When companies lean into their ESG responsibilities, it can have a transformative impact on culture and recruitment, writes INX Software CEO Marcus Ashby — in four key ways.
It’s been nearly 50 years since management guru Peter Drucker was credited with the maxim “what gets measured gets managed,” and it’s as true today as it was then.
Your focus as a company, the data you demand as a leader, the insights that you seek out to understand what’s coming down the line — wherever your attention falls, that’s where you are likely to invest the most time, effort and resources.
Sometimes, that can be seen as a bad thing.
After all, most of us can only handle one major challenge at a time and when the biggest issue for Australian employers is the drastic shortage of labour, measuring and managing your environmental performance can feel like a distraction.
But that’s the wrong way to look at ESG.
If you only think of environmental and social performance and good governance as a burden or obligation, you are missing the value that ESG can deliver in helping you find and retain talent in the toughest labour market of a generation.
We see four key advantages for our clients who have leaned into their ESG responsibilities, identifying the metrics that matter to their business, measuring them and managing the results.
The first is that it sets expectations about you and your performance as a potential employer.
People and culture experts consistently find that ESG values are dealbreakers or deciding factors for job seekers, who are looking to work for businesses with a clear track record of environmental performance.
Those motivated, purpose-driven job seekers want to see evidence that you can walk the talk.
The side-effect of using environmental software to track and record performance is that you can speak from a position of knowledge and transparency about your impact and your history of improvement — and those proof points are recruitment gold.
The second advantage is that it clarifies your expectations of any potential employee.
No one wants to hire a team member who is out of step with the direction corporate performance is going.
A mine supervisor who is unbothered about potential contamination? A cleaner who won’t recycle? A fleet manager who doesn’t care about monitoring and reducing the use of fuel?
None of these would be a good fit for most employers, so being clear that you track and measure the metrics that matter up front can save heartache down the track.
Making clear your expectations for employee performance can also help your leaders demonstrate the value they bring.
It is increasingly common for executive remuneration to include ESG factors in the KPIs of senior personnel. Some companies might guess, some will greenwash, but the best will measure against actual performance.
Thirdly, the use of software to benchmark your performance starts a serious conversation about what your business is there to do and how it does it.
Whatever your core operation — whether you run a resource company, a health care facility or a university campus — the quality of your environmental performance will provide insights into how sustainable and cost-effective your business really is.
We work with clients to compare their operations to similar businesses as well, and the gaps in performance inevitably prompt discussion about how things can be improved and done differently.
It is impossible to imagine a successful business that doesn’t track its financials or a warehouse that doesn’t bother to count its inventory.
The same is true of environmental performance. Without those insights, you are not serious about staying in business for the long term.
Finally, measuring your environmental performance is a step towards treating everyone as an adult — and that is a good thing when it comes to finding the right talent.
When corporate consultants like McKinsey talk about the factors that make for robust, resilient teams, transparency of performance and data-led insights consistently set your business up for success.
Why? Because data-informed decision making means a faster, more agile organisation. Your teams are more self-sufficient because they can act on real-time information. And your employees have access to the information they need to change course, improve or innovate.
It means your people take greater ownership of their roles, so they are more likely to stay.
So by all means, see ESG as an obligation that your business needs to address.
But don’t ignore the value that comes by leaning in to your ESG responsibilities when it comes to building a team rich with talent.