Incentives for Effective Employee Engagement

in Corporate Sustainability

Elissavet Angeliki Psilou

A Thesis in the Field of Sustainability and Environmental Management

for the Degree of Master of Liberal Arts in Extension Studies

Harvard University

May 2011

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Copyright 2011, Elissavet Angeliki Psilou. All rights reserved.

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Abstract

Corporate sustainability has become very important in business practices. Research

shows that to successfully integrate the economic, environmental and social

responsibilities of sustainability into every business process, effective employee

engagement is necessary. This is an elusive objective even for organizations recognized

for their sustainability efforts. Companies need to improve their incentive frameworks to

enhance employee engagement in the corporate sustainability programs. The research

studies the significance of sustainability in modern business and the role of employee

engagement in the successful implementation of a sustainability strategy. The incentives

for employee engagement in corporate sustainability of four financial institutions are

presented. These frameworks include activity in four key areas; education on

sustainability, public demonstration of sustainable practices, activation of employee

involvement and rewards for sustainability achievement. The analysis and comparison

proves that there is a lack of performance incentives, which supports the hypothesis that

organizations committed to sustainability could benefit from establishing performance

incentives geared to foster effective employee engagement in the sustainability program.

Companies need to link performance evaluation criteria to sustainability targets so that

the employee reward system can be aligned to the sustainability strategy.

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Dedication

This thesis is dedicated to my late father, Dr. Diomedes D. Psilos, who showed

me that the most valuable tools in life are fearlessness and good research skills.

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Acknowledgments

I would like to express my gratitude to my thesis director Dr. Robert B. Pojasek,

Adjunct Lecturer on Environmental Science at the Harvard School of Public Health. A

unique expert in the field of corporate sustainability, he pointed me toward new research

angles on current topics and exceptional sources of information. He kindly and patiently

gave me invaluable guidance and support, without which, this research could not have

been completed. His forward-looking mentality made this an enlightening experience.

I would also like to thank the sustainability professionals interviewed during my

research effort, for taking the time to discuss this interesting topic. They provided me

with important insight on the implementation process of corporate sustainability

programs.

Lastly, I would like to thank my family especially my husband Dimitris for

providing the multi-faceted support needed to complete this thesis and the ALM in

Sustainability and Environmental Management.

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Table of Contents

Abstract iii

Dedication iv

Acknowledgements v

Table of Contents vi

List of Tables viii

List of Figures ix

Definition of Terms x

I. Introduction 1

II. Background 8

Introduction 8

Corporate Sustainability 8

Adopting a Higher Set of Values 10

Operational Performance 10

Building Reputation 11

Implementation Impediments 12

The Importance of Effective Employee Engagement 14

Achieving and Maintaining an Engaged Workforce 17

Education 18

Incentives 19

Enhancing Employee Motivation 22

III. Research Methods 25

The Case Method 25

Research Design 24

Data Collection 30

Case Selection 30

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Interviewing Process 33

Interview Questions 34

Analysis Method 36

Limitations 36

IV. Results 39

Case Findings 39

Case 1 42

Case 2 50

Case 3 57

Case 4 57

Cross-Case Analysis 62

Interview Findings 67

V. Discussion 71

Introduction 71

Misleading Workforce Engagement Assessments 72

Corporate Sustainability Incentive Frameworks 73

Obstacles to Effective Employee Engagement in Sustainability Programs 74

Enhancing Incentives for Engagement in Sustainability Programs 76

Linking Performance Incentives to the Sustainability Targets 78

Recommendations for Further Research 80

VI. Bibliography 83

viii

List of Tables

Table 1: Case Characteristics 31

Table 2: Sustainability Incentives 66

ix

List of Figures

Figure 1: Research Protocol 29

x

Definition of Terms

sustaining and enhancing the environment, social and economic resources needed for the

environmental considerations in business strategy and practices (Strandberg Consulting,

2009).

performance on the job. These can be monetary--like fixed and variable pay--or non-

monetary, in the form of recognition, awards or additional time off.

ers by which companies assess

employee performance.

social and environmental goals, such as

measurable waste, pollution and energy reduction targets, community contribution,

olume.

1

Chapter I

Introduction

Recent surveys have found that sustainability is increasingly becoming part of the

way business is conducted. A variety of drivers--consumer concerns, employee interest

and government regulations--have all contributed to this trend (MIT Sloan Management

Review, 2009) of balancing the economic, social and environmental considerations in

strategy and practices (Strandberg Consulting, 2009). By making sustainability part of

what every employee does every day, it is possible for organizations to operate more

efficiently, improve risk management, enhance value (Pojasek, 2007a) and build

reputation. At the same time, they can contribute to the conservation of natural resources,

pollution prevention as well as multiple aspects of social equity. While the details of

planning and implementation of corporate sustainability programs differ according to the

-

(MIT Sloan, 2009, p.5).

To successfully implement a sustainability program, company commitment

should drive the effort for continuous improvement, permeating every operation. The

hierarchy. However, most methods for involving the workforce are not effective in

creating this top to bottom employee involvement. Traditionally, companies engage

employees in a sustainability program by instructing them to act differently and educating

2

them on how to do so. Studies demonstrate that this is simply not enough. Employees

often resist change and remain disengaged from the new programs. This poses a major

impediment to program success (Miles, 2010).

Business leaders in approximately seventy countries have adopted the principles

of national performance frameworks. The general purpose of these programs is to provide

standards and criteria to guide continual improvement (Pojasek, 2007a). They cover

strategy and planning practices, safety and fairness in the working environment and

efficiency of processes, among other principles (Pojasek, 2007a). Studies have shown

that organizations using framework criteria tend to financially outperform their peers by

more than two to one (Pojasek, 2009c). Also suggested, is seeking the involvement of

employees from the planning stages of a sustainability program. Such an approach

should include feedback mechanisms and the assignment of distinct responsibilities and

authority. Sustainability professionals need to embrace these proven performance

methods to ensure the engagement of employees when working to have a company act

responsibly in all three sustainability dimensions: environmental, social and economic

(Pojasek, 2010). The successful operation of any business depends significantly on the

level of engagement of its employees (Pojasek, 2008), especially so during corporate

transformation efforts.

Business performance frameworks and management systems are in widespread

use to help companies involve people in environment, health and safety as well as social

responsibility programs. These systems also provide guidance on how to address

employee incentives and recognition in process improvement programs. For any

3

organization seeking sustainability, this should be a priority. Research has identified

incentives as one of the key drivers of employee engagement, resulting in higher levels of

involvement, innovation, productivity and profits (Castellano, W. G., 2009).

Sustainability programs could benefit from including the right incentives as leading

indicators of employee engagement, and clearly linking them to the metrics that are

When establishing two-way

communication with employees, managers should find ways to improve planning a

sustainability program by establishing appropriate incentives toward the new goals. But

exactly how could organizations committed to sustainability improve their incentives for

effective employee engagement in corporate sustainability?

Recent research makes it evident that corporate incentive plans that influence

workforce objectives should stem from the business goals (Gordon & Kaswin, 2010).

Additional research points out should be applied

to performance evaluation as well as management (Hamdouch & Zuindeau, 2009). A

recent study on the assessment of sustainability integration in corporate strategy

advocates the establishment of concise incentive/disincentive and monitoring systems to

that end (Hallstedt et al., 2009). Meanwhile, research Green

in sustainability (Fleischer, 2009).

In sustainability management systems, the three responsibilities--environmental,

social and economic--should be integrated in every standard and operation of the

organization. This should include the set of values that companies use as measures of

4

employee performance. However, research shows that in most companies today, the

change in performance expectations is not evident through the corporate incentives that

drive the daily effort of employees. There is yet to be a widespread alignment of

incentives with the change strategy for sustainability. (Economist Intelligence Unit,

2010). In other words, in the vast majority of organizations, evaluation criteria have not

progressed to reflect the new measures of success. These higher standards are no longer

merely profit-related, but now include specific environmental and social targets, most of

w

principles and increase the chances of the successful and timely implementation of a

corporate sustainability program. Linking evaluation criteria to sustainability targets

would promote the desired behaviors throughout the organization and ensure the

alignment of individual advancement goals with the corporate sustainability strategy.

Therefore, the hypothesis of this research is that organizations committed to

sustainability could benefit from establishing performance incentives geared to foster

effective employee engagement in the sustainability program, as a way to provide

motivation to help internalize sustainability in everything employees do, fostering

continual improvement. It is crucial that employees, this key stakeholder group, address

the three responsibilities in every corporate task, extend the mentality of sustainability to

their personal lives and eventually influence external stakeholders accordingly.

To prove the hypothesis, this research used the case study method (Yin, 2009). A

cross-case comparison of five organizations with accredited sustainability programs

within the financial sector was conducted. Sustainability success was assessed according

5

to an organi

been established as a means of benchmarking, as company sustainability information and

rankings increasingly influence investment companies in their allocation of capital

(Delmas & Doctori Blass, 2009).

To safeguard against inaccurate data, the companies selected for this research are

all publicly traded, multi-national companies. Published sustainability reports were used

to determine how these companies create frameworks for employee involvement in

corporate sustainability. The employee incentives for engagement in the sustainability

program within each of these organizations served as the unit of analysis in this research.

A review of the literature, including surveys, articles and peer-reviewed papers,

provided the findings regarding employee engagement, sustainability and change

management practices, which is presented as background information. It should be noted

that the practices of corporate sustainability are rapidly evolving. Therefore, the literature

review is as current as possible, considering the time constraints of this study.

To further investigate the matter, ten short interviews were conducted with

sustainability officers and consultants in the United States and Europe. In compliance

with the initial research design (Yin, 2009), the data collected was analyzed according to

the research protocol. This is described in detail in Chapter III (Methods) of this paper.

The facts from the individual case studies and the cross-case comparison are

presented in Chapter IV (Results). The evidence, its significance and the validity of the

Hypothesis is discussed in detail in Chapter V (Discussion), as are potential research

implications of the findings.

6

The researcher reviewed incentives that were implemented to engage employees

in corporate sustainability. The priority given to employee engagement and how it is

measured within organizations was also studied. Various actions and initiatives that aim

to involve the workforce in practices of sustainability were recorded. An effort was made

to identify patterns in employee involvement plans and to determine whether

performance evaluation and reward systems are indeed inconsistent with the commitment

to the sustainability strategy. Any conclusions derived from the analysis of the research

findings could be generally applied to most corporate environments. Therefore, this work

could help researchers in the area of sustainability learn how to increase the probability of

its success, by strategically avoiding employee resistance to change. It could also help

resolve the still widespread contradiction of rewarding contributions to value increase

rather than rewarding response to all three responsibilities of sustainability. This research

could also help in the development of corporate incentives that will support organizations

in their pursuit of sustainability, provide information on how to successfully integrate it

into every-day operations as well as how to develop effective measures of accountability.

