Sustainable Human Resources Management

International Standard 26000 (ISO 26000) released by the International Organization for Standardization in November 2010 provides internationally recognized guidance on the underlying principles of the social responsibilities of organizations, the core subjects and issues pertaining to social responsibility and ways to integrate socially responsible behavior into organizations.  Article 6.4 of ISO 26000 addresses “labor practices” of organizations, which are defined as including “all policies and practices relating to work performed within, by or on behalf of the organization, including subcontracted work”.    Among the labor practices covered by ISO 26000 are recruitment and promotion of workers; disciplinary and grievance procedures; the transfer and relocation of workers; termination of employment; training and skills development; health, safety and industrial hygiene; recognition of worker organizations and representation and participation of both worker and employer organizations in collective bargaining, social dialogue and tripartite consultation to address social issues related to employment; and any policy or practice affecting conditions of work, in particular working time and remuneration.

The prescriptions in ISO 26000 regarding labor practices are based on the fundamental principles that labor is not a commodity and should not be treated as a factor of production and subjected to the same market forces that apply to commodities and that everyone has a right to earn a living by freely chosen work and the right to just and favorable conditions of work.  Article 6.4.1.2 of ISO 26000 describes the important relationship between an organization’s labor practices and social responsibility:

The creation of jobs, as well as wages and other compensation paid for work performed, are among an organization’s most important economic and social contributions. Meaningful and productive work is an essential element in human development; standards of living are improved through full and secure employment. Its absence is a primary cause of social problems. Labor practices have a major impact on respect for the rule of law and on the sense of fairness present in society: socially responsible labor practices are essential to social justice, stability and peace.

The social responsibilities of businesses with respect to their labor practices can be found at the core of the evolving discipline of “sustainable” human resources management (HRM), which has been defined as “strategies and activities to achieve a company’s balanced objectives of social accountabilities and economic profits through acquiring, developing and attaining human resources”.[1]  Kim observed that close collaboration between employer and employee is needed since both sides have divergent perspectives and interests with respect to the employment relationship: employers are seeking to accomplish their goals with respect to sustainable profitability and acting in a socially responsible manner while employees are concerned with their individual interests (i.e., motivation and continuous development to achieve both organizational and personal goals, such as increasing their marketability in the labor market, maintaining their desired standard of living and achieving work-life balance).  Kim argued that employees should be empowered to pursue individual sustainability by employers that provide support through their choices with respect to organizational culture, values, goals and strategies and methods and processes, since individual sustainability includes providing best efforts to the organization in line with one’s responsibilities.[2]

There has been a significant amount of research and literature on the relationship between sustainability and HRM.  For example, surveys of 1,000 organizations across eight countries on the key subject areas of sustainable HRM found that the most frequently mentioned areas were human resource development—training and development, re-training, license and certification, and career development—and employee characteristics, such as employee motivation, flexibility, reliability and volunteerism for performance.[3]  Other researchers have emphasized social responsibility, in line with ISO 26000; however, some prefer an economically rational explanation for sustainability in organizations and conceive of sustainable HRM as being the actions that companies should take in their environments in order to have durable access to skilled human resources.  Another strand of HRM research and literature, referred to as “strategic HRM”, is grounded in business strategy scholarship and sees sustainability as a means, or strategy, for achieving a “sustainable competitive advantage” necessary for a company to maintain long-term economic competitiveness.[4]  

ISO 26000 and Socially Responsible HRM

The minimum obligation of companies to their employees is to abide by applicable legal standards in key areas and activities such as recruiting and hiring (i.e., equal opportunity laws), compensation and benefits (i.e., minimum wage and overtime requirements), job design and placement (i.e., laws pertaining to reasonable accommodation for disabilities), protection from discrimination and harassment, workplace safety, family and medical leaves, union relations, performance evaluation and promotion, and prohibitions on unlawful termination.[5] However, socially responsible HRM is based on the proposition that employers have an obligation to exceed legal standards when forging relationships with their employees and take steps to ensure that employees are treated with dignity and value and that their contributions and hard work brings both financial and non-financial rewards.  When deciding how to effectively integrate social responsibility into their labor practices and relationships with employees and other workers, companies should refer to Article 6.4.3 of ISO 26000, which describes and lays out related actions and expectations for five core labor practices issues: employment and employment relationships; conditions of work and social protection; social dialogue; health and safety at work; and human development and training in the workplace.  While primary responsibility for ensuring fair and equitable treatment of workers lies with governments, the content and enforcement of laws vary from country to country and ISO 26000 is based on the premise that organizations should always adhere to the standards contained in recognized international agreements relating to human rights and labor standards such as the International Labour Organization Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy and the UN Guiding Principles on Business and Human Rights.

