10. Institutionalizing Sustainability

To make sustainability stick, you must embed it into the fabric of your company. This means that it must be institutionalized into your recognition and rewards system, into job descriptions, evaluation procedures, compensation, and benefit packages. This takes time and commitment, and it is often the most difficult aspect of sustainability implementation, which is why so few companies have actually been successful. These are essential requirements, however, because you need to provide the carrot, stick, and processes for institutionalizing sustainability for the long term.

Canada’s Mountain Equipment Company (MEC) is attempting to do just that. According to Esther Speck, the company’s director of sustainability, MEC has “made a decision that rather than adding a generic statement about sustainability, they would specifically clarify how sustainability was a part of each person’s job.”¹ This chapter will show you how to do that.

Start now and you can actually also take advantage of employee turnover. If, let’s say, the average turnover for your company is 4.6 years, which is the U.S. national average, then by adding sustainability to your job descriptions and onboarding, you’ll realize that about 80% to 90% of your company will have been trained within 5 years. This allows you to turn what’s normally a negative into a positive.

If your questions about sustainability end up turning away a few people, that’s okay because this will mitigate any potential unnecessary battles around implementation later on. Realize that if people are excited about sustainability, they’ll likely come to the job with some new ideas and added value. Plus, as Ben Packard states, “This will help build the ‘CSR muscle of the company’ outside of that department.”²

For example, Toyota asks Kaizen questions during its factory job interviews, which include a visit to the shop floor, where candidates are asked, “What do you think we could do to be more efficient?” If the candidate doesn’t see anything or isn’t willing to say anything, this means they might not be right for the Toyota culture of continuous improvement. This doesn’t necessarily work for all offices and interviews, but it is one technique that Toyota has found effective. It’s easy enough to do around sustainability as well.

There are three ways to handle this situation. The first method is to have management dictate a “thou shalt do as we say” mandate to all employees and just write it into their job function. This can work if you have a command-and-control type culture, but it’s going to be less effective for the long term, and it definitely will not work in a more collaborative or cooperative culture.

The second way is to utilize an engagement strategy to seek out workers’ ideas and input, as well as those of the co-workers in their department; identify what activities they have control over that they could do in a more sustainable manner and collaboratively write the job description changes. This is an empowering approach because employees can now help design the changes. Just make sure that there is someone to do a final review to ensure that the requirements aren’t too outlandish and that nobody is trying to game the system.

Lastly, what I call the review approach is to wait until the annual performance review or a time when someone is up for a promotion. This provides an excellent opportunity to talk with the employee one-on-one about the part that she can play in the company’s sustainability success and to update the job description as well.

The reason external groups and investors want leadership and the Board to have these things in their job descriptions is that they expect these individuals to have a firm grasp on the risks and potential opportunities that social and environmental issues pose to the organization. They are beginning to expect it as part of Board members’ fiduciary responsibility.

Dow, for example, has “incorporated sustainability objectives into compensation models, reviews, and other management processes, including a requirement that all newly promoted business unit managers review their units’ sustainability plans with senior management within 90 days.”³

There are three other considerations that are essential when you are incorporating sustainability into evaluations:

1. First and foremost, it has to have meaning.

Sustainability cannot be 1 of 20 things that someone is evaluated on. Each person and role will be evaluated differently, but sustainability has to be within the top eight criteria for someone to take it seriously. It needs to be real and they need to be held accountable. As always, there have to be rewards for success and consequences for failure. If it is one out of twenty criteria, then it really isn’t that important in the grand scheme of things.

2. Match the evaluation criteria with areas they have control over.

There is nothing more demotivating than to be evaluated on something that you don’t have direct control over. So if someone is being evaluated on something that is beyond her control, such as the company’s overall GHG performance, and she is in a department with very little impact, this will end up being disheartening and demotivating.

3. Don’t draw evaluation criteria too narrowly.

You want people to think systemically about sustainability and not focus on something very small that just happens to be right in front of them. What can happen is that employees might not be able to “see the forest for the trees.” So don’t draw criteria so narrowly that they focus entirely on one small thing and miss the bigger opportunities for impact by collaborating with other departments and individuals. You don’t want a situation where an employee meets her goals but ends up negatively impacting the company overall.