Other outcomes of the research could include enriching knowledge about what drives

employees; for example, interesting questions could be raised about how to create a more

satisfied workforce and strengthen the employer-employee relationship. In addition, this

information could be applied to similarly motivate other important stakeholder groups.

The transition to the higher set of values that sustainability proposes has been

generally introduced to the corporate world. However, it can only be effective if people

7

are provided with powerful incentives to become involved and, eventually adopt the

mentality of sustainability in an all-inclusive manner.

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Chapter II

Background

Introduction

Over the past decade, the concept of sustainability spread beyond forward-

thinking organizations. It is now encountered in most businesses that want to remain

competitive. This section seeks to familiarize the reader with the concept of

sustainability. A presentation of the definitions, theory and practices of corporate

sustainability will be followed by an overview of currently implemented strategies for

addressing employee engagement.

Corporate Sustainability

Sustainability--sometimes referred to as Corporate Social Responsibility (CSR),

Corporate Responsibility (CR), or even Responsible Competitiveness (Network for

Business Sustainability & Canadian Business for Social Responsibility, 2010)--has

become very important to management theory and practices, while the perceived risk of

inaction is increasing (MIT Sloan, 2009). A 2008 survey among executives from twenty-

five countries and forty industries showed 70% of the participating companies already

having or developing a sustainability program (Vandiver Group, Inc., 2009). Stakeholder

demands have enhanced this trend, as have data that demonstrate the influence of

sustainability programs on stock profits (Dow Jones Sustainability Index, & SAM,

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2011a). By striving for sustainability, organizations aim to fulfill their needs and those of

their stakeholders

p.81). Sustainability can benefit a business in both the short and long terms because it

embodies a systemic approach that helps retain competitive advantage, enhance

reputation and foster stakeholder trust (Strandberg Consulting, 2009).

However, another survey that also focused on executives from a wide range of

industries showed that among the 92% of respondents who address sustainability, only

the more adept acknowledge the full range of related responsibilities (MIT Sloan, 2009).

It is not yet widely understood that the very concept of sustainability encompasses three

dimensions that can help each other advance when addressed simultaneously. The

economic responsibilities are now complemented by more complex environmental and

social sets of duties. The environmental tasks include respecting the limitations of natural

resources, preventing pollution and safeguarding ecosystem functions. The social tasks

effective community contribution (Dyllick & Hockerts, 2002). The newly added

corporate responsibilities of environmental stewardship and applied social well-being and

equity are rapidly altering the way business is conducted. With this new approach to

generating value well under way, it is evident that corporations have the opportunity to

provide a significant example of a sustainable way of life--to governments and

individuals alike.

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Adopting a Higher Set of Values

By adopting the principles of sustainability, professionals offer the promise of a

future of cultural prosperity, social equity and natural wealth (Dyllick & Hockerts, 2002).

position regarding the new code of ethics that sustainability proposes. More professionals

realize that, particularly in difficult financial times, transparent operation and clear

accountability are crucial for retaining a place in the market (SAM & PWC, 2010). It is

also now apparent that sustainability targets are more connected to long-term financial

success rather than immediate gain (Economist Intelligence Unit, 2010 and Dow Jones

Sustainability Index & SAM, 2011a).

Furthermore, evidence points out that screening for positive action influences

institutional investors in their choices (SAM & PWC, 2010). As of December 2010, more

than USD 8 billion were allocated to DJSI companies by asset managers (Dow Jones

Sustainability Index & SAM, 2011a). Sustainability is perceived as an indicator of sound

enlightened and disc

Sustainability Index & SAM, 2011b).

Operational Performance

The journey to successfully implementing a sustainability program often begins

with methodical improvements in the organization Starting in the

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late 1980s, numerous performance frameworks were established to that end. These

frameworks offer principles for successful management that provide leading indicators of

an organizations performance. They incorporate standards for process organization and

human resource management, focusing on process improvement. One important

(Pojasek, 2008).

Some of the most prominent performance frameworks currently in use are:

- Criteria for Performance

Excellence (National Institute of Standards and Technology, 2010).

- SAI G The Business Excellence Framework (SAI Global, 2011).

- The

Fundamental Concepts of Excellence (2003).

respons

create a strong foundation for sustainability (Pojasek, 2008). This basis can lead to

further operational efficiency and innovation, as well as stronger ties with stakeholders

(NEEF, 2009).

Building Reputation

An organization committed to sustainability can steadily improve its reputation by

exercising transparency and contribution. However, it is necessary to keep stakeholders

informed. One way to do this is with the regular reporting of progress toward

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(GRI) Sustainability Reporting Guidelines can facilitate this process, because they

include economic, environmental and social metrics (GRI, 2006). This form of public

reporting provides a way to benchmark against peers, track the progress of sustainability

efforts and demonstrate the transparency of operations to stakeholders.

In addition, recently established sustainability indices like the Dow Jones

Sustainability Index World 80, the Corporate Knights Research Group Global 100 and

the FTSE4GOOD Global 100 evaluate and list companies with exceptional performance

in all areas of sustainability. Inclusion in such indices is becoming a coveted corporate

To further improve their standing, an increasing number of companies are

officially adopting structured codes of operation and investment ethics like those of the

Equator Principles or the United N Principles for Responsible Investing (PRI).

Implementation Impediments

In practice, numerous difficulties impede the successful implementation of

corporate sustainability programs. Limited knowledge is one of the greatest obstacles,

according to

always have the case-specific facts on how to identify the range of sustainability changes

way in their companies, more than 70% have no clear business case for it. Interestingly,

however, the survey concludes that a fixed mentality (MIT Sloan, 2009) is probably the

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most difficult barrier to overcome. Findings from a different survey among sustainability

p

cited three times more often than a weak business case as sustainability obstacles

(Brokaw, 2009, p. 34). Another problem noted was the slow spread of sustainability

education (Brokaw, 2009). The same survey pointed out a delay in understanding that

the rest attributing sustainability leadership to other positions or groups (Brokaw, 2009).

Inconsistent synchronization of employee evaluation metrics with the corporate

sustainability goals has also become noticeable (Way, 2010). Sustainability professionals,

consultants and academics suggest a number of strategic practices for addressing such

impediments.

It has been identified that the more people know, the more opportunity they see in

sustainability (MIT Sloan, 2009). Therefore, systematic education and training seems to

be the right way both to build a convincing economic case and to spread the know-how of

Orgain &

Nunez, 2010, p. 3). The result should be a workforce that is not only able to practice but

also to enrich the ideas of sustainability (Orgain & Nunez, 2010). Regarding the elusive

cultural change, the Network for Business Sustainability and Canadian Business for

Social Responsibility propose improvements in five key areas: structure, processes,

strategy, people and rewards (Network for Business Sustainability & Canadian Business

for Social Responsibility, 2010).

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The consensus is that as in any attempted operational change, the human element

is the most likely to cause failure, eventually compromising the credibility of the

objectives (Palmer, 2004). Therefore, corporate sustainability requires stakeholder

engagement, and employees, as a key stakeholder group, should be thoroughly and

effectively involved in all stages of the process (Pojasek, 2008), including the definition

of performance goals (Argyris, 1998). As Yahoo director of climate and energy strategy

Chris Page noted, people enjoy being part of the solution (MIT Sloan, 2009).

The Importance of Effective Employee Engagement

Employee involvement is one of the key enablers for business success (Pojasek,

2008). An engaged individual will go beyond the ordinary call of duty to serve the goals

of the organization (Orgain & Nunez, 2010). What employee engagement programs

ultimately aim to achieve is operational effectiveness (Castellano, 2009) that will lead to

a competitive advantage (Schiemann & Kostman, 2005) that is more enduring and easier

to maintain (Pfeffer, 2005). By motivating employees towards a better outlook and

improved efficiency, companies become able to produce better and more innovative

products in less time (Riordan, Vandenberg & Richardson, 2005). By effectively

engaging employees, an organization can proceed from theory to practice of their

corporate commitments (World Business Council for Sustainable Development, 2010). It

is a strategic way of conducting business (Gallup, 2010).

A Gallup study of over one hundred and fifty organizations proved that

companies can earn a per share growth rate that is 3.9 times more than their competitors

15

if they achieve successful engagement (Gallup, 2010). Best Buy provides one other

successful example, as a 2% increase in engagement at one outlet equals a $100,000

annual rise in sales (Orgain & Nunez, 2010). Further findings based on thirty years of

research involving seventeen million employees, indicate that engagement influences

employee productivity and loyalty (Gallup, 2010). It has even been found to enhance

safety performance (Williams, 2008). Meanwhile, it has been estimated that about US

$300 billion worth of productivity is lost per year because of a lack of engagement in

occupation (Gallup, 2010).

Employee engagement is especially important in corporate transformation efforts.

In such cases, it is common for employees to react by distancing themselves from the

new processes (Argyris, 1998), especially for those who stand to be affected the most

(Palmer, 2004). Change management seeks to minimize the effects of this expected

resistance (Way, 2010). Therefore, it is important for leadership to assign specific

responsibilities so that the workforce can become motivated and engaged (Miles, 2010).

This should not be done by telling people what to do, but rather by involving them

beginning with the planning and implementation stages of the program (Pojasek, 2008).

When targets stem from a group effort they feel more familiar to employees (Mager &

Sibilia, 2010).

Employee engagement is an area where even performance frameworks lack in

content, as they focus more on customer-related standards (Pojasek, 2008). Even though

the importance of effective involvement is addressed and encouraged in management

systems and sustainability reporting protocols, none provide a sufficiently clear,

16

comprehensive and easy to implement recipe for effective employee engagement in a

corporate effort. Yola Carlough, Burt

sustainability targets for 2020 (Smart Planet, 2010). Despite this fact, there are successful

examples of employee engagement to be found in the corporate world.

A number of distinguished organizations are set apart by their human capital

management strategies (Pfeffer, 2005). Companies like Intel, Stonyfield, Wal-Mart,

General Electric Inc., PepsiCo, Nestle, Interface, Patagoni

Coffee, Xerox and Molson Coors are a few noteworthy examples of such organizations.

