Human Resource Management for Organizational Sustainability

Radha R. Sharma

• Publisher: Business Expert Press
• Year: 2019
• Print ISBN: 9781947098022
• eBook ISBN: 9781947098039
• Topic: Business
• Subtopic: Business Development
• Index: Business

This book will bridge the knowledge gap and provide valuable insights into how sustainable HRM practices can contribute not only to organizational sustainability but also to sustainability at large.

The 2030 Agenda for Sustainable Development adopted at the United Nations Sustainable Development Summit on September 25, 2015 contains holistic, far reaching, and people-centered set of universal and transformative goals and targets. These call for strengthening capacities and providing an enabling environment for access to opportunities that are sustainable from economic, social, and environmental standpoints. Sustainability focus of the organization needs to go hand in hand with sustainable HRM systems, processes, and practices. But the reality is that sustainability is seldom a part of HR plans or strategic HR practices of most of the organizations.

Human Resource Management for Organizational Sustainability offers a new paradigm by focusing on human resource systems and processes from the lens of sustainability. The book puts together the concepts, researches, and practices that advance the understanding of organizational sustainability through human resource management contributed by specialists from Austria, Germany, India, Netherlands, Spain, United Kingdom, and United States, with examples, cases, and review questions. Whereas environment-related aspects have been receiving increasing attention over the years, the "people" element of social responsibility has received limited attention in management education and also in the business world.

CHAPTER 1

Corporate Social Responsibility and Sustainable Recruitment

Joost J.L.E. Bücker

Introduction

This chapter explores the extent to which a new vision on recruitment of employees can be developed that fits into a social corporate responsibility perspective. In the aftermath of the worldwide crisis from 2007 to 2015, stakeholders of some companies have been considering possible measures that could change the “ethical climate” in which business operates. A number of scams in large organizations, such as Enron, Tyco, and Parlamat, and also a string of banks in the US, such as Lehman Brothers, and in Europe, ABN-AMRO, have led to serious concerns about corporate governance and management. Most critical reflections on the worldwide economic crisis point to the incentive system that has been used to stimulate higher management and financial professionals to take more risk aimed at generating higher profits for the shareholders of these large organizations. Considerable growth seemed to be possible till the end of the first half of the first decade of the 21st century. “For example, many people ‘benefitting’ from the asset bubble of property and commodities in the first decade of the 21st century did not worry about the unsustainability of continuing large scale consumption of goods, services and debt until the financial economic crisis started in 2007” (Ehnert and Harry 2012). This system of risk-taking having seemed to pay off for more than a decade, the policy of high bonuses with high profits became more or less institutionalized as a practice. Only after the financial system in the Western world collapsed in 2007 under an emerging flow of newly created financial packages of bad and low-value mortgages did the world wake up to find that a global crisis was born that would not disappear quickly. Even after a decade since the crisis began, several countries are struggling to get their economies back on track, with some countries, such as the US, slowly recovering and a few European countries, such as the Netherlands, hoping to recover.

What Lessons Have “We” Learned?

Although the global economic crisis is understood to have been caused partly by the system of bonuses in banks, not much has changed in this sector. Some banks reduced the bonus amount because they are nationalized, and the government had to invest billions of Euros to rescue them and become a major shareholder in them. All the other banks that did not become dependent on their governments showed, soon after the crisis, that they had reinstalled a bonus system similar to the one that had existed before the crisis.

In Europe, some measures were adopted in corporate governance to increase the independent attitude of the board of advisors. These “old boys’ networks” had functioned rather well for decades but seemed to become obsolete since the board members showed selfishness and greediness. Besides, symptoms of “groupthink” resulted in making these boards less critical than they should have been. A whole package of new regulations, such as a maximum number of advisory board positions that a board member could hold were set in place to improve the governance of large organizations. In European countries, governments set up committees to formulate these new regulations; for example, in the Netherlands the committee Tabaksblat introduced a raft of measures to bring back solid governance in the business world. The Tabaksblat committee focused on the importance of striving for continuity of a firm and increasing shareholder value for the long term (Groenewald 2005).

The hardships faced by the economies, the lack of responsibility in organizational management, the role of board of directors and advisory board members cannot be viewed as isolated phenomena. The phenomenon of lack of responsibility can be viewed as a precursor of not only economic crises but also environmental damage such as global warming, air and water pollution, and a lack of sharing of wealth both among countries (developed versus developing countries) and within countries (the big divide between the haves and the have nots).