When I’ve described how I use benefits in this regard to fellow business owners and CEOs, I’m often astounded by the response that I receive, especially with those in the baby boomer generation. Their response is typically something along the lines of, “Well, when you get to my age, you’ll realize you cannot afford all this.” Those comments do nothing but anger me because I’ve seen firsthand, with both my company and others, how the data to support my argument holds up. Although it can be challenging at times with limited resources, that only means that you have to be a little more creative to find ways in which your benefits package can help your company reach its sustainability goals.

Clif Bar, for example, has sustainability embedded in employees’ benefits package, including incentives for such actions as purchasing a fuel-efficient car and making eco-friendly home improvements. Momentum is ensured at weekly staff meetings, where employees share practical tips for living greener, and at yearly award ceremonies, where individuals are recognized for excellence according to the company’s values.⁴

My company follows that of Clif Bar, in that my philosophy has always been to try to create a great place to work, one that if my best friends or I were looking for a job, we would want to work here. So I’ve aligned our benefits with our sustainability and business goals in attempt to do just that.

At SBC, this is part of our philosophy that we call life-work balance, not the other way around. We offer great benefits and try to have fun in our workplace while we work with our clients and partners.

We focus on a highly efficient 35-hour workweek with the goal of allowing our employees time outside the office to pursue their professional goals, contribute to their community, and enjoy those activities that nurture their lives. As I’ve reviewed my employees over the past five years, I’ve found that these reduced work hours in the office means they are heads-down on their work when they are in the office and typically are more productive. And it ties to our sustainability goal of being a great place to work as well.

In addition to the traditional benefits of healthcare, dental, life insurance, vision, 401k/IRA, there are a number of ideas in Table 10.1 that can further your own company’s sustainability performance, while simultaneously working to improve the wellness, satisfaction, and health of your employees. These are taken from my company and you can obviously tailor these to your company. For a complete list of benefits at Sustainable Business Consulting, go to www.sustainablebizconsulting.com.

Many companies are wrestling with these questions:

Should we do this?

If so, how?

How can we make sure that the criteria are specific, measurable, and clearly communicated?

Will this end up being motivating to our employees?

There is also the added risk of employees beginning to act out of fear that their pay will be docked if these goals are not met, which might end up being demotivating. Therefore, due to the variability associated with incentivizing employees around sustainability, there are four trains of thought on this issue:

1. If you incentivize people financially for the behavior you are trying to effect, eventually people will come around. When people start seeing others profit and earn bonuses, even the most skeptical people around sustainability will jump onboard quickly.

2. The second train of thought is that competitions and financial incentive work best together when tied to the specific behavior you are trying to encourage. For example, providing an incentive that encourages behavior change to reduce energy usage by 10% at a facility is great, but since the anticipation of financial incentive can actually be more motivating than the actual cash payment, competition is great way of fostering that anticipation.

3. The third way is to tie everyone into a bonuses pool that is paid out if and when the company achieves its sustainability goals. For example, Intel calculates each employee’s (including CEO and top executives) annual bonus according to sustainability results. It does this by “challenging all departments to improve their processes and products with sustainability in mind with a focus on three areas: energy efficiency, GHG reduction and improvements in its environmental reputation.” The results have been successful in that in the first four years of the program, the company has reduced “GHG emissions by 23% and energy use by 8%.”⁵

4. It depends on the work itself. There is a big difference between “routine” and “nonroutine” work. If the task itself is mundane or routine, a financial incentive toward faster or more efficient work might succeed. However, if the work involves creativity, writing, or innovation (as many sustainability solutions do), then throwing more money at the situation isn’t going to accomplish what you hope it will. I know that, for me, when I’m trying to write, someone offering me money to write this book differently or faster would not have been a motivator because I would still have needed time and space to think about the issues, put them on paper, noodle them over in my head, and then type them up.

So if your company is considering tying people’s compensation to their sustainability efforts, make sure you know that it works with the culture of the company and the individual, because your employee could fall into any of these trains of thought, and you want to make sure you implement the right one accordingly.