Furthermore, they have all applied measures, to different extents, to promote

sustainability through an engaged workforce. This can be achieved by providing a safe

and pleasant corporate environment, respect for personal life, fair compensation, rewards

that directly correspond to the corporate goals and the establishment of channels for

employee comments and input (Network for Business Sustainability & Canadian

Business for Social Responsibility, 2010). In certain cases, engagement promotion comes

from the employees themselves, in the form of voluntary groups that influence and act

ischer, 2009).

A sustainability program can succeed only if its values become embedded in the

throughout the workforce is crucial. Once involvement has started, a positive feedback

cycle can begin, as sustainability and engagement enhance each other, urging employees

to identify with something meaningful (Resnick Consulting, 2009).

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Achieving and Maintaining an Engaged Workforce

The traditional guidelines on how to organize, educate and motivate the

workforce come from the principles of organizational behavior. Basic experimental

knowledge originating from centuries of observation is currently applied to the

management of people within the business context. As competition among organizations

human capital. The performance standards that help organizations identify problems and

opportunities for improvement in occupational health and safety or environmental

management, also help in the area of human resources.

The following are some examples:

- ISO 14001,

Environmental management systems (2004) and AS 8003, Corporate

Social Responsibility (2003).

- ISO 9001, Quality

Management Systems (2008).

- ISO 26000, Guidance in

Social Responsibility (2009).

- OSHAS 18001, Occupational Health and

Safety Management Systems (2007).

- Improving Business Performance

(http://www.investorsinpeople.co.uk/Pages/Home.aspx).

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Despite this available guidance, data from a 2005 survey by Towers Perin found

only 14% of employees to be engaged (Attridge, 2009). A more recent global study

showed 21% of the workforce to be engaged (Gallup, 2010). This could indicate a trend

towards improved levels of involvement that could be attributed to the expansion of the

mentality for sustainability. Recently developed tools like the Gallup Q12 survey (Gallup,

2010) help companies track engagement and could also have contributed to this upward

trend. However, there is still a long way to go before an engaged workforce becomes the

common model. The aim of organizations committed to sustainability is to reach a ratio

of engaged to disengaged employees that is at least 8:1 (Gallup, 2010), which poses a

very challenging threshold.

There are many strategies and practices through which this can be worked on,

however. Providing sustainability education along with incentives is believed to be the

most effective way to advance the corporate goals (Orgain & Nunez, 2010 & NEEF,

2010) and train employees for long-term decision-making (World Business Council for

Sustainable Development, 2010).

Education

Management system standards and performance frameworks all address the

requirement for appropriate education and training of employees. Companies committed

to sustainability have to begin by defending the reasons for the changes to their

workforce (Castellano, S., 2000). Employees then need to learn how to alter their

behavior (Way, 2010). For these purposes, the appropriate resources need to be allocated

19

(Castellano, S., 2000) so that companies can offer lectures and multimedia presentations,

printed communication material and intranet sites (Balch, 2010). All these media can

facilitate the communication of facts, statistics and case studies to help employees

acquire and spread the knowledge required (Castellano, S., 2000) or become familiar

with new skills that may be needed (Bertels, Papania & Papania, 2010). In terms of

content detail, different approaches are used. For example, at Nike, general environmental

information is presented for employees to use wherever they think applicable, whereas at

BASF Corp

position (Makower, 2010).

The most common complaints regarding the processes of corporate education

highlight the need for custom training tools as well as ways of assessing the effectiveness

of these programs (NEEF, 2009). It has also been suggested that employers consider how

interested employees are in the topics (World Business Council for Sustainable

Develo

mentoring employees should not be neglected because it can provide beneficial

encouragement to sustainability novices (Bertels, Papalia & Papalia, 2010).

Incentives

It has been observed that motivation for sustainability is subject to

motivational hierarchy

concerned with the next levels of motivation, safety, belonging, esteem and self-

actualization--where individuals can identify with common ideals and goals (Mager &

20

Sibilia, 2010). Therefore, in corporate sustainability programs, remuneration, benefits and

identification with sustainability values can be expected (Mager & Sibilia, 2010).

Meanwhile, research shows that about 10% of any workforce is self-motivated, another

10% cannot be influenced, while the remaining 80% can be motivated towards behaviors

desired by management (Mager & Sibilia, 2010). To reach that available audience, there

is no clear method of choice of motives and performance incentives. Companies

committed to sustainability have applied many different strategies, ranging from practical

instigation incentives like subsidizing public transportation and walking shoes (Brighter

Planet, 2010) to publicly celebrating employee recognition.

In some companies, like Investa, employees can earn a diploma at the end of their

sustainability training (Economist Intelligence Unit, 2010). Campbell Soup established

environmental sustainability and community impact (Economist Intelligence Unit, 2010).

Hewlett-

The benefits of such incentives often translate to visible gains for the company. The

Xerox

million in addition to 2.6 million pounds of waste (Kaye, 2010).

In other cases, companies approach personal habits first. 2007

Orgain & Nunez, 2010).

Others build on community contribution like Nike

21

where 1,000 employees dedicated half a day to that cause (Makower, 2010). Simple

things like starting a trivia game to induce learning or installing a popcorn machine in the

recycling room, as was done at , can also prove very effective for changing

behaviors (Makower, 2010).

It seems that incentives are usually effective in view of the expected

corresponding reward (Castellano, S., 2010). Some believe that in sustainability

practices, recognition is enough to drive performance (Castellano, S., 2010). Others argue

that sustainability should become embedded into corporate rewards structures (Network

for Business Sustainability & Canadian Business for Social Responsibility, 2010) if it is

to become integrated in every-day business. Studies of corporate environmental programs

have shown that in order to align management incentives with organizational goals, top

deiro & Sakris, 2008). Governance

Metrics International (GMI) has recently begun screening for long-term sustainability

incentives in executive compensation (GMI, 2010). However, management research

findings indicate that if all gains from company efforts only benefit the top tiers of

management and shareholders, employees can become discouraged (Pfeffer, 2005). It

among the workforce. Recent evidence does suggest that as sustainability commitments

are rising in priority and a prompt workforce response is sought, companies are

increasingly linking sustainability targets to financial rewards (Economist Intelligence

Unit, 2010).

22

Hence, at Intel all bonuses depend on environmental performance (Fleischer,

2009). Employees at Stonyfield Farms devise plans toward sustainability goals within

progress made towards that goal (Stonyfield Farms, 2010). This approach resulted in

success for most goals (Stonyfield Farms, 2010). Glaxo Smith Kline managed a

significant reduction in energy use by linking the goal to bonuses (Network for Business

Sustainability, & Canadian Business for Social Responsibility, 2010). IBM offers $50,000

environmental awards that motivate employees from many disciplines to compete

(Makower, 2010).

These effective incentives schemes are, however, still limited to a few examples.

It seems that sustainability plans, like many prec

this case, the contradiction is the lack of alignment between corporate incentives and the

change strategy for sustainability. (Economist Intelligence Unit, 2010). This big

losing credibility.

Enhancing Employee Motivation

With the appropriate integration of recent findings and survey results,

customizing working environments, rewards and recognition could yield the sought

engagement results (Bardwick, 2010). Recent evidence points out that while workforce

,

23

less engaged employees need extrinsic motivation (Way, 2010, p. 13). This can be

accomplished with small incentives like attention from management (Network for

Business Sustainability & Canadian Business for Social Responsibility, 2010),

promotions, money or special benefits (Bertels, Papalia & Papalia, 2010). In these efforts,

it is imperative that the set targets are achievable and clearly measurable (Bertels, Papalia

& Papalia, 2010).

Findings from the discipline of psychology could also be considered in incentive

design (Kazdin, 2009), providing the missing link of knowledge about how to motivate

employees toward the desired configuration of sustainability goals. Research from Yale

University shows that incentives are more effective when they are presented as

challenges (Kazdin, 2009). Findings from a multi-year study at Harvard Business School

identified the feeling of having made progress as the number one motivator (Amabile,

2010). Other research shows that friendly competition among employees yields effective

motivation (Brighter Planet, 2010).

Furthermore, it should be taken into account that in these times of financial crisis,

engagement has been negatively affected by decreases in remuneration (Chamberlain,

2010). Sophie Rahm, head of research at European Sustainable Investment Forum

(Eurosif) observes that organizations are now searching for ways to associate pay with

long-term accomplishment (Gardner, 2010). It is believed that adding sustainability

parameters in employee performance evaluations could help toward that end (Bertels,

Papalia & Papalia, 2010).

24

This research proceeds to study examples of how incentives for sustainability are in

effect in four financial institutions. The methods of data gathering and analysis are

presented in Chapter III (Methods), immediately following this section.

25

Chapter III

Research Methods

The Case Study Method

To explore the structure of employee incentives that are currently implemented

for engagement in sustainability, this researcher used use the case study method (Yin,

2009). This method is especially effective in investigating social phenomena that a

researcher cannot control, as in this case, employee motivation (Yin, 2009). In addition,

the methodical procedure that the case study method proposes is ideal for building an

argument while safeguarding the validity of the study (Yin, 2009).

For this purpose, four multinational, publicly traded financial institutions were

selected for study. These organizations are well on their way to surpassing performance

excellence goals for achieving sustainability, as indicated by their standing in prestigious

indices that rank value, reputation and sustainability eminence. The data gathered from

the cases will be used to conduct a multiple descriptive case study, thus enabling a cross-

case comparison of the incentive practices in effect within these organizations (Yin,

2009).

Research Design

The research question arose after a study of the implementation of corporate

sustainability programs and the discovery of the importance of effective employee

26

engagement therein. It was evident that workforce involvement could stand significant

improvement; therefore, it was logical to ask the question, how could organizations

committed to sustainability improve their incentives for effective employee engagement in

corporate sustainability?

After an initial literature review, the hypothesis that organizations committed to

sustainability could benefit from establishing performance incentives geared to foster

effective employee engagement in the sustainability program was derived. It seemed that,

even in organizations that promote sustainability across many platforms, the connection

between performance criteria and sustainability goals was weak, if present at all.

Following the theory development of the research question and hypothesis, the

literature review was conducted and then focus shifted to the research design of the study.

The researcher identified the criteria for case selection and the embedded unit of analysis

within the cases as the incentives for employee engagement in corporate sustainability of

each organization. These can either be actions that create a framework for engagement or

performance rewards. Specifically, the researcher was looking to identify whether

monetary or non-monetary incentives were connected to the sustainability targets.

A research protocol was then designed to serve as a road map for the study

(Figure 1). Following the steps of this protocol, a literature search on the subjects of

corporate incentives and employee engagement in sustainability followed the initial

review. A detailed consideration of the widely accepted benchmarks for corporate

sustainability success followed to identify common standards for the final case selection.

