Talent, Transformation, and the Triple Bottom Line

How Companies Can Leverage Human Resources to Achieve Sustainable Growth

Andrew Savitz, Karl Weber

• Publisher: Jossey-Bass
• Year: 2013
• Print ISBN: 9781118140970
• eBook ISBN: 9781118238905
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

HR Professional's guide to creating a strategically sustainable organization

Employees are central to creating sustainable organizations, yet they are left on the sidelines in most sustainability initiatives along with the HR professionals who should be helping to engage and energize them. This book shows business leaders and HR professionals how to: motivate employees to create economic, environmental and social value; facilitate necessary culture, strategic and organizational change; embed sustainability into the employee lifecycle; and strengthen existing capabilities and develop new ones necessary to support the transformation to sustainability.

Talent, Transformation, and the Triple Bottom Line also demonstrates how leading companies are using sustainability to strengthen core HR functions: to win the war for talent, to motivate and empower employees, to increase productivity, and to enliven traditional HR-related efforts such as diversity, health and wellness, community involvement and volunteerism. In combination, these powerful benefits can help drive business growth, performance, and results.

• The book offers strategies, policies, tools and specific action steps that business leaders and HR professionals can use to get into the sustainability game or enhance their efforts dramatically
• Andrew Savitz is an expert in sustainability and has worked extensively with many organizations on sustainability strategy and implementation; he and Karl Weber wrote The Triple Bottom Line, one of the most successful books in the field
• Published in partnership with SHRM and with the cooperation of the World Business Council for Sustainable Development
• Forward by Edward Lawler III

This book fills a gaping hole in both the HR and sustainability literature by educating HR professionals about sustainability, sustainability professionals about HR, and business leaders about how to marry the two to accelerate progress on both fronts.

PART ONE

TRANSFORMATION, TALENT, AND HUMAN RESOURCES

CHAPTER 1

TRANSFORMING GE

Building a Sustainable Corporation from the People Up

FOUNDED IN 1892 BY THOMAS EDISON, General Electric (GE) is one of America’s and the world’s oldest, best-known, most successful, and most closely watched corporations. After generations of being a leading industrial corporation and a symbol of technological prowess and intelligent management, GE ascended to even greater reputational heights under the leadership of Jack Welch, probably the most iconic—and at times controversial—CEO of the past fifty years. With almost as many public images as Madonna, ranging from the ruthless “Neutron Jack” to the inspirational great communicator known for his sound-bite summaries of business strategies (for example, “Be number one or number two in the market, or get out”) to the scornful scourge of tree huggers, Welch became an adviser to presidents, a cheerleader for contemporary capitalism, and the global image of American industry.

Welch finally stepped down as CEO on September 7, 2001, after a very public competition for his throne among three worthy candidates, from which GE veteran Jeff Immelt emerged victorious. The company was flying high. Under Welch, corporate revenues had grown from around $26 billion to nearly $130 billion. At around $400 billion, GE’s total market capitalization was near its all-time high and over thirty times its $13 billion value when Welch had taken command in 1981.¹ Succeeding Welch in the CEO’s office must have been like taking over Babe Ruth’s spot in the New York Yankees’ lineup: exhilarating, electrifying, intimidating.

Fortunately, Immelt understood that simply trying to replicate Welch’s style or match his achievements would be a formula for disaster. He also understood that the world in which Welch had been so successful, and which Welch and GE had in turn helped to shape, was rapidly changing. Even if Immelt had wanted to operate like a Jack Welch clone, it would scarcely have been possible in this new era.

For all his managerial strengths, Welch also had his weaknesses. Perhaps the most glaring was a blind spot on the environment and the social responsibilities of business. In part, this blind spot was a natural result of his age and upbringing. A child of the Great Depression and the war years, he didn’t grow up with the civil rights movement, Vietnam War protests, Woodstock, Earth Day, Farm Aid concerts, the Concert for Bangladesh, and the other mind-shaping events that colored the worldview of the baby boom generation. He grew up before the iconic image of earthrise from the moon was available—an image that conveyed to millions the reality that the earth is not an unlimited resource to exploit but a small planet traveling through an endless expanse of unfriendly space. His view of the world was formed before thalidomide, Bhopal, Love Canal, Exxon Valdez, and Three Mile Island linked modern technology with corporate irresponsibility and human and environmental tragedy in the minds of many.

