationships with each other in order to create community impact, while unrestricted funds entails having enough financial resources to carry out the desired level of sustainability initiatives (Downey, 2013).
One can easily see where intrinsic motivational factors matches up with the element of focus. An organization’s central reason(s) for existence have a tendency to drive not only its strategies, but also the performance expectations of employees. Organizations that value the customer experience, for example, may place heavy emphasis on employee performance objectives that entail creating unique and memorable customer interaction. The question becomes whether it is the need and values of the marketplace that force leaders to implement sustainability practices or whether the values of the organization emerge separately from consumer desires. In terms of sustainability practices, the lines between consumer and organizational values appear to be blurred and interdependent. The reasons and motivations behind strategic decisions related to sustainability may be pinpointed to performance, stakeholder interests, or motivational factors, but it is hard pressed to state that one particular factor is the main reason for the emergence of the field itself. Whether it is important to practice sustainability and how that practice will be carried out is a question that seems to lack uniformity. If the public did not possess the values inherent in sustainability practices, would organizations even implement them at all?
The Leader’s Role
The level of responsibility that leaders feel towards the implementation of sustainability in an organization may be subjective. It is questionable as to whether leaders fully comprehend the role of sustainability and the impact that environmental barriers can have on the implementation of sustainability initiatives (Epstein, Buhovac, & Yuthas, 2010). Sustainability may take on different forms in an organization according to the leader’s subjective interpretation of what sustainability actually means. While sustainability typically refers to environmental, financial or socially-oriented practices, the degree to which an organization focuses on one of these areas may be aligned with a leader’s values. Since a leader is often responsible for setting the tone and direction of an organization’s culture – including its values – it is highly probable that the leader’s own values become integrated into this culture. In fact, it is not beyond the realm of possibility that a founding leader’s personal values become the cornerstone of a firm’s culture. Leaders who take social and environmental responsibility to heart will weave this into the organization’s products, services and practices. This can be witnessed in organizations that manufacture food products without genetically modified ingredients, that give a percentage of its sales to charitable organizations or causes, use recycled packaging materials, and practice environmentally sound manufacturing processes.
Whether organizations should create positions and leadership teams that are solely responsible for sustainability initiatives is a matter of debate. Should there even be an executive leadership role responsible for designing and carrying out the practice of sustainability? Or should sustainability be on the radar of all employees regardless of level or organizational role? The reasoning behind not creating a separate, defined role related to sustainability is that internal expertise in this area is unwarranted. Instead, the responsibility should be shared by everyone in the organization, regardless of job role, knowledge or expertise in the area. Some experts in the field believe this is the wrong approach, as it would be the same as expecting everyone to fulfill the functions of a specialized job. Those with expertise in sustainability should be placed in these types of positions (Pitchford, 2015).
If those with sustainability knowledge are to fulfill leadership roles that champion their expertise, the question becomes how do leaders define sustainability? One definition of corporate sustainability is “a company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and social opportunities into its business strategies” (Fairfield et al., 2010 p. 1). While there is quite a bit of evidence to suggest that the implementation of sustainability initiatives result in enhanced organizational performance, there is a lack of research on how organizations can best implement sustainability practices (Fairfield et al., 2010). The implication is that regardless of how a leader defines sustainability, his or her initiatives will benefit the organization. A leader’s true struggle may be how to enact his or her vision and account for factors that may present challenges to the implementation of sustainability initiatives.
Different types of organizations are involved in the implementation of sustainability initiatives. Government entities, government sponsored enterprises and private organizations are the three different types of structures that the public depends on for sustainability initiatives (Andre, 2011). One of the trends amongst the organizations that are implementing sustainability is a tendency to emphasize conservatism versus growth (Andre, 2011). Conservatism embraces the notion of downsizing and reusing/recycling whereas growth embraces innovation and creativity (Andre, 2011). Arguably, public leadership has different overall objectives than private firm leadership. For instance, public and government organizations tend to provide services that society deems as necessary to sustain a certain quality of life. Private organizations provide products and services that theoretically consumers need or desire. Consumers are willing to pay according to lifestyle preferences, market factors, and value propositions. The type of organization will factor into a leader’s choices regarding sustainability initiatives. Leaders of public organizations may find that sustainability is interwoven into the fabric of those organizations’ functions. Leaders of private organizations can use sustainability to develop unique organizational identities or establish competitive advantages.
Leaders should be able to align the values and objectives of the organization with their chosen sustainability initiatives. In some cases, that may mean focusing on the human or people aspect of sustainability. The decisions of leaders have the potential to directly impact the quality of life for the public/consumer base (Pfeffer, 2010). Even though the trends favor a focus on the physical environment rather than the social environment, leaders that want to focus on the social environment can implement initiatives that take human needs into account. Organizations that pay employees well and provide adequate health insurance are practicing a form of social sustainability. Not only are these organizations preventing undue strain on the public sector and other entities in the medical industry, these organizations improve the quality of life for employees. The employees do not have to be put under undue financial strain and access to adequate health insurance and financial resources helps reduce stress (Pfeffer, 2010). It also helps reduce stress related illnesses and conditions related to premature mortality (Pfeffer, 2010).
Some organizations promote sustainability from a financial or performance perspective. Employees’ compensation is directly linked to individual and/or organizational performance. This can indirectly impact both the financial and social aspects of sustainability since linking pay with organizational performance can result in more cohesive teamwork (Rajasekar & Jeyasutharsan, 2013). A combination of teamwork and technology can play into sustainability initiatives as witnessed with Frito-Lay in the 1990s. The company was faced with increasing competition and manufacturing restraints. The organization’s leaders wanted to focus on and improve financial sustainability. In order to do so, new methods of collecting and dispersing sales data via information technology systems were implemented. Access to improved data helped managers make better informed sales and distribution decisions during periods of product shortages. This aided the company in preventing further market erosion (Osborn, 1998). The effectiveness of leadership’s decisions when it comes to sustainability initiatives can be enhanced by quality data, but only if that data is in alignment with clearly defined sustainability goals.
Future Directions
Areas of research that could prove beneficial to the leader’s role in organizational sustainability are how various types of cultures result in different initiatives and how leaders can implement sustainability initiatives. It would be beneficial if the research could include theoretical models for each main area of social, environmental and financial sustainability. Another area of potential beneficial research is the impact sustainability initiatives have on organizational culture, employee morale and employee engagement.
The role of the leader in formulating and implementing sustainability initiatives in various types of organizations will help determine how leaders should be involved. The research will determine the best methods leaders can use to implement sustainability initiatives and whether leaders need to be isolated to positions that solely focus on sustainability. Success rates amongst various types of leadership styles, organizational types, and sustainability initiatives will help shape best practices. In addition, the research can help identify what factors block or hinder the successful implementation of various initiatives. As this is currently one of the biggest gaps in the literature, it would also be beneficial to identify what role organizational culture plays in hindering the implementation of sustainability.
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