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Workplace Visions®

A Publication of the Society for Human Resource Management

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Issue 2 of 4 | 2009

Can Sustainability Initiatives Survive in a Tough Economy?

Over the past decade, many organizations have made signifi cant progress in ■

developing sustainable, socially responsible ways of working and have benefi ted through improved employee morale, loyalty and productivity. An emphasis on sustainability has also strengthened HR’s position as a strategic ■

business partner because so many dimensions of sustainability involve HR responsibilities.The challenges of the current economic environment are likely to cause some ■

organizations to put sustainability initiatives on the back burner. Yet far-sighted HR leaders will continue to help their organizations leverage sustainability to make a positive difference, enhance the organization’s reputation and employer brand, motivate employees and even improve the bottom line.

With mass layoffs, stagnant wages and signs of economic turmoil all around, it would be easy to assume that the issues of sustainability, corporate social responsibility (CSR) and greener ways of working will have to take a backseat. But sustainability has by now become deeply integrated into the business agenda of many organizations. For these organizations, sustainability no longer merely consists of an optional set of corporate initiatives that can easily be eliminated. Instead, sustainability has become a part of the philosophy, mission and culture of the organization. Similarly,for the HR function, sustainability issues are now much more than a collection

of programs and initiatives that can be slashed when times get tough. Many of the measures used in sustainability/CSR reporting indices—such as promoting diversity and inclusion, ensuring employee health and safety, and working to guarantee nondiscriminatory employment through fair compensation and equal employment opportunities—form the backbone of the HR function. Even in the current challenging economic environment, HR professionals will continue to lead their organizations in these aspects of sustainability. Innovative HR leaders will even fi nd ways to build sustainability into their strategies for dealing with the repercussions of a down economy.

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must be measured, and this is moving the HR profession to develop new metrics and performance indicators. Many of these factors may be influenced by the current economic crisis. For example, could a significant increase in unemployment make the case for sustainability and CSR as a recruitment and retention tool weaker? And could the need for cost-cutting lead many organizations to abandon their efforts to develop greener ways of working?

While HR professionals considered sustainability issues to be key workplace trends in the months before the economic crisis,2 it is possible that a prolonged economic downturn could have a suppressive impact on the development of sustainable work practices. Yet, so far, this does not appear to be the case. Instead, while the current problems in the economy and the collapse of many large corporations around the globe seem to be changing the parameters of the debate on corporate social responsibility, this has, by no means, quashed the debate itself. If anything, the economic collapse seems to have made the public even more focused on the obligations companies have to their employees and the communities where they do business.

Job loss, layoffs and business reputationThis increased scrutiny involves a few key issues that relate to the HR function. First, the behaviors, spending habits and especially the compensation packages of senior executives have become a lightning rod for public anger and frustration in recent months, particularly in companies taking part in the government bailout package. This turn of events may start to have an influence on the processes organizations use to determine executive compensation. At the very least, they are drawing more public attention to the issue of executive compensation as a component of any organization’s image, brand and reputation.

A second issue that the downturn has highlighted is the importance of dealing with layoffs carefully and sensitively—or risk destroying a company’s reputation in what is already a difficult time. David Schwartz, president of DN Schwartz & Co, a New York-based executive search firm, and former vice president of human resources at Goldman Sachs, notes that the way businesses handle layoffs speaks volumes about the company’s values. “The companies that have the greatest reputation worldwide for being great places to work do this very well—at least as well as you can, given that it’s an unpleasant and miserable task.”3 With 2.6 million jobs lost over the course of 2008 and many economists predicting that job losses will continue throughout 2009,

There are several issues that are keeping sustainability and CSR in the spotlight despite the financial challenges so many businesses are facing. One is a broadening of views on what exactly constitutes a responsible organization—something that is very much influenced by the current economic crisis and, in particular, the government bailout of large segments of the banking industry. Another is the convergence of policies that aim to reduce business costs but also have positive social or environmental outcomes. Yet another factor is the anticipated changes in government policies in relation to both employment and environmental issues.

These issues are somewhat different from those that dominated the debate on sustainability and CSR even just a short time ago. A SHRM Executive Roundtable on Sustainability and Human Resource Management Strategy, held in the spring of 2008, brought together HR leaders and sustainability experts to discuss the future role of HR in promoting and supporting sustainability and CSR.1 The participants agreed that sustainability was already influencing the HR profession in multiple ways.

