Are you a leader or a laggard? HR's role in creating a sustainability culture.

[ILLUSTRATION OMITTED]

Human Resources Management (HRM)--function, practices and systems--may be missing the next source of real competitive advantage. Leading and facilitating sustainability initiatives and creating a sustainability culture are the critical tasks confronting human resources professionals now. HRM, particularly in the specific practices impacting recruiting, hiring, training, compensation, knowledge management and development, holds tremendous opportunity to shape the firm's sustainability agenda.

We find an immediate need for understanding the possibilities of transformation to a sustainable organization, and the range and type of actionable practices suitable for HRM and HR professionals. A small number of firms, including industry leaders like Nike and Starbucks, have recognized the emerging paradigm of sustainability and have taken steps to make sustainability a central component of their strategy (Epstein, 2008). Despite the increasing clamor for more sustainable business practices from multiple stakeholders, many firms are reluctant to move quickly, due possibly to a lack of understanding of policies and actions leading to sustainability.

We are concerned that HR professionals may be missing an opportunity to develop and capture unique resources and competencies that customers will value and the competition will find difficult to imitate. Instead, they find themselves waiting to see what emerges, as firms transition out of an emphasis on compliance and pollution prevention activities to those in which social and environmental impacts will be the basis of strategic opportunities and competitive advantage.

Our Investigation

We focus on two primary questions: (1) How do firms organize and manage themselves to promote and integrate new sustainability initiatives, and (2) How do HR practices influence a firm's ability to integrate and collaborate on a myriad of emerging sustainability-focused business practices? Our analysis of both quantitative and qualitative data helped us to:

* uncover three distinct types of firms integrating sustainability activities into the work place;

* identify three primary obstacles to implementing sustainability initiatives;

* develop strategies for overcoming these obstacles to implementation; and

* propose a stairway to sustainable opportunities for HR to take a leadership role.

Sustainable practices are those that go beyond process improvement and waste reduction (typically found in the operational approaches of the past), and focus on developing innovative social and environmental practices that promote collaborative efforts across functions, create unique social capital and build long-term economic value for the firm. A dominant theory in the literature, the resource-based view of the firm, stipulates that companies can gain sustainable competitive advantages if they are built on and supported by organization-level competencies (Barney, 1991). These competencies reflect unique combinations of resources that are rare, non-substitutable, difficult to imitate and valuable to customers (Barney and Wright, 1998). Organizations integrating organizational-level competencies within sustainability activities are predicted to have highly motivated and engaged employees who can focus their efforts on the reduction of materials and energy by several orders of magnitude, the development of new, innovative "green" products or services and new business models that they can design to have a strategic impact on sustainability (Epstein, 2008).

So what can HRM professionals do to increase the opportunities that await them in the new, "green collar" economy? An organization's culture and entrenched business practices, and the strategic importance given to human resources may be critical determinants of building a sustainable organization. Every day, managers are charged with developing new, "sustainability" focused programs and strategies in a way that will most benefit the firm. Yet, researchers and practitioners have few examples of what has been tried that focus on HR elements such as organizational design, recruiting, training and management practices; and several questions still remain unanswered.

After conducting an HR-focused forum on sustainability sponsored by the local chapter of the Human Resource Planning Society (1), and through the collection of survey data, we are able to highlight the importance of the HR function and offer an explanation for why some firms adopt certain sustainability practices and others do not. There is a significant opportunity to build upon an emerging paradigm of sustainable development and explore how the HR function can play a strategic role to help lead the efforts to build a sustainability culture.

Study Design

We designed and conducted a Web-based survey of executives of firms located in western Pennsylvania, eastern Ohio and northern West Virginia. The survey, sponsored by the local chapter of the Human Resource Planning Society, was designed to identify the extent to which firms had implemented various sustainability initiatives, and the role of the human resource function in creating and implementing these sustainability initiatives. Based on an extensive review of literature, we pooled many initiatives that had been identified as examples of environmental and social dimensions of sustainability. We rewrote the items to avoid redundancy and ensure clarity, and pre-tested them with a group of academics and practitioners. The Web-based survey, administered during October and November 2008 resulted in 76 complete responses. The sample consisted primarily of HR professionals (49 percent) along with operations (14 percent), sales and marketing (13 percent) and senior management (8 percent). Three-fourths of our respondents had nine or more years of experience in their field. Both small and large firms were represented in our sample. The firms represented a variety of industry sectors including manufacturing, healthcare, retail and services.