Long-term incentive awards: 25% of restricted stock units that are granted have a performance-based vesting schedule related to Xcel’s position as a leader in environmental conservation.⁶

Other executives: Annual incentive awards are tied to sustainability performance metrics, including environmental metrics (GHG goals) and social metrics (employee safety), increasing the amount of renewable energy available for commercial operation, improving energy efficiency, and integrating new technologies.^7,8

Employees: A variable compensation plan called the Employee Bonus plan is a profit-sharing plan for employees. It has three main components: absolute financial performance, relative financial performance, and operational goals. Sustainability metrics are integrated into the operational goals component.¹⁰

A McKinsey Quarterly survey¹¹ found that, in general, people want to do a good job, have their work recognized, and have the autonomy and ability to do their jobs. In today’s fast-paced work environment, where many benefits have been curtailed since the financial recession, some of them permanently, offering praise and recognition is a very low-cost way of maintaining employee satisfaction and retention. This type of reward is basically free to the employer, and it can mean a lot to the employee.

Why do so many organizations and managers fall down in this regard? In most cases, the nonfinancial ways of rewarding and recognizing people are more difficult because they take more time, energy, and commitment from managers. Additionally, bosses tend to be more removed from the day-to-day work and don’t necessarily know what drives their employees personally, so they offer compensation as a reward because it’s just easier and simpler to do.

As Daniel Pink points out in Drive, some of our most poignant experiences in life are when we’re doing something that is bigger than ourselves. Realizing the satisfaction of a job well done on something that is important and can make a difference can drive people to do even more.¹² Sustainability is just that.

In many companies, a culture of LEAN or Kaizen (continuous improvement) can force employees to focus on what’s not working and how they can fix the problem. Because sustainability is a journey that will never be finished, it’s important to recognize positive behavior and to take time out every once in a while and celebrate successes as well.

Making change around sustainability can be uncomfortable for people; therefore, positive recognition and rewards are important. An absence of positive feedback can give employees the false impression that their efforts weren’t appreciated, acknowledged, or useful. According to Christine Manning, visiting assistant professor of environmental studies at Macalester College, “There needs to be a social feedback loop that says, ‘I’m glad you did that,’ so be sure to balance your feedback loops with both positive aspects and opportunities for improvement.”¹³

At my office, where we constantly focus on continuous improvement, we also make sure to take a moment to celebrate every new contract, no matter the size. This small gesture is a way of involving the whole office in the success of the team that brought in the project, and it provides a short pause for people to look up from their screens and share in the excitement.

One caution on rewards and recognition, though, is to make sure it is authentic. For example, I once consulted with a small business where the sales and service people met their quarterly goals, so the CEO thought it would be great to order pizza to celebrate. However, he then thought he was done, and when the pizzas arrived he didn’t even acknowledge or celebrate with the team. What made this worse was that most of the employees had recently gone on diets and didn’t want to be eating pizza. What type of message do you think was sent? Some of the employees commented to me a few months later, “So what? If we miss our goals, we miss out on a pizza party that we don’t want and leadership won’t attend anyway!” So if you are going to recognize and reward people, be sure to take the extra time and effort and tailor the reward to your employees and be authentic.

Empower your employees to take initiative and generate ideas

Get trained faster and more effectively

Create shared project landscapes and compelling narrative

Solve problems

Engage and educate employees about sustainability in a fun, nontraditional manner

Encourage performance and participation

Generate feedback loops more quickly

Claudia Capitini says, “Be sure to couch things in levity and ridiculousness. Games are real time education and mentoring,”¹⁴ and people tend to absorb and remember things that they were a part of that they enjoyed.

The idea is not necessarily creating a mobile application but rather using the elements and mechanics of gaming to accomplish a business goal.

A University of Colorado–Denver Business School study found that those trained on games do their jobs better, have higher skills, and retain information longer than workers learning in less interactive, more passive environments. This report examined 65 studies and data from 6,476 trainees and discovered that those using games (in this instance video games) had the following benefits:

An 11% higher factual knowledge level

A 14% higher skill-based knowledge level

A 9% higher retention rate than other trainees¹⁵

While I was running the client through a CSR training that was focused on meeting GRI reporting criteria, it became quickly apparent that although there were only 15 people in the room, there were 3 alpha males in the room, all of whom were competing for air time. I broke them into three separate groups with an alpha in each.

Usually I’d give them about three hours to work through this process, but sensing the machismo in the room, I decided to add a competitive element to the exercise and instead gave them only one hour to try to complete a C-Level CSR template about their company.

At first, each team was all over the place trying to figure out how to get started. Sensing this and because I wanted people to get going, I went to the first team and simply said, “Come on, guys, you need to pick it up and start filling in the template because team 2 is already beating you!”