After the cases were selected, interview candidates were identified and the interview

27

questions were compiled. Ten interviews were conducted among sustainability

professionals to shed further light on the research question. The information gathered

supplemented the literature and case data, providing valuable insight into the obstacles

and facilitators of effective employee engagement in modern organizations striving for

sustainability. These conversations were especially useful in identifying trends for future

changes that have not yet been documented in published literature. Guidance for the

interviewing process was obtained from the book Interviewing: Principles and Practices

(Stewart & Cash, 2008).

The data collection that followed included a detailed study of the four cases, the

development of a matrix for the classification of data. The case reports were composed

and cross-case analysis conducted. Subsequently, the relevant findings from the interview

transcripts and the literature review were classified according to the matrix.

Finally, the researcher reported on the cross-case analysis and interview findings.

After the integration of the literature data, it was time to question whether the initial

theory needed modifications. To build an argument that supported the claimed

proposition, a logical connection had to be made between the case data regarding

employee incentives for engagement in corporate sustainability and the hypothesis (Yin,

2009). The evidence had to prove the notion that in most organizations distinguished for

their sustainability efforts, the framework of incentives and rewards is not adequately

initial theory

28

was still valid and could be proven using the findings. Therefore, no changes were made

to the research question and hypothesis.

The same logic was replicated in examining all cases to draw generalized

conclusions. It was attempted to identify patterns across the cases (Yin, 2009) that

logically lead to an explanation of the effectiveness, or lack thereof, of the incentives

toward engagement in the corporate sustainability program. The discoveries made should

help identify gaps in strategy when planning a sustainability program and help

recommend further research into new or unanswered questions. Safeguarding the

reliability, construct validity, as well as internal and external validity of the research

design (Yin, 2009) was a primary concern during the entire process.

29

Figure 1: Research Protocol

30

Data Collection

To understand the importance of effective engagement in sustainability programs

and to best explore the organizational phenomenon of employee motivation, a multi-

disciplinary search was conducted using several databases available through the Harvard

University library system.

The evidence collected came from documents (peer-reviewed journal articles,

professional white papers, published articles authored by sustainability professionals, and

published corporate reports), archival records in the form of survey results, and focused,

short-time interviews featuring questions prepared according to the research protocol

(Yin, 2009). The multitude of sources ensures the construct validity of the research

design (Yin, 2009). Data were gathered and carefully organized in a database to maintain

Case Selection

To apply the theoretical replication logic and to obtain the anticipated results

within a satisfactory number of cases, four organizations were selected (Yin, 2009). They

were all chosen within one market sector to facilitate comparison of practices. Their

parallel operations and processes ensure a similar workforce mix and human resource

indices are available that screen for the characteristics needed for this research. To ensure

the reliability of the study (Yin, 2009), the corporations chosen are all multinational,

31

publicly traded companies that are legally obliged to publish accurate data. The financial

institutions that were compared in this research are Barclays PLC (Barclays), BNP

Paribas, Credit Suisse Group (Credit Suisse), HSBC Holdings PLC (HSBC). These

banks excel in the banking sector, confirming the positive influence of sustainability

practices on value building. Their standing is validated by their high ranks in lists such as

the

Brand Finance (Bank Finance Brand Directory, 2011) and

r, 2011).

Employees Countries Rank by

Assets Rank by Safety

Rank by Value of Banking Brand

Rank by Financial Brand

Case 1: Barclays

144,000

60

4

34

7

10

Case 2: BNP Paribas

210,700

80

1

18

12

6

Case 3: Credit Suisse

46,600

54

26

26

15

20

Case 4: HSBC

300,000

83

17

19

3

1

Table 1. Case Characteristics

32

The following sustainability-related indices and frameworks were also referred to

for the final case selection:

The Dow Jones Sustainability Index (DJSI) World 80: this service

-

driven

portfolio managers with valuable information (DJSI & SAM, 2011a).

dimension (anti-crime policies, brand management, customer service

management and stakeholder engagement), environmental dimension

(business opportunities financial services/products, business risks large

projects/export finance, climate change governance, environmental

policy/management system, operational environmental footprint) and

social dimension (code of ethics in investments/financing, occupational

health & safety, social value added: financial inclusion/capacity building,

the following awards on this index: (DJSI & SAM, 2011b):

- HSBC: SAM Bronze Class

- Barclays: SAM Silver Class

- Credit Suisse: SAM Bronze Class

- BNP Paribas: SAM Bronze Class

FTSE4GOOD Global 100:

companies that meet globally recognized corporate responsibility

33

Global 100 list (FTSE, 2011).

The United Nations Environment Programme (UNEP) Financial

Initiative, of which all four banks are members, encourages sustainable

practices in financial sector activities (UNEP Financial Initiative, 2011).

The Equator Principles: a code of ethics, to which all four banks are

signatories, that ensures social and environmental responsibility in project

financing (The Equator Principles, 2010).

Interviewing Process

Those interviewed were selected among available sustainability officers of

companies striving for sustainability. After receiving the exemption from the Harvard

University Committee on the Use of Human Subjects in Research, a number of

professionals were contacted for interviews. A brief communication with the ten

representatives who were willing to be questioned took place before the interviews were

scheduled. Two appointments were held in Boston, MA, one in Vevey, Switzerland, and

the rest were conducted using Skype or telephone. Four of the subjects are sustainability

officers at financial institutions and three are officers from public multi-national

companies known for their sustainability accomplishments. The last three are consultants

in the field of corporate sustainability based in the United States.

All subjects were informed about the details of the process in advance and were

presented with a consent form, as per the instructions provided by the

34

Committee. The consent forms assured the subjects of anonymity, confidentiality and the

destruction of interview records after the grading of this thesis (Yin, 2009). At the time

of the actual appointments, conversation occurred based on the ten questions previously

approved by the Human Subjects Committee. During the interviews, notes were

handwritten by the researcher and later classified in a confidential database.

Interview Questions

Questions to sustainability officers:

1. Which sustainable practices do you consider most important for your business?

2. How do you educate employees on these practices?

3. Does this education ensure their participation? If not, in what ways do you seek to

improve their engagement in the sustainable practices?

4. Can you give me examples of non-financial motivation towards sustainability? Are

any implemented in your company?

5. Can you give me examples of non-financial rewards for sustainability? Are any

granted in your company?

6. What metrics do you -or would you- use to assess the effectiveness of employee

engagement in corporate sustainability?

7. By those standards, how effective is the engagement that you have achieved?

8.

employees are judged by? Are any of these linked to the sustainability targets?

9. Are company salaries and bonuses associated to any non-profit results?

10. What do you consider the biggest obstacle for engagement in sustainability to

be? Do you have a strategy to overcome this obstacle?

35

Questions to sustainability consultants:

1. Which sustainable practices do you consider most important in businesses today?

2. How would you educate employees on these practices?

3. Do you think that this education ensures their participation? If not, in what ways

would you seek to improve their engagement in the sustainable practices?

4. Can you give me examples of non-financial motivation towards sustainability?

5. Can you give me examples of non-financial rewards towards sustainability? Would

you recommend their implementation?

6. What metrics do you -or would you- use to assess the effectiveness of employee

engagement in corporate sustainability?

7.

employees are judged by should be linked to the sustainability targets? If so, can you

provide some examples?

8. Do you think company salaries and bonuses should also be associated with any non-

profit results? If so, which ones?

9. What do you consider the biggest obstacle for engagement in sustainability to be? Do

you have a strategy to overcome this obstacle?

10. o implement a

corporate sustainability program?

36

Analysis Method

After collection, careful analysis of the data followed the case study protocol. A

matrix was developed to facilitate classification of the literature review findings

according to their content in relation to the hypothesis.

Following the literature review, the case studies were conducted. Corporate

reports were studied for activities that encourage engagement in sustainability, either by

educating, demonstrating the practice of sustainability, actively encouraging

participation, or providing rewards for sustainability accomplishment. These activities

were listed and grouped for each case. A cross-case analysis was then compiled,

comparing the combination of activities in all four cases, synthesizing an explanation that

supports the hypothesis (Yin, 2009). Interview transcripts were then analyzed and the

main conclusions set aside to complement the case study findings in the Discussion

section of this thesis.

The analytical strategy was based on the theoretical propositions inferred in the

stated hypothesis (Yin, 2009). Using the pattern matching technique, comparison of the

data gathered with the predicted hypothesis (Yin, 2009) strengthened its validity.

Limitations

Certain limitations and biases that had to be dealt with during the research

design, data collection, and evidence analysis stages of this study. Specifically, the

37

judgment, available time and access. The intention was to cover all relevant credible

sources that were published by the time the case analysis was conducted. Furthermore,

the accuracy of the published corporate reports that the case study analysis depends on

could be challenged, as corporate reports are impossible to verify. However, the fact that

the specific data the conclusions were based upon were not quantitative should be taken

into account. To minimize the risk of basing the study on faulted information, the

organizations selected for study are all publicly traded companies with a responsibility to

their shareholders to publish accurate data.

reason, useful guidance was obtained by relevant literature (Stewart & Cash, 2008),

course material and the director of this thesis, Dr. Robert Pojasek.

The companies selected for the case studies presented may not accurately

represent conditions in the corporate world in its entirety. Even if accurate, the

generalizations made reflect the business environment during the time shortly preceding

data collection. Numerous factors may have changed between that time and the writing of

the thesis.

The interpretation of data regarding corporate employee programs could have

made to avoid personal bias affecting the interpretations and conclusions presented in the

Discussion section.

ee programs was based on the

facts included in the most current sustainably reports and website pages. It is quite

38

mentioned. However, the cross-case discussion was based on the material that each bank

chose to publicize for 2009, therefore, it should have yielded a fair comparison. Special

effort was made to avoid personal bias infiltrating the interpretations and conclusions

presented in the Discussion section.

39

Chapter IV

Results

Case Findings

The case studies began by noting certain descriptive characteristics, such as

geographic spread of operations and size of the global workforce. Consequently,

ied. These are

voluntary surveys used to assess employee engagement in all four organizations, and

such surveys are a widespread corporate practice in general. Answers from the

icipation

employee engagement. All of the studied organizations had satisfactory participation

rates, but none reached 100%.

Finally, each of the four cases was studied specifically for identification of the

offered incentives for employee engagement in the corporate sustainability program.