The chapter first discusses the prevailing economic paradigm and the behavior of managers in large organizations and then introduces the building blocks of a new way of management. This is then applied to the way people are managed or should be managed in a sustainable way with a focus on HR strategy renewal. Within the traditional HR practices, the chapter will elaborate on the recruitment and selection process.

Economic Paradigm

An earlier warning call came forth from the Brundtland report (1987), which focused on the need to work on an “agenda for global change and a common future for mankind and has been concerned with the question of how to advance societal and economic development without endangering natural living conditions for the majority of humanity” (United Nations 1987). Buckingham and Nilakant (2012) describe the context, the institutional environment, that shaped the conditions for the way management and leadership operate. They describe the following four challenges that need to be met:

• finding a solution for the slowdown of the Western economies and the high level of unemployment,
• the adverse consequences of exploiting the earth, namely, increased carbon-dioxide emissions and global warming,
• the growing divide between the rich and the poor worldwide but also within Western society, and
• the rise of transnational religious fundamentalism.

In 2015, these four challenges remained the same and had even grown in importance since the publication of their book. The authors posit that we have to critically reflect on our current model of management and leadership. They ask: “How relevant are our prevailing theories and models of corporate management in a changing world?” (p. 2). They refer to Ghoshal (2005), who claims that bad economic theories of management are destroying good management practices. Jensen and Meckling (1976) argue that organizations are perceived as a nexus of contracts; they speak about the contractarian perspective as opposed to an organization as a social arrangement. A focus on self-interest of the managers and an attempt of the shareholders to get these managers more focused on the shareholders’ interest initiates a process of ever-increasing bonuses. In other words, the agency problem has not really been solved in the end.

Buckingham and Nilakant (2012) refer to a case study that illustrates the dysfunctional consequences of management practices based on the economic model. CEOs Albert Dunlop and Dennis Kozlowski of the American firms Scott Paper and Tyco, respectively, are described by Ghosal (2005) as examples of today’s managers: “ruthlessly hard-driving, strictly top-down, command-and-control focused, shareholder-value-obsessed, win-at-any-cost business leader” (p. 85). These business leaders conform solely to the demands of the shareholders. Buckingham and Nilakant (2012) refer to the rise of neoliberalism in the 1980s and 1990s that has strongly shaped the current theories of management and business. It goes further than just claiming personal liberties for entrepreneurs. Harvey (2005) states that “neoliberalism proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade” (Harvey 2005, p. 2). This definition is reflected in the policies of many Western countries that have privatized state-owned companies, deregulated the markets, and left the initiative to self-interested individuals. Although the authors claim that neoliberalism has its roots in the ideas of Plato, Hobbes, and Machiavelli, who were in quest of societies’ development and progress, since the early industrial revolution, the economic perspective in the form of neoliberalism has led to a “selfish maximization of self-interest as the sole motivation of human conduct,” neglecting other ethical issues that may also be important in explaining human conduct (4). The authors, furthermore, claim that “any theory of corporate management must address three main issues: efficiency of the enterprise, the fairness of its dealings, and sustainability of its activities” (6). Efficiency is desirable because it leads to less waste of resources and so is sustainable in the end. Fairness is needed because it creates loyalty and flexibility but only if there is “inclusive” fairness, that is, fairness for all stakeholders instead of fairness only for the shareholders. Sustainability is vital to ensuring long-term profitability, which underlies the long-term survival of the company.

Socially Responsible Organizations

Ehnert (2009) remarks that interest in corporate social responsibility has grown only after a crisis resulting from resource shortage. But she critically observes that even during a crisis companies look for immediate survival at the cost of sustainability. Pfeffer (1998) described a number of management practices that should lead to innovation, productivity, and sustained profitability. These “high performance” management practices are employment security, selective hiring, self-managed teams and decentralization, exclusive training, reduction of status differences, sharing of information, and high and contingent compensation. Turban and Greening (1997) claim that many organizations have of late been looking for alternative ways of management: focusing on corporate social performance (CSP), a construct that emphasizes corporate responsibilities to multiple stakeholders, such as employees, clients, and the community at large, in addition to its traditional responsibilities for shareholders. Early studies related to CSP focused more on the self-centric traditional entrepreneurs and CEOs. These studies investigated the relationship between firms and certain social groups and how firms’ actions might be regulated by new government legislation, public pressure, and judicial actions (Sethi 1995). Over the last decade, studies related to CSP have focused on how social responsible behavior may create competitive advantage for the long term (App, Merk, & Büttgen 2012). However, Hahn and Figge (2011) warn that these so-called win-win-win studies tend to be rather unrealistic. Ehnert and Harry (2012) assume that “for the majority of organizations it will not be so easy to create economic efficiency, ecological, social and human sustainability simultaneously without a fundamental change in their business strategy and their organizational culture” (p. 223 to 224). They provide an alternative definition of corporate sustainability (based on Müller-Christ and Remer 1999) as a “rationale to balance consumption and regeneration of corporate resources” (Ehnert and Harry 2012, p. 224). The idea is that if companies engage themselves in the regeneration and development of the resources that they themselves consume today and will need in the future—by maintaining the systems and relationships from where these resources originate—this can be called sustainability and lead to sustainable business behavior.

