In the wake of the COVID-19 pandemic, business leaders have been forced to rethink their approach to talent acquisition, retention, and development. As we have seen with other pandemics in recent history - like HIV/AIDS in the 1980s - it can be easy for companies to focus on short-term goals instead of long-term resilience.
However, this has led many businesses into trouble over the past decade; Research shows that organisations with ESG (environmental, social and governance) strategies are better equipped to address this advance of change than those who do not have them.
What is ESG?
ESG is a framework for assessing and managing environmental, social, and governance (ESG) risks and opportunities across an organisation's activities.
ESG factors can affect operational performance and financial returns. That said, ESG issues can serve as a lens through which to view business performance from a broader perspective beyond purely economic considerations.
ESG issues are actionable because they can directly influence corporate reputation, brand value, customer loyalty, employee retention rates and investor confidence.
ESG: serving the three pillars
ESG is a critical component of your global workforce strategy. The considerations of the three components of ESG are inextricably linked to the three pillars of your business: people, planet, and profit.
They affect how you approach all aspects of your business - from recruiting and retention to employee engagement and performance management programs.
ESG is about more than just corporate responsibility; it's also about being profitable over the long term. ESG practices help organisations retain top talent by creating a culture focused on the positive impact that:
Supports employee well-being
Improves financial performance by reducing spending on safety incidents/accidents, property damage costs due to environmental issues (e.g., storm damage)
Eliminates legal expenses related to lawsuits brought against them by employees who feel they are discriminated against based on age or other protected characteristics such as race/ethnicity or gender identity/expression.
How do the three components of ESG contribute to an effective global strategy?
The environment is one of the key areas organisations need to focus on to build an effective global workforce strategy. Many prospective employees in these times are concerned with the adverse impact of their carbon footprint. With the ongoing climate crisis, it is no surprise that job seekers are partial to organisations with the least environmental impact.
How can we develop a global workforce strategy based on sustainable production?
What kind of energy sources will be needed by our facilities worldwide?
How do we use less water while still producing high-quality products?
How do we reuse waste products from other processes within our factories?
Social Ethics & Responsibilities
Social ethics and responsibilities are the cornerstones of a responsible investor. Social impact drives a company's positive outcomes - satisfied employees and investors enhance business outcomes. The key drivers for ESG include:
Environmental, social and governance (ESG) factors must be integrated into business strategy, not just performance measurement.
All stakeholders should be involved in the investment process, including employees, management, and customers.
Investors must take a long-term view rather than seeking only short-term profits.
To ensure that you meet your social ethics and responsibilities as an investor: make your investment decisions based on strong financial metrics; engage with companies to understand ethical and social issues; monitor ESGs over time; measure and report on success against goals; commit to ongoing improvement.
Governance (political, regulatory, legal, and ethical)
Corporate governance is the rule of the game. It's about how you play the game and how you play it with others. When we talk about governance issues, we are talking about political, regulatory, legal, and ethical considerations that will help determine whether your organisation will successfully achieve its goals.
Managing global workforces means knowing international laws (including tax implications), cultural differences in business behaviour (such as how to negotiate contracts or deal with disagreements between employees) and understanding local customs in each country where you operate.
To effectively govern your global workforce requires strong leadership skills at all levels of your organisation – those who understand how their actions impact those around them locally and internationally are critical for success!
How can we develop a global workforce strategy based on the three ESG pillars?
ESG issues are challenges that touch every industry and company, regardless of size or geography. These challenges require solutions at the local level and can be implemented through business practices that integrate sustainability into their core business model.
As companies begin to understand these issues, they also realise they are not alone in facing them – they have peers across industries and geographies working on similar problems with different solutions.
What are the most important values of your organisation?
What does "local" mean to you in this context?
Define ESG-based hiring criteria and practices for each location
How can we leverage our existing data sources to identify local hiring options and better align them with our ESG-based goals?
How can we implement these practices to increase our attractiveness to talent?
Build an ecosystem that supports growth and change
How can we support talent acquisition efforts across all locations?
What kinds of resources are needed to support these endeavors?