These were catalogued and then organized in four categories, listed in the order of

motivational strength. The list of categories starts from the weakest incentive practices,

which are the educational activities on sustainability issues. Following are the activities

the activities that employees can participate in directly. The list ends with the strongest

incentives, which are any straightforward rewards for sustainability achievement.

40

Rewards were also screened for non-financial kinds, as researchers believe that strong

corporate sustainability is often distinguished by the use of many different tools, not just

monetary standards (Hamdouch & Zuindeau, 2009).

The four categories are as follows:

Education Sustainability education and training programs for employees, separate

from traditional job training. This category includes all activities

designed to educate or train employees in practices related to

sustainability.

Demonstration Sustainability action without employee participation. This category

lists all example-setting initiatives for sustainability, such as

community financial support, membership in welfare organizations/

initiatives and awards won. By publicly and consistently promoting

social and environmental sustainability, these actions foster behavioral

changes in the workforce. Practices that are considered standard, such

as regulatory compliance on workforce diversity and just labor

practices were excluded from the lists.

Activation Sustainability action with employee participation. Action that enlists

the help of employees on a mandatory or voluntary basis. These

activities are designed to promote environmental, social and economic

sustainability in the community. Studies have shown that employees

across all levels

41

Rewards Employee financial and non-financial rewards linked to sustainability

targets. Rewards and bonuses related to sustainability metrics provide

the strongest incentive for employee engagement in the corporate

sustainability program. Making the performance-reward link obvious

ensures that organizations are reinforcing performance standards

(Riordan, Vandenberg & Richardson, 2005) towards the sustainability

targets. According to research by Experts in Responsible Investment

Solutions (EIRIS), only 15% of the top banks link salary with

environmental, social and governance metrics (Gardner, 2010).

However, progress in that area is becoming apparent. At global

depended on sustainability progress (Gardner, 2010).

All incentive practices listed were numbered in ascending order, to facilitate their

comparison of the four cases. It should also be noted that some actions were credited to

more than one category. Where the number is in bold typeface, it is to indicate a wider

program of numerous actions, the analysis of which is beyond the scope of this paper

(e.g. a multi-faceted environmental footprint reduction program).

corporate annual/sustainability reports and official websites. The most recent edition to

42

date was used in all cases, representing data and activity of the year 2009. The cases are

presented in alphabetical order.

Case 1: Barclays

Barclays has a workforce of 144,000 employees and offices in 60 countries

(Barclays, 2010a).

Following are the main incentives in effect for engagement in the sustainability

(2010a):

Education

1. Coaches business and credit risk teams worldwide through the Group

Environmental Risk Management Team.

2. Revised t

include training on human rights considerations.

Demonstration

3. Holds membership in the UNEP Statement by Financial Institutions on the

Environment & Sustainable Development.

4. Is a member of the UNEP Finance Initiative (co-chair, human rights).

5. Is a member of the Business Leaders Initiative on Human Rights.

43

6. Participates in the Change

Board.

7. Won the Energy Risk Award

(Barclays Capital).

award by

Charity Times.

9. Received the Clarion award for a video on climate change (Southern Africa).

10. Achieved Platinum status in Business in the Community.

11. Achieved gold status in the standard.

12. Was voted as one of the top fifty places where women wan to work

(The Times, UK).

Report (Barclays, 2010b, p. 5).

14. Issued the Group Sustainable Supply Chain Statement.

15. Implemented

16. Launched Gconomy Visa in the United States: donates part of the

earnings to green schools and rewards domestic recycling.

17. Has Environmental and Social Impact Assessment lending controls.

18. Promotes investments in natural resources through Barclays Natural Resource

Investments.

44

19. Works in the renewable energy market through The Alternative Energy Group

(Barclays Capital) and The Natural Resources Team (Barclays Corporate).

20. Set up the first dedicated carbon-trading desk (Barclays Capital).

21. Sponsored the climate adaptation report presented in Poznan.

22. Produced Storm Shelter, a report assessing climate change effects in Africa.

23. Participates in the

24. Promotes financial education for disadvantaged people through the Banking

on Brighter Futures program.

25. Supports investing in local initiatives through the Local Communities

program.

26. Targets a reduction in the company's environmental footprint through the

Barclays Climate Action program.

27. Published The Green Guide for Business, a carbon reduction handbook

distributed for free to 5,000 corporate customers.

28. Participates in the Protecting Eastern African Resources and Livelihoods

program.

29. Promotes the United Nations Millennium Development Goals through

programs like the Katine project for improving maternal healthcare (Uganda) and

partnerships with the Emerging Africa Infrastructure Fund, Junior Achievement

Worldwide, CARE International and Plan International.

30. Is active in fundraising for housing through the Social Housing Team

(Barclays Corporate).

45

31. Donated 10 million GBP towards basic banking services (Africa, Asia and

South America).

32. Offers Barclays Money Skills for disadvantaged people (UK).

33. Tested Power Perfector at nine retail centers (UK).

34. Supports female employees though the Women in Management course as well

as the Barclays Wealth and Talking Talent programs for senior executives.

35. Publishes the Smart Living magazine for female customers.

36. Promotes Disability Inclusion, with programs that raise awareness, provide

support and work environment adjustments.

37. Published a Guide for Integrating Human Rights into Business Management.

38. Reports on Global Reporting Initiative (GRI) guidelines (produces a level

B+, Self Declared report).

39. Reports greenhouse gas (GHG) emissions through the Carbon Disclosure

Project.

40. Has been carbon neutral in banking operations since December 2009.

Activation

41. Supported My Money Matters program with volunteers offering financial

management advice to the elderly.

42. Encourages employee volunteering through the Charity Begins at Work

program (58,000 active volunteers and fundraisers in 2009).

43. Encourages online input of employees' improvement ideas (Barclays

Corporate).

46

44. Conducts an annual employee survey.

Rewards

45. Established the global for employee community

contribution.

Case 2: BNP Paribas

BNP has a workforce of 201,700 employees in over 80 countries. The BNP

As mentioned

(BNP, 2010), the main incentives for engagement in sustainability are the following:

Education

1. Trained 163 project-financing professionals on the Equator Principles.

Demonstration

2. Holds membership in the UNEP Statement by Financial Institutions on the

Environment & Sustainable Development.

3. Participates in the UN Global Compact.

4. Is in the steering committee of the Equator Principles.

5. Signed the Principles for Responsible Investment.

6. Is a member of the International Investors Group on Climate Change (BNP

Paribas Investment Partners).

47

7. Is a member of Institutional Investors Group on Climate Change (BNP Paribas

Investment Partners).

8. Is a member of the Principles for Responsible Change (BNP Paribas

Investment Partners).

Energy

Business.

10. Re Diversite label

11. Received the ISO 14001 certification for its Welcome and Services branch

model.

12. Received the Finansol for three socially responsible funds (BNP Paribas

Investment Partners).

13. Received the Novethic certification for three socially responsible funds.

14. Established the BNP Paribas Foundation that supports medical research,

heritage protection, the arts, education, job opportunities for the disadvantaged

and environmental protection.

15. Supported 29 French charities (2009).

16. Was the first bank to open a solar-powered branch (Alexandria, Italy).

17. Installed efficient equipment to reduce energy use.

18. Sourced 96% of the paper used from sustainably managed forests.

19. Has invested over 2 billion Euros in renewable energy.

20. Will help finance the largest wind farm in Sub-Saharan Africa, in Ashegoda,

Ethiopia.

48

21. Signed two strategic cooperation agreements with Russian oil company TMK-

BP under the Kyoto Protocol.

22. Launched three new social and environmental funds.

23. Raised 163 million Euros through a four week SRI campaign (Belgium).

24. Offers competitive interest rate loans for hybrid or low-emissions cars

(Turkey).

25. Supported medical institutions (Singapore, Morocco).

26. Replaced year-end gifts with donations to the medical Institut Pasteur.

27. Sponsored numerous initiatives to help the poor with meals, medical care,

education and employment.

28. Supports female employee through networking groups and a commitment to

have 20% women in key positions by 2012.

29. Promotes handicapped hiring through an agreement with the French

government.

30.Uses two new buildings with a High Environmental Quality certification.

31. Provided training on microfinance risk (Tunisia).

32. Lowered insurance fees for paraplegics.

33. Invested in PlaNet Finance, which promotes microfinance development.

34. Reports on the GRI guidelines (produces report of undeclared level).

35. Reports on GHG emissions through the Carbon Disclosure Porject.

49

Activation

36. Supported 62 French charities through the Coup de Pouce program, led by

BNP Paribas Foundation personnel.

37. Created the non-profit Benevolat de Competances et Solidarite to encourage

employee and retiree volunteering.

38. Created the Community & Charity program in the UK to encourage

employee volunteering.

40. Created a carpooling website to help employees reduce GHG emissions.

41. Made train travel mandatory for certain routes.

42. Launched a 13,000-employee challenge to reduce paper use by 25% (BNP

Paribas Fortis).

43. Provides funding and support to organizations in which employees

volunteer through the Helping Hand program.

44. Executed a confidential survey with 9,000 participants to assess and mitigate

employee stress levels.

45. Conducts an annual employee survey.

Rewards

In this category, no rewards linked to the sustainability targets were identified.

This does not exclude the possibility of such variable-pay links for specific

executive positions in the bank. However, this information was not available. It

50

should be noted that the organization was contacted by e-mail but did not provide

the information requested.

Case 3: Credit Suisse

Credit Suisse employs 47,600 people in 54 countries around the world. Their

Suisse, 2010).

ed in the

Education

1. Raised employee awareness on energy use through the Energy Efficiency Week

exhibition (Zurich).

2. Added a module on the environment and climate protect

interactive learning program.

3. Implemented mandatory online training programs for the optimization of

internal control processes.

4. Added an online training module on anti-discrimination to the Engaging

Difference program.

5. Made online compliance training mandatory.

6. Established a disability awareness training program.

51

7. Trained 244 employees in active disaster control through the Ready When the

Times Comes program.

Demonstration

8. Holds membership in the UNEP Statement by Financial Institutions on the

Environment & Sustainable Development.

9. Participates in the UN Global Compact.

10. Is a member and supporter of the International Committee of the Red Cross.

11. Is a member of the Swiss Association for Environmentally Conscious

Management.

12. Is a member of the Association for Sustainable and Responsible Investment

(Asia).

13. Upholds The Carbon Principles.

14. Signed the CGAP Initiative for Microfinance Client Protection Principles.

rophy for voluntary energy efficiency

improvements by Energy Model Zurich.

Singapore Building

and Construction Authority (Singapore).