Of course there was no real competition, but this prompting instantly changed the attitude of team 1. Their energy level picked up and they stopped talking about the process and just started working. So next, I walked over to team 3, which actually was doing very well, and told them, “Keep it up—you guys are killing team 1, but team 2 is about to catch up!” This didn’t sit well with team 3’s alpha, so he decided to break the team into small subgroups, each with their own sections of the report, and gave them 20 minutes to complete their sections. The team members quickly got on their cellphones and called the office to delegate research tasks, and within 10 minutes information started to fly in. I kept pushing people during the final 30 minutes, bugging them every once in a while by just pointing to another team and saying, “They’re ahead of you.”

The result was astounding. In that one hour all three teams came back having adequately filled a C-Level GRI CSR report, something that can take some companies weeks. By giving them time pressure and the impression that they were trying to beat the other teams, their competitive nature took over. More important, they were laughing, smiling, more confident, and no longer intimidated by the CSR process. Plus, they had a better understanding and were further along than any of them ever thought they could be after such a short time.

Although this technique is effective, remember that not everyone who has influence is an alpha. Be sure to also engage the “cool kids” within your company. In many ways, it’s just like high school. We all followed what the cool kids did and the same is true within organizations. These are respected individuals and the trendsetters within a company, who most likely are not in the “C-Suite.” Find out who those people are and ask them to help you in the implementation, because employees will follow their fellow peers in a way that they might not follow leadership. Try to take advantage of these individuals’ popularity and enlist them in helping you share the sustainability message.

SAP created a “sustainability quiz” that taught employees about sustainability initiatives through a virtual Monopoly game in which users were pitted against Betty Sustainability. Question topics included energy efficiency, recycling, and sustainable behavior. Players continued to play the game over and over again to discover new sets of questions—and to try to win an iPad 2.¹⁹

Killer: Employees engaged by direct peer-to-peer competition.

Achiever: Employees engaged by earning badges or other rewards with each accomplishment.

Socialite: Employees engaged by leader boards that show who is winning.

Explorer: Employees engaged by new experiences and choices.

Here are some examples of sustainability-related games you could try within your company:

Paper-LESS: Have a competition to reduce or eliminate paper among departments.

Talking Trash: Launch a recycling/composting campaign to reduce waste per facility.

Kilowatt Krackdown: Have a competition on energy usage by division or facility.

Commuter Challenges: Encourage employees to use human-powered or public transportation to get to work. These are common around bike-to-work month.

A fun game that one of our past clients conducted was a Fun Mug Contest. Typically, when companies want to move away from disposable or Styrofoam cups, they make the commitment and go out and buy a bunch of company-branded mugs. Although this is great, and okay for the meeting room, we discourage our clients from doing this because it is an unnecessary expense. Everyone has an extra coffee mug at home. So what this client did was have a Fun Mug Contest and had people bring in their funniest mug or even one that they decorated themselves. Some employees made them fun, others made them obnoxious, and some of the men of course showed no creativity at all. The company then brought all the employee participants together and gave out $100 for the person with the funniest mug. This competition gave the company another opportunity to tie the contest back to the business case and why they were doing this: to save money and, at the same time, lower their environmental impact.

No matter what competitions or games you decide to use within your firm, make sure that they are fun and that all employees can participate, and as Derek Eisel, the former global environment program manager at Expeditors, says, “Make sure the competition is real. If you are going to have a ‘Branch or Department of the Month’ around sustainability, then you have to have the data platform in place for them to actually compete using hard data on energy, paper, waste, or whatever you are competing on. It can’t just be qualitative; it has to be backed up with numbers and people really need to win it!”²⁰

Incorporate sustainability into job descriptions. It sets the tone and expectation not only in current employees but in all new hires. Use turnover to your advantage and make sure that all your new hires get sustainability training and have it embedded in their job descriptions from day one.

Sustainability must be part of employees’ evaluations. It cannot be 1 of 20 criteria; it has to have meaning.

Align benefits and compensation to encourage the sustainable behavior you want to see.

Leadership needs to be evaluated and compensated around sustainability as well. When this occurs, they are more likely to care and ask questions throughout the rest of the organization.

People are competitive. Use games to get them to break habits and think differently. They push themselves to try to do things that might be new, different, or even surprising.

Engage the alphas and the cool kids. Use their personalities and competitive nature to bring sustainability to the forefront.