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Reskilling Management for Sustainable Performance

Dear CEOs, Allow us to start with a couple of questions. Should you tie your managers’ rewards to their carbon footprints?

Should you invest in your suppliers’ diversity and inclusion?

Should you shorten the working week of your employees?

Just 3 years ago these questions would have sounded very awkward. And yet today, we all know they are deeply relevant to our companies’ commitments under the ESG banner, for which all stakeholders are now demanding immediate action. But what only few leaders already know is that these questions are also extremely relevant to business performance, provided they are approached with the right management skills. And to test the vigor of your management skills, we invite you to answer this question in all honesty: “Which data will I use to decide these matters with confidence?” If your answer is “I’ll probably use the same data as 3 years ago”, then your management skills need rejuvenation.

More than for the Digital Revolution a few years ago, the Sustainable Transformation of business is asking for major upgrading of management skills. This is now far more urgent, wider in scope and impact, and potentially far more disruptive to corporate strategy than digitalisation ever was.

Such an existential challenge also offers unprecedented opportunities for those who embrace it.

A company like Unilever, under its Sustainable Living Plan, first with Paul Polman as CEO and now Alan Jope, have reached a similar conclusion.

“We are on the front edge of a new model of business where authentic purposefulness leads to better financial outcomes, better profits”, says Alan Jope [1].

Now, where to turn for a management upgrade?

It is saddening that experts who study business management with scientific rigour publish their work in academic journals that very few business leaders will ever read. As a consequence, upgrades in management travel from academia to the boardroom at a very slow pace.

Notably, since the 2010s, several seminal expert studies (that remain unknown to CEOs) have proven the cause-and-effect relationship between sustainability practices and superior financial results, including growth and profit (up to +4.5pts of annual growth in one case, see Graph 1) [2]. This means that the capitals approach to sustainability (advocated by macroeconomists and the OECD [3]) also works at the microeconomic level of business:

 “Sustainability requires the simultaneous preservation or increase in several “stocks”: quantities and qualities of natural resources, and of human, social and physical capital” [4]

This brings back our testing question: “Which data will I use to decide these matters with confidence?”

Innovating on what we’ve learned in our careers in large multinational companies and on the state of the art in management studies, our own practice has allowed us to go beyond simply measuring stocks of different forms of capital. We use Data Science to discover the dynamic relationships between, on one hand, specific resources of human, social, natural and financial capitals amongst multiple stakeholders, and, on the other hand, desired business results, including Profit. For instance, with our approach, it is possible to know with evidence whether reducing employees’ working hours in a specific business would lead to greater or poorer productivity, and even to quantify it.

New data need to be collected to measure the stocks and flows of different forms of capital within the network of your stakeholders. This will reveal the mechanisms of value creation, from which the business benefits. Thus, Data Science, with advanced processes, allows to isolate key drivers for sustainable growth and ESG impact, tying sustainability to profit into one strategy. Such approach determines the advanced management skills required to achieve two concomitant goals: profitable sustainability AND sustainable profit. This is what we coined “Sustainable Performance Management SPM©”; specifically: a set of processes, tools and scientific methods that enable management to turn CSR and ESG into Profit centers.

As a leader, studying fundamental ESG decisions and seeking to shape your company’s culture for the next 20 years, act now to acquire such SPM practices:

1) gathering human, social and natural capital data,

2) upgrading management skills accordingly, and

3) making sure you get the right help to use them effectively [5].

You don’t want to be one of these last CEOs who still pilot their business by sight, while others navigate our complex times with the right GPS.

Start now. It is the right time. 

 

AUTHORS:

Cedric Bachellerie and Guillaume Orhant are the founders of Sustainamics®. They met in 1996 while working at Kimberly-Clark. They accumulate 50+ years of expertise in marketing, innovation strategy and transformation, within some of the world’s largest multinational companies, at country, EMEA and Global levels. In the last 5 years, they have become experts in implementing Sustainable Performance Management in corporations, building on best practices from large corporations and adapting cutting-edge academic research to fit business’ operations and culture.

COMPANY BRIEF:

Sustainamics® is an international consultancy with a bold ambition: to become the Big One of Sustainable performance management services by 2030.

Sustainamics’ Purpose is to transform corporations into sustainable ones by turning ESG & CSR into profit centres, with the help to Data science.

First published in Sustainability Journal, Abu Dhabi Sustainability Group.

NOTES:

[1]: Quoted in Brands on a Mission: How to Achieve Social Impact and Business Growth through Purpose, by Myriam Sidibe, 2020

[2]: The Impact of Corporate Sustainability on Organizational Processes and Performance, by Eccles, Ioannou, Serafeim, Management Science, February 2014. Link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1964011

[3]: Measuring what Counts, The Global Movement for Well-Being, The Movement for new Metrics, beyond GDP, by Joseph Stiglitz, Jean-Paul Fitoussi and Martine Durant, 2019.

[4]: The Report by the Commission on the Measurement of Economic Performance and Social Progress, Joseph Stiglitz, Amartya Sen, Jean-Paul Fitoussi, 2008.

Nowadays, 400 organizations have shown their support to the capitals approach to sustainability by joining the Capitals Coalition. Link : https://capitalscoalition.org/capitals-approach/

[5]: We know that a large majority of business leaders will need to seek expert advice to help upgrade such skills that are not currently within their corporation. For instance, in PwC’s global CEO survey (2019), 70-80% of CEOs state that they still face issues with critical capabilities, especially data capabilities (despite the amount of data created globally having increased by x30 in 10 years).

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