Universum (Switzerland).

19. Holds top management members responsible for voluntary commitments and

reputational risks through the Reputational Risk Sustainability Committee.

52

Global

Investor magazine

21. Established the Credit Suisse Cares for Climate initiative, supporting action

against climate change.

22. Partnered with International Human Rights Forum Lucerne.

23. Monitors sector specific guidelines for business involving sensitive industries

like forestry and mining through the Public Policy- Sustainability Affairs internal

unit.

24. Established the Credit Suisse Microfinance Capacity Building Initiative to

support people in developing economies.

25. Launched the touring exhibition Microfinance-A Social Investment that

Creates Opportunities.

26. Established the sustainability-themed indices Credit Suisse Global

Warming Index, the Credit Suisse Water Index, the Credit Suisse Global

Alternative Energy Index, the Credit Suisse Global Resource Efficiency Index and

the Credit Suisse Global Nanotechnology Index.

27. Established the Credit Suisse Fund (Lux) Global Responsible Equities (2007)

and the Credit Suisse Real Estate Fund Green Property (2009).

28. Supports three client charitable foundations, covering administration and

management costs.

29. Participates as a global partner of Habitat for Humanity.

30. Sponsors sports and the arts regularly.

53

31. Established the Credit Suisse Global Education Initiative.

32. Created an award-winning park surrounding the Swiss administrative center,

hosting around 350 species of plants.

33. Endorsed a WWF letter to the Swiss Federal Council prior to the Copenhagen

Conference.

34. Supported various local climate change mitigation initiatives.

35. Sponsored the World Future Energy Summit (Abu Dhabi

36. Supported the Minergie-P Days building standard and Building for the 2,000-

Watt Society (Switzerland).

Solar Youth access to the Credit Suisse headquarter

roof.

38. Reduced paper consumption by 500 metric tons.

39. Supports education in developing countries through organizations like

Camfed, CARE, PLAN International, Room to Read and Teach for All.

40. Implemented over 220 initiatives for employee support, covering nutrition,

health and stress management.

41. Supports the research on global, economic, scientific and demographic trends

through the Credit Swiss Research Institute.

42. Publishes the Credit Suisse Worry Barometer, featuring issues of public

concern (Switzerland).

43. Implemented controls for waste management, cleaning and catering.

44. Reduced air-travel by 16%.

54

45. Restricted electricity supply to hydropower-origin (Switzerland).

46. Increased the use of FSC-certified photocopying paper to 78%.

47. Made an agreement with DeutcheBahn rail services to apply to Credit Suisse

only renewable-source powered travel.

Jubilee

Fund (Switzerland).

49. Hosted a knowledge-sharing event on environmental risks for financial

service providers and NGOs.

50. Suppo East

London Business Alliance.

51. Support education and professional training through The Global Fund for

Children (EMEA, Eastern Europe, Central Asia and the Middle East).

52. Supports the Network for Teaching Entrepreneurship that teaches life skills to

14-16 year old children (Germany).

START (Germany).

54. Supports orphans through The Big Chance (Russia).

55. Supports distance learning in orphanages through Who Else But Me? (Russia).

56. Sponsored the Asia Society Sustainability Series (Mumbai).

57. Sponsored the Swiss Equity Sustainability Day (Zurich).

58. Sponsored Cleantech- The Driver of the 21st Century (Berne).

59. Reports on GRI guidelines (produces a level A, Self-Declared report).

60. Reports on GHG emissions through the Carbon Disclosure Project.

55

61. Has been GHG neutral in Switzerland since 2006.

Activation

62. Held Accessibility Day for disability awareness.

63. Provides the opportunity for managers to share ideas for new sustainable

products and services through the Credit Suisse Green Business Initiative internal

forum.

64. Promotes a dialogue with the Executive Board on addressing current issues in

the Leadership Forum and the Senior Leadership Challenge.

65. Participates in the Junior Achievement program in numerous cities.

66. Participated in WWF Earth Hour.

67. Supported 19 local community-aid projects with cash donations and

volunteers.

68. Provides employee-assisted emergency aid through the Credit Suisse Disaster

Relief Fund.

69. Contributed about 1,700 days of volunteer work to the Mountain Forest

Project Foundation.

70. Established the Charity of the Year program, in which the employees select

the organization that will be supported (UK).

71. Raised GDP 900,000 for Place2Be, which provides school counseling (UK).

72. Allows Credit Suisse staff to dedicate one working day per year to

volunteering (B. Bischoff, personal communication, November 3, 2010).

56

73. Held employee campaigns for blood donations, disability assistance and

education on child-soldier practices (Asia Pacific).

74. Participated in cleanup of Lamma Island beach on UN World Environment

Day (Hong-Kong).

75. Supported the critically ill or elderly with nutrition help through Open Hand

(San Francisco).

76. Supported young volunteering through City Year (New York).

77. Supported reading skills through Working in the Schools (Chicago) and

Central Singapore Community Development Council (Singapore).

78. Supported Help for Victims of Hurricane Katrina (New Orleans).

79. Promoted team spirit and coordination in disadvantaged children through

(Singapore).

80. Supported the Swiss Red Cross with blood donations.

81. Provided disability support through Procap (Switzerland).

82. Promoted financial skills through Young Enterprise (Switzerland).

83. Fundraised for feeding the poor through Schweitzer Tafel (Switzerland).

84. Conducts an annual employee survey.

Employee Rewards

In this category, no rewards linked to the sustainability targets were identified.

This does not exclude the possibility of such variable-pay links for specific

executive positions in the bank. However, this information was not available. A

brief e-mail communication took place between the researcher and one of the

57

practices was not provided. It should be noted, however, that Credit Suisse

2010 (Credit Suisse, 2010).

Case 4: HSBC

This bank employs 300,000 people and operates in 83 countries worldwide. The

HSBC ation rate of 91% (HSBC, 2010).

Following are the main incentives for employee engagement in the corporate

sustainability program, as they appear in the HSBC

2010).

Education

1. Includes sustainability module included in global induction course for new

employees.

2. Offers Senior Onboarding Program (38 participants).

3. Group Graduate Development Program (393 participants).

4. Next Generation Development Program (136 participants).

5. Senior Risk Management Program (52 participants).

6. Risk Management Program (182 participants).

2009).

58

8. Trained Asia-Pacific investment teams on sustainability criteria.

9. Trained 100 relationship managers on sustainability issues.

Demonstration

10. Is a member of the UNEP Statement by Financial Institutions on the

Environment & Sustainable Development.

11. Participates in the UN Global Compact.

12. Adopted The Climate Principles.

13. Signed the Investor Statement Against Climate Change (HSBC Asset

Management).

14. Participates in the Roundtable on Sustainable Palm Oil.

15. Participates in the Malaysian Forest Dialogue.

16. Was number two on the GS Sustain (Goldman Sacks) environmental, social

and governance policy and performance list.

Hang Seng

Index by Oxfam Hong Kong and CSR Asia.

18. Obtained the SA 8000 certification for social accountability, working

conditions and labor rights by Social Accountability International (HSBC Brazil).

19. Received the British

Business Awards (China).

-in- ory of

the Best Practice Financial Services Award 2009, by Benchmark and Best

Practice magazines (Hong Kong).

59

21. Supports over 200 projects through the Future First global education

programme for disadvantaged children.

22. Sponsors Hong Kong Carbon Reduction campaign.

23. Created the HSBC Climate Center of Excellence, which published thirty

research papers in 2009.

24. Is trying a 2 kW photovoltaic system (Malta).

25. Established the Turn it Off program (North America).

26. Uses two new LEED standard buildings (Egypt and Canada).

27. Installed 617 square meters of solar panels at the London global headquarters.

28. Implemented various initiatives for disaster relief and rehabilitation in

Mumbai (charity day, for fundraising marathon, charity dinner and auction, cash

donations, disaster management workshops for citizens, helpline and ambulance

services).

29. Created the Cleantech team to advise on and finance electric vehicles, fuel

cells, solar photovoltaics, thermal products and wind turbines.

30. Invests in projects that enhance and protect the environment through the

HSBC Environment Infrastructure Fund.

31. Launched the Green & Sustainable Insurance plan, with over thirty products

providing insurance against climate change impacts.

32. Presented the effects of climate change to 1,000 clients (Lebanon).

33. Supports personal finances through the Employee Financial Education

Program.

60

34. Offers a Green House Insurance (UK, Hong-Kong).

35. Works with a number of voluntary organizations globally to help manage

personal finances.

36. Supported the Copenhagen Communiqué on Climate Change.

37. Conducts the Climate Confidence Monitor survey.

38. Introduced a sustainability questionnaire in tendering and supplier processes.

39. Assesses sustainability risks through the Vendor Management Programme.

40. Launched the HSBC Climate Partnership Programme

41.Tracks the stock performance of global companies profiting from low-carbon

activities through the HSBC Climate Change Benchmark Index.

42. Invests in sustainable water supplies through HSBC Environmental

Infrastructure Fund (Australia).

43. Implements a Sustainability Risk Rating System, which includes forest land

and forest products, mining and metals, chemicals, freshwater infrastructure and

energy.

44. Prohibits the offering of financial services to defense equipment companies.

45. Supported Haiti orphans with cash donations.

46. Works in seven cities around the world to encourage low-carbon technologies

through The Climate Group.

47. Implements a Global Environmental Efficiency Program.

61

48. Has the main HSBC buildings in compliance with the BRE Environmental

Assessment

US Green Building Council.

49. Reports on GRI guidelines (HSBC Group produces a report of undeclared

level).

50. Is the number one financial institution for

climate strategy and carbon data disclosure.

51. Is carbon neutral since 2005.

Activation

52. Allowed 285,000 hours of employee volunteering during work time (in

53. Partnered with Foundation for Environmental Education in Eco-Schools

Climate Initiative, involving HSBC employee volunteers.

More than

Money.

55. Provides employee-supported contribution to various disaster relief and

rehabilitation programs.

56. Promotes field research on climate change through The Climate Partnership

and Earthwatch.

57. Conducts an annual employee survey.

62

Rewards

In this category, no rewards linked to the sustainability targets were identified.

This does not exclude the possibility of such variable-pay links for specific

executive positions in the bank. However, this information was not available. It

should be noted that the organization was contacted by e-mail but did not provide

the information requested. Starting in 2010, metrics having to do with water,

energy, waste, carbon emissions, travel, paper and data centers will be

evaluations (HSBC, 2010).