Role of the HR Function with Respect to Sustainability Initiatives

Core organizational commitments with respect to labor practices such as those that might be adopted from ISO 26000 should be approved at the top of the organizational hierarchy by the board of directors and the members of the senior executive team; however, implementation is generally assigned to the human resources (HR) function.  Ideas about the role of the HR function with respect to sustainability initiatives can be found in surveys such as the one conducted by Wirtenberg et al., who analyzed the role that HR leaders and the HR function played with respect to sustainability initiatives at nine large, public, multinational companies that had been recognized as being among the world leaders in handling environmental, governance, social responsibility, stakeholder management and work environment issues and found that the greatest contributions by the HR function to sustainability effectiveness among the studied companies occurred in the following areas[6]:

• Leadership Development: A number of the companies placed a strong emphasis on creating a “culture of development” and offered unlimited leadership development opportunities for high potential employees that reinforced a core of sustainability as one of the overarching corporate goals.
• Training and Development: The HR function was frequently cited as an essential element of the company’s efforts to educate employees about sustainable development.  For example, HR personnel created examples for employees not involved in the technology area (i.e., accountants, administrators and floor workers) to help them see the relationship between their job tasks and sustainable development.  The HR function can also leverage its learning management systems to build employee knowledge about sustainability and allow employees to continuously upgrade their competencies with an easy-to-use program that can also track individual performance and engagement.
• Diversity and Multiculturalism: The HR function played an active role in addressing a number of challenges and issues relating to diversity and multiculturalism including transparency and metrics in diversity policies and procedures; achieving a “winning inclusive culture strategy” and “cognitive diversity”; workplace practices in the global context; and compensation schemes, such as providing workers in developing countries with a living wage.
• Ethics and Governance: HR leaders were heavily involved in ethics and compliance oversight committees, development and implementation of policies and performance standards that often exceed local laws and regulations and which are consistent with the UN Global Compact, self-assessments, design and administration of mandatory ethics and compliance training programs that also covered sustainability and values, and e-learning programs.
• Talent Management:  HR leaders created value to their companies through their efforts with respect to recruiting and staffing and providing companies with the right people and right mental models, as well as the requisite functional expertise.  An emphasis on sustainability also provided companies with a competitive advantage when attempting to attract and retain talent (i.e., the more talented workers tend to be attracted to firms that have been branded as a company that is sustainable and “doing the right thing”).
• Workforce Engagement: HR was an important player in getting employees engaged and involved in a company’s journey to sustainability and high levels of employee engagement were also found to be positively related to company sustainability, customer satisfaction and business growth.  Wirtenberg et al. noted that workforce engagement may be the domain that best epitomized the “people” element of the “triple bottom line” and workforce engagement follows from building a sense of commitment among employees who become passionate about making a difference.

Bäbler surveyed the relevant literature and conducted case studies that led to the identification of the HRM practices most relevant to corporate environmental initiatives (CEI) including training and development, policies, recruiting, compensation and performance appraisals and talent management.[7]   Other key roles and responsibilities for HR professionals with respect to any CEI included acting as a “change facilitator” to anticipate the need for organizational changes in connection with any CEI, prepare the organization for change through clear and thoughtful communication of the necessary changes, oversee execution of the necessary changes, and energize others to accept and embrace the changes; serving in a collaborative role across internal and external organizational boundaries to share information in order for the CEI to be successful; proactively developing new approaches to managing people and helping the organization create an environment that supports continuous learning and creativity; and understanding and attempting to align the concerns of multiple stakeholders, including employees, customers, shareholders and the society at large, and educating managers about the value of HR and the consequences of managing people effectively (or ineffectively).[8]

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This article is an excerpt from the author’s forthcoming book on Sustainability Management, which will be published by Routledge in late 2020.  For further information, visit the following page on the author’s Sustainable Entrepreneurship Project website: https://alangutterman.com/topics/governance-management/

