Insight Article: Sustainability in Business: Top-Down vs. Bottom-Up Approach
Many studies have shown that sustainability in business leads to financial benefits, for example Harvard Business Review has found that improving environmental, social, and governance (ESG) performance reduces staff turnover by 25-50%, increases productivity by 16% and improves company morale by 38% making huge savings in recruitment costs.
This is great news for business leaders who believe in the benefits of sustainability, however, it can be challenging to introduce sustainability measures in an operational context. This is where sustainable leaders need to connect with individual employees, and vice versa.
At home, your staff probably recycle, turn out the lights in an empty room, save leftovers for lunch the next day and turn off the heating when away. At work the same individual may not do those things so readily, because at the point of making the decision, they ask themselves, ‘What’s in it for me?’.
In essence, this is a cost-benefit analysis.
At home the benefits are clear, everyone is responsible for their own home financially as well as morally, however at work that responsibility usually sits with one person, perhaps the office manager or perhaps is not owned at all. The cost-benefit analysis of choosing to make any decision at work, including that of any sustainable behaviour, works on three levels:
- Formal – job description, employment contract, performance agreements
- Psychological – rewards, recognition, expectations, commitment
- Social – perception, culture, values
At the core of this decision is the interaction and reciprocal agreement between the individual’s cost, their time, effort, responsibility, and the benefit to the individual, usually assigned to them by their employer.
To successfully integrate sustainability into a company it is vital that the leadership team connects with the individual on all three levels and for both parties to meet at a mutually agreeable point. The employee needs to know that their actions will be viewed positively by their employer and the employer needs to demonstrate that these actions are expected.
At the formal level the individual needs to know that sustainability is being incorporated into each department and responsibility lies with all employees, at all levels.
Psychologically, employees know that they will be rewarded and recognised for their positive sustainable actions.
The fundamental gap that needs to be bridged is that of the organisation’s purpose living up to the individual’s values and standards.
The connection between the individual and organisation on these three levels is a manipulation of the cost-benefit analysis where both parties benefit.
For these connections to forge (and hence narrow the sustainability gaps between the individual’s behaviour and the organisation’s engagement), the business leaders need to drive the change. Bottom-up change can only go so far if there is an unresponsive leader.
8 simple steps to enable top-down, sustainable change:
- Define long term purpose – Give your stakeholders and your employees something to align with and hopefully they will use the organisation to express their own values.
- Make the economic case for sustainability – Help your staff understand that it is about ‘doing well’ not just ‘doing good’. Involve employees in linking their departments with environmental initiatives and encourage ideas about positive change.
- Create sustainable knowledge and competence – Allow your team to broaden their sustainability awareness through learning and identifying how they can align their purpose with impact in the workplace.
- Make every employee a sustainability champion – By encouraging the senior leadership team to openly engage on sustainability issues with employees at all levels, allowing personal values to be shared.
- Co-create sustainable practices with employees – Provide a framework for employees to engage and be innovative, e.g. an easy to access fund for sustainable ideas.
- Encourage healthy competition among employees – Suggest employees raise money for a charity of their choosing or have a sustainable hero of the month award.
- Make sustainability visible inside and outside the organisation – Join a publicly recognised scheme as well as put up signs in the workplace celebrating internal sustainable achievements.
- Showcase higher purpose by creating transformational change – Commit to making bold sustainability pledges and encourage your supply chain to do the same. The sustainability pledges will foster a sense of unity amongst employees as they strive to achieve the goal which has a substantial, positive impact.
Choosing behaviours that support sustainability involves making lots of small decisions every single day. There are various factors which affect whether, as individuals, we make the sustainable choice or not. For business leaders its key to understand what these factors are to develop an effective sustainability strategy that is adopted across the organisation.
We know that, from a business perspective, top-down change is preferrable because bottom-up change will inevitably be limited by senior leadership buy in. The 8 simple steps above is a great place to start.