Cross-Case Analysis

The companies compared in this study were all chosen because they are globally

well established and successful in the financial sector. Moreover, all four have been

recognized for their sustainability achievements by widely accepted organizations that

monitor and evaluate sustainability progress.

In the effort to put sustainability theory into practice, these organizations strive to

alter many of their processes, add new activities, and improve workforce engagement

levels. In this respect, they all implement a number of initiatives meant to demonstrate

sustainable practices to employees and the community. As discussed previously, these

range from informative presentations to awards for sustainability. In the comparison of

the four cases, it is evident that all four banks have added social and environmental

63

priorities to their economic goals. As seen in Table 2, they tackle projects across the wide

General sustainability education is offered in the employee induction course as well as

three other programs that educated 567 employees. Meanwhile, risk management and

climate topics are addressed through other activities that trained 718 employees in 2009.

However, if the total workforce of 300,000 people is considered, it could be argued that

besides the induction course, the rest of the education program could be improved

significantly. Credit Suisse follows with activities aiming to raise energy-efficiency

awareness and educate on environmental and compliance issues. In 2009, this bank added

a social program on disability awareness. Lagging behind in this area are Barclays and

BNP Paribas. Barclays only trained employees on credit-related environmental and

human rights considerations, while BNP Paribas only educated 162 out of the total

201,700 of its employees on the Equator Principles.

The banks under study have spread their efforts in many areas in the

community and employees to live by. All four banks are affiliated with prestigious

organizations that promote sustainability and adhere to relevant principles of business

conduct. Sustainability-related distinctions and awards have been received by all four.

They also promote responsible investing through special investment funds and programs.

Social equity and human rights are being advanced, as is promoting sustainable

64

Hu

if one looks at the spirit of their other actions, it does not seem that they neglect these

considerations. The support of education, research, and philanthropy also attract effort

and capital. The most intense areas of activity are for all four, is the action on

sustainability and against climate change, as well as the efforts to reduce the

environmental footprint through efficiency improvements and initiatives of many kinds.

four in providing opportunities for direct employee involvement in sustainability. They

offer initiatives for new ideas on sustainable products and internal control processes.

Credit Suisse allows employees one day off per year for volunteering and provides

numerous initiatives for that to take place (Table 2). Meanwhile, HSBC reported that

volunteers supported the few available initiatives and made contributions towards disaster

relief efforts. The employee survey is mentioned as the only feedback mechanism in

place. BNP Paribas offers incentives for alternative travel, encourages volunteering

through four different programs and finances the charities that employees contribute to.

BNP Paribas also promotes responsible investing through employee savings plans. In

2009, they launched a competition to reduce paper use, and they tackled workplace stress

through a 9,000-participant survey, in addition to the standard annual employee survey.

Barclays seems to be lagging behind the other three, with an online medium for bringing

forth improvement ideas and quite fewer programs for volunteering, donating,

fundraising. Furthermore, they show no effort to influence personal sustainability habits.

65

has one sustainability-related procedure in place, the global ds that

rewards employees active in community contribution. The other three banks show no

evidence of such practices. At present, all four banks fail to demonstrate a link between

the pay and bonus structure to sustainability targets or achievement of any kind.

66

Education Demonstration Activation Rewards

Table 2. Sustainability Incentives

1. Barclays 2. BNP Paribas 3. Credit Suisse 4. HSBC

A. Sustainability Education Programs 1, 2 1 1, 2, 3, 4, 5, 6, 7 1, 2, 3, 4, 5, 6, 7, 8, 9

B. Membership in Sustainability-Promoting Organizations 3, 4, 5, 6, 23 2, 3, 4, 5, 6, 7, 8 8, 9, 10, 11, 12, 13, 14 10, 11, 12, 13, 14, 15

C. Distinctions Received for Sustainability Achievement 7, 8, 9, 10, 11, 12, 19, 20 9, 10, 11, 12, 13 15, 16, 17 16, 17, 18, 19, 20, 50

D. Promotion of Responsible Investing 17, 18 22, 23, 39 26, 27 29, 30, 41

E. Sustainability & Climate Change Promotion 13, 14, 15, 16, 21, 22, 25, 27 14, 19, 21, 24

18, 19, 20, 21, 23, 29, 32, 33, 34, 36, 37, 49, 57, 58,

66

22, 31, 32, 43, 35, 36, 37, 38, 39, 40, 42, 43, 44, 46

F. Environmental Footprint Reduction Efforts 26, 33, 38, 39, 40 16, 17, 18, 30, 34, 35, 41 38, 43, 44, 45, 46, 47, 59, 60, 61

24, 25, 26, 27, 47, 48, 49, 50, 51

G. Social Equity & Human Rights Action 34, 35, 36, 37 14, 28, 29 22, 50, 62 35

H. Sustainability in Developing Countries Action 28, 29, 31 20, 25, 31, 33 24, 25, 39, 42, 51, 56 28

I. Education and Reserch Support 24, 32 14 31, 41, 48, 52, 53, 55 21, 23, 33

J. General Sponsoring & Philanthropy 30, 42 14, 15, 26, 27, 32 28, 30, 54 28, 45

K. Employee Input Mechanisms 43, 44 42, 44, 45 63, 64, 70, 84 57

L. Employee Personal Sustainability Promotion 40, 41, 43 40, 66 33

M. Employee Volunteering Programs 41, 42 36, 37, 38, 3962, 65, 67, 68, 69, 71, 72, 73, 74, 75, 76, 77, 78, 79,

80, 81, 82, 8352, 53, 54, 55, 56

N. Financial Rewards Linked to Sustainability Targets

O. Non-Financial Rewards Linked to Sustainability Targets 45

67

Interview findings

As mentioned in the Methods section previously, the interviews were held

with corporate sustainability officers of multi-national corporations and sustainability

consultants in the United States.

There is a common understanding that we are at a time when business is being

reformed around a higher set of values. A sustainability strategy is also considered crucial

when organizations are interested in attracting new talent. In implementing that strategy,

on the new priorities of sustainability can be matched with what works in an

organization. Consistency and continuity of the messages are regarded as key factors in

the transformational process, because the perception of bad habits can linger for a while

after a change.

All subjects reported the yearly voluntary employee survey to be the main

engagement assessment tool, claiming that it can help management identify the units that

need to improve involvement levels. Monitoring employee participation in company

sustainability activities was also mentioned. The sustainability officers thought that the

harder employee group to engage is people over fifty years of age. Business managers

that are responsible for short-term profits were also mentioned in this category by

representatives of multi-national corporations,

latter group is important, as those are the people that will transfer the sustainability

directions from the top executives to the rest of the workforce. Other obstacles mentioned

68

were employee fatigue, due to a message and duty overload, as well as global differences

in culture that make it harder to apply certain policies around the world. The officer of a

as posing an additional impediment to sustainability policy implementation.

Regarding the educational practices of current corporations, the same executive

commented that focus has shifted past the employee education stage, as after about a

decade of exposure to sustainability, employees are now willingly becoming involved in

the corporate efforts.

In terms of strategies to improve engagement effectiveness, intra-workforce

competitions were a favorite answer. An example was provided by a large multi-national

that held a vide

according to its global sustainability director. The same subject thought it likely that

sustainability initiatives would advance faster if they were to answer customer demands,

stressing how useful customer surveys can be. Another interesting comment was that an

truly become a part of what everyone does on a daily basis. One interviewee from a

financial institution believes that engagement improvement still competes with the core

tasks of employees. All subjects agreed that the right incentives are needed to ensure

participation, while one consultant mentioned the solution of officially changing job

descriptions to include the sustainability goals, thus, ensuring participation in the new

strategies.

69

Even though all subjects thought linking sustainability targets to performance

incentives would be very motivating for employees, they agreed that it is only partially

applied, yet gaining momentum. Two of the sustainability executives from financial

Sustainability team had sustainability targets linked to variable pay. Many subjects also

should regard it as the next step in the journey to sustainability.

A sustainability manager form a multi-national corporation commented that

having no repercussions for not achieving sustainability goals stalls the success of the

program. He added that the most effective action that could be taken is to link

sustainability targets to executive-level salaries. Sustainability officers and consultants

agree that changing performance criteria and linking bonuses to corporate sustainability

targets would be a shortcut to convincing employees that management is committed to

the transformation. Such action would help cases where employees think sustainability is

a fad that will pass, due to a history of poor change management.

All subjects thought that non-financial motives are especially valuable in the

change effort. It seems that if employees are paid fairly, additional money is not a

principle motivator for excellence. In younger employees, open recognition seems to be

very effective. Gaining the feeling of participation, as well as engaging in the process of

setting up the change are regarded as effective motivators as well. Additional time off is

also offered

method of variable pay. Employees are awarded points that can be redeemed in different

70

ways. Some subjects believe that if leaders rely on financial rewards alone for too long,

they are seen as prerequisites rather than as a stimulus and, therefore, effective only in

changing short-term behavior. As the strength of monetary motives tends to diminish in

the long term, it is not thought of as an effective means to permanent behavior changes.

Lastly, some new facts arose in the Credit Suisse case after interviewing one if its

sustainability officers. It was noted that about fifty people across Credit Suisse, working

in the environmental management and supply-chain teams, do have sustainability

measures linked to variable pay. It was added that the rest of the workforce is required to

measure all actions against sustainability principles, as sustainability is one of the ten

core values of the company.

71

Chapter V

Discussion

Introduction

The hypothesis of this research was that organizations committed to sustainability

could benefit from establishing performance incentives geared to foster effective

employee engagement in the sustainability program. Performance incentives can be

monetary, such as cash bonuses, or non-monetary, like changes in job descriptions that

create ethical obligations of performance and excellence. They can also be a combination

of the two kinds, such as awarded points that could be redeemed with cash or time-off.

Competitions could be classified in either category, according to the reward given. The

literature research showed that performance incentives are highly effective in employee

engagement. Currently a limited practice in the implementation of sustainability

programs, the establishment of such motives for sustainability achievement is gaining

momentum.

son

demonstrated that rewards--the strongest performance incentive for engagement in

sustainability--could stand the most improvement. Evidence in the literature showed that

linking evaluation criteria to the sustainability targets increases interest and involvement

in the program. The interviewed subjects, experts in the implementation of such

72

programs, also stated that linking performance rewards to sustainability goals is crucial. It

is clear that it is regarded as the necessary next step to end the era of no repercussions for

missed sustainability goals.

A detailed discussion of the expected and unexpected findings, as well as how

they pertain to the question and hypothesis of this research follows.