Welch’s age and upbringing helps explain why he, like many other business leaders of his generation, resisted taking responsibility for certain environmental problems. So does his intense bottom-line orientation: when remedies for pollution were on the agenda, Welch could see only the costs to GE, estimated at $500 million, not the opportunities for potential benefit.² Whatever their combination of reasons, Welch and his team at the head of GE fought the cleanup of the Hudson River, where over 1.3 million tons of PCBs (a suspected human carcinogen) had been discharged from a pair of GE plants in upstate New York. The company also spent millions of dollars opposing the proposed cleanup of PCBs dumped into the Housatonic River by a GE plant in Pittsfield, Massachusetts. PCB production was banned by Congress in 1979 and by the Stockholm Convention on Persistent Organic Pollutants in 2001. Despite this, GE lawyers and scientists continued to debate the risks posed by PCBs, and in November 2000, they sought to have a major enforcement provision of the Environmental Protection Agency Superfund cleanup law declared unconstitutional, saying it gave the federal agency “uncontrolled authority to order intrusive remedial projects of unlimited scope and duration”—a position that the courts rejected twice. The New York Times called Welch himself “stubbornly retrograde” on environmental issues, and even the conservative Economist acknowledged that Welch’s refusal to compromise on the Hudson cleanup was “arrogant.”³

By 2001, it was becoming increasingly clear to leaders both inside and outside corporate boardrooms that such a combative, unyielding stance on environmental and social issues was no longer tenable. The twenty-first century was already becoming the age of sustainability—an era in which social and environmental responsibility is more essential than ever before and an era in which companies are being increasingly held responsible for their social and environmental impacts as well as their financial success; in which transparency and openness, not secrecy and arrogance, are considered signs of corporate self-confidence and strength; in which the most effective organizations are characterized by cooperation with a wide range of stakeholders rather than by an attitude of zero-sum competition for limited resources; in which more and more companies are seeing environmental and social problems not just as costs to be minimized but as business opportunities to be embraced; and in which the smartest business leaders focus on long-term strategies for survival and success rather than obsessing over quarterly earnings reports and daily stock price fluctuations.

Like most successful leaders, Jack Welch was a reflection of his era; Jeff Immelt is a reflection of his. Bob Corcoran, GE’s vice president for corporate citizenship and president and chairman of the GE Foundation, explains how Immelt’s generational background helped plant the seeds for his personal response to environmental and social issues:

You have to always stay contemporary, and that’s true of any generation of leaders. The first Crotonville class [at GE’s corporate training center] Jeff Immelt talked to in 2001 asked him, “Jeff, what makes you different from Jack Welch?” He said, “Well, the biggest difference is I’m twenty years younger.” Everybody laughed. He said, “No, I’m serious. I’m twenty years younger, so the things that shaped me during my early days were things like Vietnam, the civil rights marches, Watergate, Earth Day, and the women’s rights movement. I view the world differently because of those events.”⁴

Soon after his ascension, Immelt began to implement the changes he viewed as necessary for the company to maintain its enviable success in the face of the complex demands of a rapidly changing world. In particular, Immelt launched a pair of strategic sustainability initiatives known as ecomagination and healthymagination.* They’re designed to create new product and services opportunities for GE while addressing environmental issues, such as global climate change and water scarcity, as well as pressing social concerns primarily related to the lack of accessible, affordable health care.

For Immelt, as Welch’s successor, making the move toward sustainability was not just a dramatic attention getter; it jump-started a strategic change and began a culture change within GE as well.

In this process of change, the leaders of GE’s human resource (HR) function have played a crucial role. Their work in advancing ecomagination and healthymagination and supporting GE’s other moves toward sustainability underscores the fact that organizational change is about changing the thinking, feelings, and, ultimately, the behavior of people. For this reason, the HR leaders who help shape the workforce largely determine the success or failure of any important change initiative. Thus you might define the key role of HR, at GE or at any other corporation, as that of “people movers,” in both the literal and figurative sense.

With employees helping to build the sustainable companies of the future, HR’s role in guiding and implementing the transformation is changing dramatically. We see this in giant corporations like GE but also in small and medium-size companies with much simpler organizational structures and, in many cases, HR departments that consist of just a few people. In some organizations, sustainability is driven by an enlightened CEO like Jeff Immelt; in others, it begins with initiatives sponsored by lower-level managers or launched by frontline employees. But in every case, for the shift to sustainability to have permanent impact, it must ultimately be embraced by employees at every level of the organization. Hence the need to build sustainable businesses from the people up—and the crucial role of the people movers of HR in making it happen.