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About the Author

This article was written by Alan S. Gutterman, whose prolific output of practical guidance and tools for legal and financial professionals, managers, entrepreneurs and investors has made him one of the best-selling individual authors in the global legal publishing marketplace.  His cornerstone work, Business Transactions Solution, is an online-only product available and featured on Thomson Reuters’ Westlaw, the world’s largest legal content platform, which includes almost 200 book-length modules covering the entire lifecycle of a business.  Alan has also authored or edited over 90 books on sustainable entrepreneurship, leadership and management, business law and transactions, international law and business and technology management for a number of publishers including Thomson Reuters, Practical Law, Kluwer, Aspatore, Oxford, Quorum, ABA Press, Aspen, Sweet & Maxwell, Euromoney, Business Expert Press, Harvard Business Publishing, CCH and BNA.  Alan is currently a partner of GCA Law Partners LLP in Mountain View CA (www.gcalaw.com) and has extensive experience as a partner and senior counsel with internationally recognized law firms counseling small and large business enterprises in the areas of general corporate and securities matters, venture capital, mergers and acquisitions, international law and transactions, strategic business alliances, technology transfers and intellectual property, and has also held senior management positions with several technology-based businesses including service as the chief legal officer of a leading international distributor of IT products headquartered in Silicon Valley and as the chief operating officer of an emerging broadband media company.  He has been an adjunct faculty member at several colleges and universities, including Berkeley Law, Golden Gate University, Hastings College of Law, Santa Clara University and the University of San Francisco, teaching classes on corporate finance, venture capital, corporate governance, Japanese business law and law and economic development.  He has also launched and oversees projects relating to sustainable entrepreneurship and ageism.  He received his A.B., M.B.A., and J.D. from the University of California at Berkeley, a D.B.A. from Golden Gate University, and a Ph. D. from the University of Cambridge.  For more information about Alan and his activities, and the services he provides through GCA Law Partners LLP, please contact him directly at alangutterman@gmail.com, follow him on LinkedIn (https://www.linkedin.com/in/alangutterman/) and visit his website at alangutterman.com.

About the Project

The Sustainable Entrepreneurship Project (www.seproject.org) was launched by Alan Gutterman to teach and support individuals and companies, both startups and mature firms, seeking to create and build sustainable businesses based on purpose, innovation, shared value and respect for people and planet.  The Project is a California nonprofit public benefit corporation with tax exempt status under section 501(c)(3) of the Internal Revenue Code dedicated to furthering and promoting sustainable entrepreneurship through education and awareness and supporting entrepreneurs in their efforts to launch and scale innovative sustainable enterprises that will have a material positive environmental or social impact on society as a whole. 

Copyright Matters and Permitted Uses of Work

Copyright © 2020 by Alan S. Gutterman.  All the rights of a copyright owner in this Work are reserved and retained by Alan S. Gutterman; however, the copyright owner grants the public the non-exclusive right to copy, distribute, or display the Work under a Creative Commons Attribution-NonCommercial-ShareAlike (CC BY-NC-SA) 4.0 License, as more fully described at http://creativecommons.org/licenses/by-nc-sa/4.0/legalcode.

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[1] S.K. Kim, Sustainable Management and Future of Human Resource Management, http://docplayer.net/14543650-Sustainable-management-and-future-of-human-resource-management.html (accessed May 7, 2020) 

[2] Id.

[3] Id.

[4] B. Mazur, “Sustainable Human Resource Management in theory and practice”, Economics and Management (January 2014), 158, 159.  See also.B. Mazur, “Linking diversity management and corporate social responsibility”, Journal of Intercultural Management, 5(3) (2013), 39.

[5] M. Kelly, J. McGowen and C. Williams, BUSN (Independence, KY: South-Western Publishing Company, 2014), 58-59.

[6] J. Wirtenberg, J. Harmon, W. Russell and K. Fairfield, “HR’s role in building a sustainable enterprise: insights from some of the world’s best companies”, Human Resource Planning, 30(1) (2007), 10.

[7] S. Bäbler, Human Resource Management and Environmental Sustainability (Zurich: Institut für Strategie‐ und Unternehmensökonomik at University of Zurich, 2010), 30-31.

[8]  Id. at 33-34.