According to the roundtable participants, HR professionals are now being called upon to create an organizational culture that appeals to those who are seeking more meaning from their work. This is changing the way employers attract and recruit new employees, especially younger workers, and influences the way HR professionals communicate and develop their employer brand. HR professionals are also considering how sustainability may be an important part of employee engagement efforts. In addition, an emphasis on greener ways of working can have a significant influence on the ordinary day-to-day processes of a workplace and is encouraging many HR professionals to completely rethink how work is accomplished. Finally, for sustainability efforts to really become meaningful, their effectiveness

For the HR function, sustainability issues are now much more than

a collection of programs and initiatives that can be slashed

when times get tough.

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Sustainability in the Current Business Environment ..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

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the importance of treating employees that are being laid

off with dignity and respect will continue to be crucial.

HR professionals themselves are anticipating deeper job

cuts in the U.S. labor force in the first half of 2009. A total

of 73% of HR professionals surveyed in the SHRM Labor

Market Outlook Q1 2009 saw more trouble ahead for the

U.S. job market—54% were somewhat pessimistic about job

growth in the United States in the first quarter of 2009 and

anticipated job losses and another 19% were very pessimistic

and anticipated job cuts during the quarter. A total of 76%

of respondents said they would keep their payrolls flat or

conduct layoffs in the first quarter of 2009. More than

one-third of HR professionals at large companies—those

with 500 or more employees—said their organization

planned to make cuts during the first quarter of 2009.4 In

a more stable economy, many components worked together

to create a business’s overall reputation and standing as a

responsible, sustainable organization. But in the current

climate, the way an organization treats its employees,

including those it is forced to let go, could become the issue

that determines the company’s public reputation and brand as

a responsible business.

Other cost-cutting measuresMany organizations are going to great lengths to avoid layoffs by implementing a number of cost-cutting initiatives instead. A good number of these are approaches that involve both HR practices and the issue of sustainability. Seeking out alternatives to layoffs indicates organization’s willingness to go the extra mile for the sake of its employees—enhancing both its reputation as an employer and overall business brand. It also avoids some of the negative repercussions of layoffs on productivity, motivation, employee turnover rates and customer service. Academic studies have shown that layoffs negatively affect employee turnover at precisely the moment when companies need their employees to remain engaged.5 A December 2008 Leadership IQ survey of 4,172 workers at 318 companies where corporate layoffs occurred in the last half of 2008 found that 81% of surviving employees say customer service has declined, 77% see more errors and mistakes being made, and 64% say their colleagues’ productivity has declined.6 A SHRM poll conducted in late October 2008 showed that at the moment when the economy began to take a steep dive, many employers began to look for alternatives to layoffs. Most of the approaches organizations used were standard practices during a downturn, such as attrition, hiring freezes and reducing the use of contingent workers. Some employers said they were also encouraging employees to use their vacation time, reducing working hours, including implementing organization-wide shorter workweeks and offering job sharing.7

While seeking alternatives to layoffs is mainly about preserving the company’s productivity and reputation as a responsible employer, some practices have a side benefit of also being greener ways of working. A good example is the use of telecommuting—a practice that is considered both an employee benefit and a way to benefit the environment.

In a down economy, the way an organization treats its

employees, including those it is forced to let go, becomes a

central factor in determining the company’s public reputation.

Table 1 | Main Drivers of Environmentally Responsible Programs for Organizations

2008(n = 333)

2009(n = 287)

Contribution to society (i.e., good corporate citizenship, ethical considerations)

69% 64%

Environmental considerations 53% 55%

Economic considerations (i.e., saving money on operating costs)

46% 53%

Health and safety considerations 34% 30%

Employee activism 24% 25%

Competitive advantage 15% 17%

Public relations strategy 23% 16%

Consumer activism/grassroots pressure

16% 14%

Local/federal regulations 18% 11%

Local/federal incentives 11% 7%

Local/federal proactive initiatives 5% 4%

Shareholder activism 3% 2%

Market share improvement 4% 1%

Source: Society for Human Resource Management. (2009, January 7). SHRM poll: Green initiatives during financially challenging times. Retrieved from www.shrm.org/surveys.


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The economic downturn appears to be having a profound impact on telecommuting. When SHRM conducted a poll on steps organizations were taking in response to rising gas prices in May 2008, only 18% of organizations said they offered telecommuting as a way of helping employees deal with rising fuel costs. But in less than a half a year—by September 2008—that percentage had gone up to 40%.8 The move to four-day workweeks is another example of a practice that some organizations are implementing as a cost-saving measure that also benefits the environment by taking more commuters off the roads and by saving building maintenance and energy costs.

