Does Sustainability Change the Talent Equation?

The promise of working with a company that makes sustainability a priority is a powerful incentive. Credit some of that power to the lowly cubicle.

“You’ve gone through this generation that have lived in cubicles,” says 36-year-old Cameron Sinclair, cofounder of Architecture for Humanity Inc., a nonprofit organization based in San Francisco that brings professional design services to communities in need. Cubicle culture may have started with a noble idea — openness and accessibility — but for many office workers, cubicle life turned into, as Sinclair puts it, “being holed away in a five-foot-high, fabric-panel square without any view of the world.”

Employees are hungry not just for a paycheck and some creativity in their job but for companies that pay attention to that world and ask them to, too. And increasingly, that translates into wanting companies to pay attention to issues around sustainability.

It’s not just charitable companies like Sinclair’s that are alert to the possibilities. Conversations with 70 thought leaders as well as responses to the Sustainability Initiative survey bear this out: of private sector companies, 57% say they expect employee interest in sustainability to impact their organizations. Over one-third of companies — 37% — already highlight sustainability initiatives in recruiting. And some 43% are drawing on employees to be part of the process by designing products or processes for reuse or recycling.

But just as companies are benefitting from new employee hungers, they’re encountering risks. When you unleash employee passion, expectations change. There are costs to not meeting them.

First Wave of Payoffs: Attraction and Retention

“You see it at the front lines of recruiting,” says Peter Schwartz, cofounder and current chairman of the Global Business Network, a scenario planning consultancy headquartered in San Francisco. “One of my former staff went back to graduate school and is getting an MBA at Stanford and a PhD at Stanford in ecosystems. I was asking him, ‘How’s it going at school?’ And he said, ‘Half the people want to be green business, and half want to go into investment banking and are deeply depressed.’”

Companies that talk about sustainability in coherent ways have the potential to unleash an emotional commitment to them. Harvard Business School professor Rebecca Henderson encountered this phenomenon while researching the value of energy conservation. While energy represented just 3% of costs for most businesses she looked at, making reducing energy usage not an obvious
financial priority, she saw how efforts to conserve energy, to reduce water, “to act in ways that are more consonant with the individual values of your employees,” all set a tone that employees noticed. The no. 1 reason that managers she’s spoken to care about these issues, she says, is hiring. “It really helps them get good people.”

Our survey found the same thing among some companies. While 35% of respondents said that improving sustainability-related communications would deliver the greatest benefit to their organization’s relationship with consumers, the relationship with employees was the next most frequently top-ranked choice, at 16%.

Second Wave of Payoffs: Increased
Innovation and Productivity

Christina Page is director of climate and energy strategy at Yahoo!, Inc., a title created when she took the job in 2007. She says that the effects of bringing a climate change strategy to a company can be broader than might be obvious at first, in ways that many would find surprising.

When she asks to the accounting staff for information about how certain expenses are tracked, “they spontaneously offer back, ‘I’m so glad you’re doing this. I’m so glad we have this within the company,’” she says. When she talks to engineers, “they’re thrilled to be part of the solution” and look at how the design of a Web page or elaborateness of a Flash animation — say, the number of snowflakes on the Yahoo! front page in December — affects the CPU cycle, which affects server utilization, which affects the company’s emissions globally. The data center staff are on it, too. “I think they find it personally offensive not to make a data center as thermally efficient as you possibly could,” Page says. It’s a passion that’s there for the tapping.

“People are hungry for the opportunity to work professionally in a way that is consistent with building a sustainable world instead of one that undermines it,” says John Sterman, a professor at the MIT Sloan School of Management and director of MIT’s System Dynamics Group. “The idea that ‘I’m going to work in a corporation that may have the impact of further degrading the capacity of the planet to support life and then in my spare time I’m going to use the money that I’ve made to do good deeds’ — that just doesn’t cut it for people anymore. You can’t have that kind of dissonance.”

The Big Risk: Raised Expectations Must Be Met

There’s a risk to asking people to care, of course. “You have to then walk the talk,” says Richard Locke, a codeveloper of MIT’s Laboratory for Sustainable Business and an MIT Sloan School deputy dean and professor. “If you start selling [sustainability], people are going to check on you.”

Jeffrey Hollender, cofounder and executive chair­person of home-products company Seventh Generation Inc., says there’s an inherent challenge to entering into a relationship about sustainability with employees: It raises the bar. “If you disclose nine things but forget to disclose the tenth, there is a tremendous feeling of being let down,” he says. “The pressure that you have to exert internally to maintain those standards and provide that disclosure is incredibly high. And you have to be very willing to admit you’re wrong when you fall short of those expectations. We have experienced both this wonderful exponential support, but we’ve also experienced tremendous disappointment and anger when we fall short of those expectations.”

Challenge: Breaking Mental Models and Establishing Leadership

The biggest challenge within organizations to addressing sustainability issues is outdated mental models and perspectives on sustainability, according to our survey. That was cited as the no. 1 roadblock by about 23% of respondents, even ahead of “don’t know what to do first,” “not persuaded by the value proposition” and “not enough resources.”

That’s what John Hofmeister found when he was president of Shell Oil Co., from which he retired in June 2008. “One of the biggest obstacles is educating everyone to come to a fairly comfortable level of knowledge and understanding of what it’s all about,” he says. At Shell, there were — and still are — skeptics of the business value of a focus on sustainability. “They never quite saw the value, could never quite get their heads around understanding the whys and wherefores, the hows and whats, of sustainability,” says Hofmeister. “They felt it was more in the range of public relations.”

So who’s tasked with leading the charge? No consensus there. Nearly 40% of managers in our survey say that “all employees” are responsible for addressing sustainability issues. About 23% say a corporate or cross-functional group has authority, about 17% say a senior or executive-level official and about 8% say each business unit has a group responsible.

“Businesses need to get on board with this,” says Tim Mohin, now a sustainability consultant with EORM Inc., an environmental health and safety consulting company, and previously senior manager for supplier responsibility at Apple Inc. and Intel Corp.’s director of sustainable development.

Their best bet, he says: bring on people “who want to save the world,” give them a little space to be innovative and then figure out how to keep them from falling into “the great cubicle mind-set.”