Sustainable Human Resource Management

Zaugg, Blum, and Thom (2001) define sustainable Human Resource Management (HRM) as “long term socially and economically efficient recruitment, development, and retention and disemployment of employees” (p. II). What is interesting in this definition is that the focus is on social and economically efficient HRM behavior in the long term. Many situations in business concerning people focus on short-term solutions. Although in recent years interest in sustainability has been growing, research related to sustainable HRM has remained sparse (Pfeffer 2010). Some scholars have suggested that a focus on socially responsible actions may create a more positive image of the company and enable it to attract employees of good quality or high potential (Fombrun and Shanley 1990; Lis, 2012). This is reflected in Müller-Christ and Remer’s (1999) definition of “sustainable HRM” as “what organizations themselves have to do in their environments to have access to highly qualified people in the future” (p. 76). A lot of organizations are struggling with their “employer branding.” As the success of a company depends on the attraction and retention of sufficient and good quality personnel, the creation of a positive image as an employer is important for organizational success (Jackson and Schuler 1990). To cope with the shortage of engineers in the labor market in northwestern Europe, organizations that are able to attract the attention of engineers have a competitive edge as they can “fish in a larger pool” and thereby interview more applicants and can select the better or more motivated ones. Thus, creating a positive image, often referred to as corporate social responsibility activities, is a priority for organizations at present. Social responsibility can also be a recruitment tool, as pointed out by Poe and Courter (1995), who found IBM, General Motors, and Microsoft “sending out brochures to potential applicants promoting their philanthropic activities and their environmental friendly programs.” Although “employer branding” in itself can be a helpful tool, this lever can also be used with a short-term focus.

A study on sustainable HRM might investigate the advantages of sustainable HR practices, such as recruitment and selection, training and development, financial participation, management development, career management, reward policies, and the impact of these sustainable HR practices on the long-term competitiveness of the firm. For instance, a firm that encourages a learning environment and runs a program for the underprivileged in society may be a more attractive employer for the present generation of graduates than one offering higher salaries and perks. The next paragraph discusses how recruitment can contribute to more sustainable business development.

Recruitment

Breaugh (2008) defines (external) recruitment as “encompassing an employer’s actions that are intended to: (a) bring a job opening to the attention of potential job candidates who do not currently work for the organization, (b) influence whether these individuals apply for the opening, (c) affect whether they maintain interest in the position until a job offer is extended, and (d) influence whether a job offer is accepted.” A few elements can be distinguished in this recruitment process: first, to attract attention your company must be known, have an attractive image, and offer potential candidates a raft of highly appreciated incentives along with a career perspective related to personal growth, developing decision-making influence, and financial participation.

Turban and Keon (1993) found that applicants were more positive about organizations with decentralized decision-making and firms that used pay for performance instead of on tenure. Other research found that sociall...

Table of contents

• Cover
• Title Page
• Copyright
• Dedication
• Contents
• Acknowledgments
• Human Resource Management for Organizational Sustainability: Introduction
• Chapter 1 Corporate Social Responsibility and Sustainable Recruitment
• Chapter 2 Personal Development toward a Sustainability Mindset
• Chapter 3 Transparency in Reward and Recognition
• Chapter 4 Responsible Communication
• Chapter 5 Motivating Future Business Leaders to Assume Social Responsibility through Prosocial Behaviors
• Chapter 6 Accountability in Appraisal Process
• Chapter 7 Values, Ethics and the Human Spirit for Responsible Management
• Chapter 8 Coaching and Mentoring for Responsibility
• Chapter 9 Training Employees for Responsible Management
• Chapter 10 Management Education for Developing a New Generation of Managers to Lead Responsibly
• Chapter 11 Promoting Responsible Leadership and Sustainability
• Editor and Author
• List of Contributors
• Index