The recognition that sustainability efforts can save costs is a major factor in preserving such initiatives during the downturn. A January 2009 SHRM poll on organizations’ practices that promote environmental responsibility found that economic considerations were one of the main drivers of environmentally responsible business practices, according to HR professionals.9 In only one year, the percentage of respondents who reported this as a top driver rose by 7%

(see Table 1). Thus far, the economic downturn does not

seem to be reducing business efforts to use environmentally

friendly work practices; on most measures, organizations

were doing more in 2009 to support a green workplace than

they were in 2008 (see Table 2).

For the foreseeable future, cost factors are likely to be

a key force shaping organizations’ sustainability and green

working initiatives. This could lead many organizations to

look for cost-saving measures that also have an environmental

or, in some cases, social benefit. But the perceived cost of

implementing such programs could also discourage many

companies from adopting them. The SHRM poll found that

in 2009, 90% of respondents said that cost was the main

barrier to implementing environmentally friendly processes

or programs in their organizations.10 So while organizations

are likely to continue considering sustainability and greener

ways of working, they may do this mainly by looking for

ways sustainability and cost-saving initiatives overlap or

complement each other.

Table 2 | Environmentally Responsible Practices

2008(n = 195)

2009(n = 180)

Offering recycling program for office products 83% 88%

Encouraging employees to work in more environmentally friendly ways 83% 84%

Using energy-efficient lighting systems and equipment 66% 73%

Donating/discounting used office furniture/supplies to employees or local charity 73% 71%

Installing automatic shutoff for equipment 63% 65%

Minimizing water consumption by using water-conserving plumbing fixtures 49% 65%

Buying or leasing refurbished goods 59% 63%

Promoting walking, biking, taking public transit 59% 63%

Partnering with environmentally friendly suppliers/companies 55% 59%

Encouraging/promoting/providing car pooling for employees 35% 59%

Salvaging or reusing construction materials 47% 53%

Minimizing pollution (e.g., emissions to air/water from your production) 53% 48%

Participating in or sponsoring projects/events in the community to improve the environment (e.g., a trash pick-up day, plant-a-tree day, fundraiser for local nature preserve)

50% 48%

Offering telecommuting to employees 32% 45%

Selecting a location with public transit access 48% 40%

Offering recycling program for selected personal products (e.g., cell phones) 38% 37%

Participating in global events to improve the environment (e.g., Earth Day, fundraiser for foreign nature preserve)

42% 34%

Source: Society for Human Resource Management. (2009, January 7). SHRM poll: Green initiatives during financially challenging times. Retrieved from www.shrm.org/surveys.


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Leading Indicators of National Employment® (LINE®)survey reported that recruiting difficulty of top talent was easing substantially.12 And as more people found themselves facing a precarious financial situation as they prepared for retirement, labor market experts predicted that many older workers would stay in the workforce for much longer than previously expected. Even though the current labor market favors employers more than the jobseeker, recruitment and retention issues remain important. A number of employers are hiring, and staffing professionals are aware that this economic downturn could precede another period of talent shortages. Indeed, even in the current economic downturn, talent shortages continue in a few industries. As long as recruitment and retention efforts continue and especially as employers look for ways to attract younger workers, sustainability issues will remain important. According to the experts at the SHRM executive roundtable on sustainability, HR professionals are in a position to actually help define what sustainability means in their organizations, especially by demonstrating that sustainability is much more than legal compliance.13 And by emphasizing the people dimensions of sustainability, HR professionals can demonstrate how it encompasses a wide range of issues, including but not limited to environmental issues. The better HR professionals are able to communicate their organization’s own unique approaches to supporting sustainability and CSR, the more likely they will be able to leverage sustainability as a recruitment and retention tool.

Public policy developmentsAnother factor that could keep sustainability, especially green working initiatives, in the spotlight is any developments in public policy aimed at promoting environmentally friendly technologies and investments. The Obama administration has said that it will push a new energy plan that will invest $150 billion over the next 10 years to “catalyze private efforts to build a clean energy future, save more oil than is currently imported from the Middle East and Venezuela combined, put 1 million Plug-In Hybrid cars—cars that can get up to 150 miles per gallon—on the road by 2015, ensure 10% of U.S. electricity comes from renewable sources by 2012 and 25% by 2025, and implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80% by 2050.”11 It is not yet clear if these ambitious goals will be dialed down as a result of the economic crisis. But if these kinds of large-scale national programs are implemented, they could have a significant impact on the kinds of environmentally friendly programs and initiatives U.S. businesses adopt. And because the U.S. business environment has a substantial influence on the global economy, these initiatives could have a ripple effect on business practices around the world.

