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Sustainability Governance and Management

Resources on Management

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A wide range of definitions and conceptualizations of “management” have been offered and it is often difficult for managers to fully and clearly understand their roles within the organization; however, managers striving for effectiveness and success would do well to invest time and effort into understanding the functions, roles and skills associated with the managerial position. As with definitions of management, researchers and commentators have developed a variety of lists of managerial functions. The consensus seems to be that managers can expect to be involved in planning, organizing, leading and controlling, and that these functions will be needed when working with a range of organizational resources including people, cash, physical assets and information. While the specific day-to-day activities of managers will vary depending on his or her place in the organizational hierarchy, he or she must nonetheless have the ability to understand the behaviors and feelings of the people who report to them, senior officials above them in the organizational hierarchy, other colleagues throughout the organization, and external stakeholders such as customers, supplier and regulators. In addition, managers must be able to maintain self-awareness and monitor their personal capacities for dealing with the stress of their jobs and engaging in activities that will further their career development. In order to be adroit practitioners of their craft, managers must understand certain basic concepts such as the functions, roles and skills associated with the managerial position; the different levels of managerial effectiveness and how they are measured; and the styles available to managers and the factors that determine which style might be preferred in a particular instance.

Corporate social responsibility (“CSR”) is like any other important management initiative and requires proactive leadership from the top of the organization. In fact, it is clear that the “tone at the top” is an important factor in the success or failure of any CSR initiative and that the directors, executive officers and senior managers of the organization are uniquely positioned to act as internal champions of CSR and proactively communicate with everyone in the organization on a daily basis about the impact of new environmental and social products, services and activities (e.g., philanthropic projects) and CSR-related systems and processes. These leaders must also commit to investing the time and effort necessary to explain the organization’s CSR initiatives to clients and customers and other stakeholders and develop and implement appropriate metrics for tracking and reporting progress. At the same time, while CSR certainly extends “beyond the law”, directors and officers must remain mindful of their traditional fiduciary duties and understand how laws, regulations and standard contract provisions are rapidly evolving to incorporate environmental and social responsibility standards.

CSR has changed the playbook for organizational governance, leadership and management. Among the issues and activities that will need to be considered in establishing and maintaining effective governance and management processes for CSR implementation are the following:

Understanding how CSR is changing the traditional fiduciary duties of directors and officers including the ascendance of the stakeholder-focused model and the introduction of alternative legal architectures for sustainability-oriented businesses
Ensuring that the board of directors integrates environmental and social responsibility into the governance structure and the traditional roles and responsibilities of directors
Designing and implementing an effective framework for board oversight of CSR and corporate sustainability
Developing and implementing internal governance instruments—codes, policies and procedures—to guide organizational members on their CSR-related duties and responsibilities and provide a foundation for decision making
Designing effective internal organizational structures and systems for managing CSR initiatives and programs and supporting CSR commitments and expectations such as preparation and distribution of sustainability reports and stakeholder engagement
Integrating CSR into the duties and responsibilities of the chief executive officer and other members of the C-suite team, as well as into their compensation arrangements, and developing job responsibilities for a new breed of sustainability executives
Developing and maintaining a sustainability-supportive organizational culture and integrating sustainability into the organization’s technology management structure
Implementing formal management systems relating to sustainability-related issues such as the environment, social responsibility and supply chain security and processes for collecting and analyzing information to assess CSR performance and effectiveness
Identifying and counseling directors, officers, managers and employees on ethical issues that will arise as they discharge their responsibilities with respect to CSR and work to enhance and maintain the reputation of the organization
Conducting continuous audits and assessments of the sustainability governance and management framework through the use of certification and rating systems in order to evaluate and improve CSR performance and effectiveness

CSR requires organizations to look beyond traditional economic performance to consider the impact of their activities on the environment and society in which they operate and on stakeholders other than the owners of the organization; however, pursuit of CSR relies on many of the same basic governance and management processes that have been developed in the business world (e.g., planning, acquiring and deploying resources, building products and systems and monitoring execution of day-to-day operations). At the same time, the emergence of CSR has fueled interest in new skill sets including sustainable leadership and ethical management.

Organizational studies is an important sub-topic of management that warrants special consideration. An organization is any group of persons with a common objective. Simply put, two or more people may band together to form an organization because they determine that working together is a more effective means for creating value than if each of them continued to work separately. The study and practice of organizational design focuses o the structured processes that emerge within organizations to guide how their members (e.g., owners, executives, managers and non-managerial employees) interact with one another to pursue their mutually agreed goals and objectives with respect to the creation of value for themselves and the external environment in which the organization operates. While the initial idea for what becomes a new business may emerge suddenly, without warning, or after long deliberation but without any semblance of a formal roadmap as to how to proceed, efficient pursuit of the idea ultimately requires attention to creating and administering an appropriate organization for the business.

Structure is one of the key elements in organizational design, along with such things as strategy, culture and business processes, and establishes how senior management of the organization wishes to allocate the ability to control activities and resources throughout the organization. The building blocks of organizational structure are formal groupings of people and resources into units—departments or divisions—that focus primarily on one of several structural dimensions including functions, products, geographic areas or customers/markets. Organizational structure determines how power and authority is allocated, how information flows and who is accountable to whom through mandated reporting relationships. Structure alone cannot make an organization successful; however, if the structure is not aligned with organizational strategy it will be difficult for senior management to achieve the desired results.

There is no single structure that works best in all cases and the structure will continuously change as the organization grows and evolves with emphasis shifting from one dimension to another as circumstances dictate. In most cases an organization will initially choose a function-based organizational structure that divides work activities into functional groups such as research and development, production, sales and marketing, finance and administration (including human resources). As the organization grows it will shift the primary dimension of its structure to products or markets, either geographic or customer-based, through creation of divisions for each key product line or market. Other structures based on two or more of the dimensions—matrix or hybrid—may be used in appropriate cases when the activities of the organization have expanded into multiple product lines and/or markets.

Resources on Management

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