Misleading Workforce Engagement Assessments

The researcher did not expect to find that all companies studied rely mainly on an

analysis of voluntary employee survey responses for measuring employee engagement.

The companies all seem to derive conclusions based on answers to multiple-choice

questionnaires. Yet those who take the time to answer such questionnaires, are likely

already more engaged than the non-respondents. Therefore, their answers could provide a

weak basis for improving engagement incentives. None of the companies that were

examined mentione -participants, in search of ways

to gain the attention of these specific groups.

Voluntary polls could help identify the people that are the least engaged and try to

understand the reasons for their lack of interest. It could be they were not aware of the

poll, were not provided with adequate time to complete it or did not believe their input

would make a difference. In such cases, management could improve response rates by

providing clarifications on the process and the intended use of results. With improved

participation, survey outcomes would better reflect the workforce mentality.

73

As a practice, however, employee polls are a lagging indicator of employee

engagement. Organizations on a path to sustainability should have well-established

procedures to ensure that engagement acts as a leading indicator of the sustainability

ldrige National Quality

Program, 2010, p.18). An effort towards operational excellence through performance

frameworks and management systems would ensure this practice with the implementation

Investors in People, SAI global or

Baldrige guidelines. It could be argued that the companies studied do not have a strong a

management basis for sustainability to build on. It is important that they improve this

ropriate policies, systems,

processes and tools ensure that people are engaged and make a meaningful contribution

Corporate Sustainability Incentive Frameworks

The literature review and case studies showed that companies which succeed in

sustainability begin their journey by establishing educational processes of different kinds.

findings show that the organizations studied are serious about

demonstrating the practice of sustainability by altering company strategy and operations.

These companies are active in charity and sponsoring of various initiatives aimed at the

support and development of their local and global community.

74

Furthermore, these companies have all created weaker or stronger frameworks of

activities in which employees can participate and experience sustainability in action. This

provides good follow-up to theoretical training and opportunity for employees to identify

with something meaningful. This experience should also help create a mindset for

To encourage participation and innovation further, some companies offer rewards

for sustainability achievement. These are most often found as awards in competitions

and, in a limited number of cases, monetary compensation.

activation and

system overall. However, to further improve the effectiveness of employee engagement

and, therefore, the corresponding incentives, each of the previously mentioned categories

could be enhanced.

Obstacles to Effective Employee Engagement in Sustainability Programs

Besides an outdated mentality and a failure to justify the business case for

sustainability, the interviews revealed an important obstacle to employee engagement that

was not obvious in the research. This was the identification of the employee groups that

as people over fifty years of age. This was surprising to the researcher, as the more

experienced employees should be in a better position to appreciate the benefits of

sustainable practices. Having seen the degradation of our environment and natural

75

practices over the last decades, people in this group should be the strongest advocates for

sustainability. However, it seems that the difficulty to change long-established habits

dominates their stance. In addition, older employees may think the sustainability trend

will soon fade away. Consequently, their longer work experience bears additional weight

on their adaptability to new practices.

The study identified business managers who are responsible for short-term profits

as the second group that is hard to engage in the corporate sustainability efforts. It is

annual financial targets. Therefore, it is natural for them to resist any policy or activity

that would have a negative effect on that outcome, even if it would be profitable in the

long-term. Middle managers were also named as generally unwilling to pass down the

expectations of the three responsibilities of sustainability. The employee fatigue that was

mentioned earlier could also be contributing to this phenomenon.

After completion of the literature review and case studies, it was clear that there is

achievement. Currently, that connection exists only rarely and in most cases is limited to

executives with environmental responsibilities. The fact that employees do not expect to

could be why it is difficult for them to effectively engage in sustainability practices.

76

Enhancing Incentives for Engagement in Sustainability Programs

All interview subjects agreed that employee involvement could be enhanced if

well-designed incentives were in place withi

participation in a sustainability program, these would have to be specifically tailored to

cater to the mix of each workforce. Naturally, a prerequisite is for management to know

exactly which groups need specific attention.

The first stage after an accurate employee engagement assessment would be to

improve the educational opportunities offered within the company. Many organizations

could benefit from establishing additional talks and presentations, seminars or hands-on

training on new practices. This would help enhance the consistency and continuity of the

sustainability messages, as experts recommend.

for sustainability. That could be because it provides the most visibility, bringing public

praise and recognition to the organization. This consequently enhances reputation and

leads to value increase. Therefore, the incentive category that provides behavioral

examples to employees is also the most popular with management because it brings

immediate acclaim and yields indirect financial benefits. Companies could further

attention should be paid to selecting actions with long-term effect, even if they would

provide less publicity outside the company. It is likely that such a policy would be

77

influence on motivation towards personal sustainability efforts inside and outside the

workplace.

objective is simple: companies should

seek to engage everyone. They should try to increase opportunities for volunteerism by

setting up activities in a wide range of times, locations and functions, to facilitate

participation. Careful monitoring of the turnout in these activities should provide a very

good estimate of employee engagement, as mentioned by experts questioned in this

study. An analysis of the non-participants would help companies adjust the structure of

the activities in order to provide everyone with the right opportunity for involvement.

Increasing intra-workforce competitions also seems to be an effective strategy for

increasing involvement.

In addition to receiving incentives in the form of education, examples or

activities, employees should expect rewards for their sustainability accomplishments like

neglected area of incentives for engagement in corporate sustainability program. It is

crucial to reward employees for their achievements in any change management effort.

The researcher in this study could not come to a satisfactory conclusion regarding the

extent to which rewards are linked to sustainability targets at present. It is evident that

specific positions within certain organizations are evaluated and rewarded for

sustainability progress, but this is not a widespread practice. The interviews verified that

it is common for environmental managers to have certain sustainability-target-to-pay

links, but the practice is limited to a few people within a company. Companies would

78

benefit from expanding this practice to the entire workforce. Sustainabilit

business in one way or another. The intention of HSBC to include environmental metrics

in the performance evaluations of its Chief Technology and Services officers starting in

2010 is an indication that this strategy is gaining ground. Credit Suisse will also

demonstrate a way to enhance engagement in the sustainability program by adding

Another interesting concept that arose during the interview process has to do with

le of management for sustainability. It was suggested that

sustainability teams should remain small in size, so that they are forced to simply

coordinating tasks, leaving the execution to be evenly spread among the workforce. This

strategy would eventually make the responsibilities of sustainability constant

considerations for every single employee.

Linking Performance Incentives to the Sustainability Targets

In the effort to improve incentives for effective employee engagement in

corporate sustainability, organizations should establish appropriate monetary and non-

and rewards ensures that these issues are discussed, gaps and training needs identified,

and that people are incentivized to pursue sustainability objectives through their

performance incentives to sustainability targets as a solution to the most significant

obstacles to workforce involvement--a crucial element in the success of a corporate

79

sustainability plan. Where certain groups, such as younger employees, may only need to

be given a sustainability strategy, a medium for feedback and open recognition as a

reward, older employees need the special attention of management and possibly strong

performance incentives, especially designed to foster their engagement in the

sustainability program. Middle managers and executives responsible for short-term profit

success should be approached in a similar manner. Linking performance incentives to

sustainability strategy should prove an effective way to address the needs of all

disengaged groups and enhance workforce interest in general, helping to integrate

sustainability tasks in every operation. Sustainability officers and consultants also believe

that changing performance criteria and linking bonuses to corporate sustainability targets

would help convince employees that management is committed to the change.

The research shows that a widespread implementation of performance incentives,

such as competitions, awards, and variable-pay allocation for sustainability achievements,

would increase employee interest in the program. Implementation could begin with

official changes to employee job descriptions. If measurable sustainability targets were

added, participation in the new strategies would become an obligation by contract.

, 2011, p. 10). In addition, the consideration for engagement

-

Changes to performance criteria would have to follow, giving these employees strong

motivation to join the company efforts towards sustainability. This practice would also

facilitate the implementation of sustainability practices in many different countries and

80

cultures, and across large workforces in volume. Multi-national corporations like Shell,

TNT and NovoNordisk are already using a number of sustainability measures in their

performance assessments (WBCSD, 2011).

The importance of non-financial motives and rewards was evident during the

literature review and interviews and should not be neglected. It is believed that if

employees are paid fairly, additional money is not a principle motivator for excellence.

Receiving additional time off, gaining the feeling of empowerment and participation, as

well as engaging in setting-up the change effort are regarded as more effective

motivators. Ensuring these conditions bears no cost to companies and should be

implemented from the planning stages of a sustainability program.

The effective alternative of a mixed monetary and non-monetary reward that

emerged in the research was a point system that serves as a method of variable pay.

Employees are awarded points that can later be redeemed with time-off, cash or various

other benefits. This method provides the gratification of a bonus, with a lesser financial

cost to the company and would be especially useful in times of financial crisis.

Recommendations for Further Research

The findings of this study could assist other researchers in their efforts to find

ways to improve workforce engagement in sustainability programs. By pointing out the

weaknesses of current incentive structures, new motivational strategies can be designed

to cover the needs of the entire workforce. These changes in employee incentives would

help those who are interested in facilitating the implementation of sustainability programs

81

and should be applicable to any corporate change effort. Furthermore, the effectiveness of

different educational practices should be studied to optimize the content, frequency and

combination of stimuli.

Human resource professionals could also use the findings of this work to better

understand employee survey results for engagement improvement. By identifying the

groups within a workforce that are harder to engage, they could also alter the recruiting

process--where the law allows--ensuring that there is an interest in receiving

sustainability education in people over fifty. The same process should be implemented

when hiring middle managers or executives in positions responsible for short-term

financial results.

Economic, social and environmental criteria should be equally represented in the

to sustainability goals. Only then would employee performance incentives foster effective

engagement in the corporate sustainability program. However, what is the most effective

way to link performance incentives to the sustainability targets? To this end, the author

recommends that further research take place in the area of employee motivation towards

sustainability.

Questions to be studied would include the following: How could all sustainability

targets be measured so as to facilitate progress monitoring? What would be the most

effective way to link those targets to employee variable pay? How can a corporation

reward lower-level employees who are only paid a fixed salary? The motivational

strength of monetary versus non-monetary rewards poses great interest here. How can the

82

effectiveness of non-financial motives be assessed? Do they bare a hidden cost to the

company? What would be an effective ratio of monetary and non-monetary rewards?

The answers to these questions by future researchers would benefit the efforts to

implement sustainability programs in the business community. Especially in these times

of economic distress, it would be useful to evaluate and implement customized motives to

could use employee engagement in a sustainability program as a leading indicator of its

success.

83

Chapter VI

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