GE’s people movers are helping build a sustainable corporation in a number of specific ways. They are leveraging the traditional strengths of GE’s corporate culture, especially its openness to adaptation and learning, while gradually but decisively promoting changes demanded by the age of sustainability. They are recruiting the new talent and skills needed to meet tomorrow’s environmental and social challenges, helping GE’s key operations and business units and the corporation as a whole develop capacities they need to maintain the company’s global leadership in an era of drastic change. They are embedding the principles of sustainability in the daily processes and activities that structure life at GE. Perhaps most important, they are helping the company use the new energies unleashed by the move toward sustainability to ensure that both the rising generation of leaders at GE and the company’s tens of thousands of rank-and-file employees are deeply engaged in their jobs and the corporation’s business mission.

In short, they are demonstrating the ways that knowledgeable and focused HR leadership can play a central role in building the kind of organization needed to survive and thrive now and in the future. Even more remarkable, as we’ll see, the changes driven by sustainability are simultaneously creating new strategies that HR leaders can use to tackle some of their most intransigent long-term problems. Sustainability creates new challenges for HR—but it also provides new tools for addressing familiar ones.

Ecomagination: Why GE Is Turning Green

Ecomagination, the first of GE’s major sustainability initiatives, was launched in 2005 based on research from 2003–2004, just a couple of years into Immelt’s tenure. It emerged in response to customer demands that GE saw as containing potential for business growth. GE’s customers were concerned about environmentally related business risks, such as climate change, water shortages, overreliance on coal and oil, and the eventual depletion of other resources, such as strategic metals. These problems were generating pressure on businesses from many directions: from rapidly fluctuating prices and uncertain availability of crucial resources; from government agencies seeking to impose new regulations and restrictions; from nongovernmental organizations (NGOs) and community organizations that were increasingly vocal about environmental concerns; and from customers who were beginning to factor all of this pressure, as well as the environmental performance and reputation of their suppliers, into their buying decisions.

Immelt convened a cross-functional business team and asked them to develop a strategy that would enable GE to capitalize on these new demands. Ecomagination was the result. The initiative included four basic elements:

• GE would expand its R&D investments in clean technologies—those with minimal harmful impact on the environment and minimal demands on scarce natural resources.
• GE would develop green products and services designed to meet new, higher standards of ecofriendliness, as measured by authoritative third-party certification.
• GE would make its own pledge to sustainability, altering its internal policies, processes, and procedures to minimize its environmental footprint—beginning with reductions in greenhouse gas emissions and moving toward the use of less water and other natural resources.
• GE would provide more transparency into its decision making and engage more consistently in open dialogue with a wider range of stakeholders, including community organizations, NGOs, and advisory boards specifically created to help GE understand the needs, interests, and values of those affected by its activities.

Taken together, these tenets embody one of the six broader principles Immelt had formulated for running GE: that “GE is a company that solves big problems for customers and the world.”⁵ As we’ll see, this inspiring statement of principle effectively merges the notion of sustainability, including its focus on a company’s environmental and social impact as well as its financial success, into GE’s overall corporate strategy. According to Immelt, “The two biggest global challenges—and the two that may have the biggest impact on us as human beings—are clean energy and affordable health care.”⁶ These environmental and social challenges are helping define GE’s business arena and its sources of revenue, profit, and growth, now and in decades to come. This strategic breakthrough has also started a revolution in GE’s corporate culture—a two-step pattern common to many organizations that embrace sustainability.

We refer to the space where environmental or social benefits overlap with business interests as “the Sweet Spot” for a given company. Activities in the Sweet Spot lead to wins for the organization as well as for customers, affected communities, NGOs, advocates, and other stakeholders. In GE’s case, the broadly defined Sweet Spot of “solving big problems” has led to huge opportunities to develop solutions related to energ...

Table of contents

• COVER
• TITLE PAGE
• COPYRIGHT PAGE
• DEDICATION
• ABOUT THE AUTHORS
• FOREWORD
• PREFACE
• PART ONE: TRANSFORMATION, TALENT, AND HUMAN RESOURCES
• PART TWO: FROM TRADITIONAL HR TO SUSTAINABLE HR
• PART THREE: ORGANIZATIONAL DEVELOPMENT AND CHANGE: HR’S ROLE IN BUILDING SUSTAINABLE COMPANIES
• PART FOUR: SUSTAINABILITY AND EMPLOYEE ENGAGEMENT
• ACKNOWLEDGMENTS AND THANKS
• INDEX