What is required to scale up from a technical and operational perspective?
Be prepared to thrive in a volatile world
Companies need to be prepared to face changes at any time. This means being ready for change and adapting promptly to obstacles.
In a world where things can happen at any moment—a natural disaster or an economic downturn—you must be able to cope with uncertainty and disruption. This can be achieved by working together as a team of diverse professionals from different departments who can work together seamlessly across borders, cultures, and languages.
To do this, open communication channels between management teams around the globe are essential. Hence, everyone stays informed about decisions made in one part of the world that could impact operations elsewhere around the globe.
Influential leaders can adapt quickly to change
A key lesson from the COVID-19 pandemic is that the most influential leaders will be those who can adapt quickly to change. For example, consider how quickly Walmart changed its strategy following the pandemic. The company went from one of the largest retailers in America to a smaller store with limited supplies within two months following COVID-19.
The leadership required to make such a radical transition is not easy; however, it demonstrates how much impact you can have on an organisation when you can adapt quickly and address challenges effectively during difficult times.
Adapt your workforce strategies and priorities
Your company's workforce strategy and priorities will require adaptation. Specifically, you'll need to consider the ESG framework as an essential part of your business operations—not just as a good thing in and of itself. It can also serve as a critical foundation for more resilient business operations.
Create a foundation for more resilient business operations
ESG is a way to ensure you have the right people in the right places, with the right skills and drive to make a difference. In addition to helping ensure your workforce is engaged and invested in their work, ESG can help you navigate difficult times. When it's time for change — whether macroeconomic shifts or business-specific issues drive it — ESG can help your organisation be more prepared for what comes next.
Build resilience to increase sustainability and withstand disruptions
Resilience is the ability to withstand disruptions. ESG strategies can help companies build resilience by improving their ability to stay in business when storms hit, or pandemics spread.
Corporate sustainability strategies will ensure your company's ability to endure over time. In other words, sustainability means that a company will be around tomorrow—or at least for as long as you need them! It's essential for companies who want your business now and in the future.
Build resilience by fostering employee engagement, well-being, and satisfaction
You may have heard that ESG is vital for your bottom line. There are also many benefits of ESG to you and your employees. Here are a few examples:
Employees are happier and more productive
Employees are more engaged
Employees have better health
Employees are more likely to stay with the company
Employees are more likely to recommend the company to others
Bolster talent acquisition and retention efforts
As a result of growing awareness around ESG issues, a vast majority of employees are increasingly demanding that their employers take action to support more sustainable growth practices. In fact, according to studies on employee engagement and sustainability, about 64% of millennials stated that a company's social and environmental factors are important when selecting jobs, and 83% would be more loyal to a company if their jobs could positively impact society.
Companies can incorporate ESG factors into job descriptions, so potential hires know if this is an area where they want to work before deciding about accepting an offer.
Employers can offer training or certifications for employees who want additional knowledge about how ESG impacts their work or industry but may not have the time for formal training programs like many colleges provide today.
Be better equipped to adapt to change
ESG can be a competitive advantage. The world's most successful companies are already using ESG to build their brands, attract and retain talent, gain market share, and build their reputation as good employers. These companies also have an advantage with millennials as this cohort makes up most of the current workforce.
Companies with ESG strategies are better equipped to address this advance of change than others because they're focused on building long-term value for stakeholders through responsible leadership and governance practices. Besides addressing key issues like the focus on climate change, these companies also have a firm grasp on societal issues and staff satisfaction.
Employers embrace the Employee Value Proposition of ESG—Environmental, Social, and Governance—as a global workforce strategy. In effect, companies are growing their talent pools by building programs that align with the needs of employees from various generations.
With the increasing pressures on companies to establish ESG standards as a standard part of their corporate responsibility strategy, companies should also seek to ensure that they are built into their Global Employment and Mobility strategy.
An ESG-driven approach to workforce management requires careful consideration and application of ESG variables in a global talent pipeline's recruitment, assignment, and development.
While you focus on developing and implementing your company's ESG values - whether you are focusing on local development, or are expanding internationally, let Airswift take care of the rest.