Sustainability and green working as recruitment and retention factorsOver the last quarter of 2008 and into the first quarter of 2009, HR professionals taking part in the SHRM

Project TeamProject lead: Jennifer Schramm, M. Phil., manager, Workplace Trends and Forecasting, Research

Project contributors: Steve Williams, Ph.D., SPHR, director, Research

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This report is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information.

© 2009 Society for Human Resource Management. All rights reserved. Printed in the United States of America.

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to develop best practices as well as the training and education on implementing these practices, and developing performance indicators and metrics that track progress. But perhaps the most important role that HR can play is to use its position as the interface between the company leadership and employees to weave sustainability into the overall organizational culture. This can be done regardless of the economic climate and is likely to pay off when the economy once again begins its recovery.

Endnotes .................................................................

1. Society for Human Resource Management. (2008). 2008 executive roundtable symposium on sustainability and human resource management strategy. Alexandria, VA: Author.

2. Society for Human Resource Management. (2008). SHRM workplace forecast. Alexandria, VA: Author.

3. Roner, L. (2009. February 3). North America: Retrenchment – Responsible downsizing. Ethical Corporation. Retrieved from www.ethicalcorp.com/content.asp?ContentID=6315&newsletter=24

4. Society for Human Resource Management. (2009, January). SHRM Labor Market Outlook: Q1 2009. Retrieved from www.shrm.org /Research/Documents/08-0895-StaffingResearchRedesign-FNL.pdf.

5. Trevor C., & Nyberg, A. (2008, April). Keeping your headcount when all around you are losing theirs: Downsizing, voluntary turnover rates, and the moderating role of HR practices. The Academy of Management Journal, 51, 2.

6. Leadership IQ. (2008, December). Leadership IQ Study: Don’t expect layoff survivors to be grateful. Retrieved from www.leadershipiq.com /index.php/news-a-research-/recent-studies/150-layoff.

7. Society for Human Resource Management. (2008, October 30). SHRM poll: Layoffs in light of 2008 challenges to the U.S. economy. Retrieved from www.shrm.org/surveys.

8. Society for Human Resource Management. (2008, September). SHRM poll: What assistance are organizations offering to help employees deal with high gas prices? Retrieved from www.shrm.org/surveys.

9. Society for Human Resource Management. (2009, January 7). SHRM poll: Green initiatives during financially challenging times. Retrieved from www.shrm.org/surveys.

10. Ibid.

11. Whitehouse.gov. (n.d.). Energy and the environment. Retrieved from www.whitehouse.gov/agenda/energy_and_environment.

12. Society for Human Resource Management. (2009, February). Leading Indicators of National Employment (LINE) survey. Retrieved from www.shrm.org/Research/MonthlyEmploymentIndices/Pages /default.aspx.

13. Society for Human Resource Management. (2008). 2008 executive roundtable symposium on sustainability and human resource management strategy. Alexandria, VA: Author.

14. Walumbwa, F., Avolio, B., Gardner, W., Wernsing, T., & Peterson, S. (2008, February). Authentic leadership: Development and validation of a theory-based measure. Journal of Management, 34, 1.

The Continuing Business Case for Sustainability .........................................

Less tangible issues such as leadership, team identity and company culture also are contributing to a continuing commitment to sustainability even in these difficult economic times. In some ways, the economic crisis has actually underscored the need for business practices and organizational missions that reach beyond the purely financial. The economic collapse of many large, long-standing and influential corporations is leading both business leaders and employees to question the mission and vision of their organizations.

Authentic leadershipBeginning with corporate scandals in the earlier part of the decade and culminating in the economic collapse of a number of large, well-established companies, the issues of authenticity and authentic leadership have become more critical. Academics studying the issue have begun to look for new ways to measure the attributes and behaviors that comprise authentic, positive leadership because without these measures it may be more difficult to predict successful leadership and to hold leaders accountable when a lack of integrity results in their failure as leaders. New research on authentic leadership also finds a statistically significant and positive impact of authentic leadership behaviors on employee job satisfaction.14 As academics learn more about the most crucial components of authentic leadership, it is likely to lead to a greater emphasis on the issues of ethics, social responsibility and sustainability in leadership development strategies.

Team identity and citizenshipHaving confidence that their organizational leaders act with honesty, integrity and a sense of responsibility to employees, their customers, communities and other stakeholders is also the first step in creating an organization employees feel proud to work for. HR professionals are well-positioned to lead their organizations in developing this kind of company culture. The experts at the SHRM executive roundtable suggested that the role HR professionals should play is to catalyze their organizations’ sustainability strategies by facilitating and orchestrating the sustainability conversation, developing corporate guidelines and strategies, working with organizational leadership to determine the best ways to use limited resources, working with employees