We identified six sustainability dimensions based on a factor analysis of responses to 21 items that measured whether the respondent firm implemented particular sustainability initiatives. These ranged from employee-related efforts, such as promoting ethics and integrity and encouraging community volunteer programs, to environmental protection initiatives such as conserving electricity and pollution reduction/prevention. We computed the dimension score by adding the responses to the initiatives that comprise each dimension. We then classified the 76 firms based on their score on the six dimensions spanning social (employee orientation and volunteerism) and environmental (conserving materials, environmental protection, employee conservation and sustainability measurement) sustainability initiatives. We identified three distinct groups of firms using cluster analysis; we labeled them Leaders, People-focused and Laggards. We conducted further analyses to validate the cluster membership, as well as examine the presence of any systematic differences across these three clusters of firms (additional details on the statistical procedures are provided in the sidebar).

Key Findings

Our analysis revealed four conclusions:

i. Firms differed significantly in the extent to which they had implemented sustainability initiatives. Those firms simultaneously integrating social and environmental sustainability initiatives were considered Leaders. Next, People-focused firms focused on social initiatives to a greater extent than environmental initiatives. Finally, Laggard firms had not implemented, to any significant extent, either the social or the environmental sustainability initiatives.

ii. Leader firms saw a significant role for HR in facilitating and leading the sustainability efforts within their organizations.

iii. Leader firms utilized a range of human resource systems to reinforce their firm's people practices and environmental practices to build a sustainability culture.

iv. People-focused firms utilized a range of human resource systems to implement their firm's people practices to a greater extent than their environmental practices.

Sustainability Dimensions and Diffusion of Sustainability Practices

The six sustainability dimensions and the 15 specific sustainability practices that comprise them are summarized in Table 1. We also examined the extent to which the responding firms adopted or diffused these practices. The firms more widely adopted employee wellness, safety and ethics-related initiatives than environmental initiatives. For instance, 75 percent of the responding firms implemented employee health and wellness programs and promoted ethics and integrity as an integral part of their organizational culture. In contrast, fewer than 12 percent of the firms indicated that they conduct life cycle analysis of new products or calculated the carbon footprint of their companies. We captured the patterns of these differences in the adoption of sustainability initiatives using cluster analysis, and have summarized the results.

Leaders, People-focused and Laggards

A cluster analysis of the sustainability initiatives across the six dimensions revealed three distinct groups of firms that were most similar to each other within a group, and least similar across groups. We examined the profile of each group and labeled them as Leaders, People-focused and Laggards based on the extent to which they implemented social and environmental sustainability practices. Characteristics of these three clusters are summarized graphically in Exhibit 1.

We validated our classification by looking at two indicators. Firms that we classified as leaders and people-focused were significantly more likely to have a sustainability policy than firms classified as laggards (50 percent, 35 percent and 7 percent respectively, [chi square] significant). We also examined whether the three clusters differed in their responses (using a three-point scale) to the question: To what extent is your organization developing a sustainability culture/work environment? Again leaders and people-focused firms were engaged in developing such a culture to a greater degree than laggards (2.20, 1.82 and 1.25 respectively, p < .001). While leaders and people-focused firms were not significantly different in either having a sustainability policy or developing a sustainability culture, their extent of adoption of many of the environmental initiatives was significantly different. These results confirm the existence of three groups of firms.

Leaders (N=20). These firms, comprising 26 percent of our sample, were far ahead of others on all six dimensions of sustainability practice, and were the most comprehensive in their approach to implementing both social and environmental sustainability initiatives. A typical firm in this group implemented at least two employee orientation and two environmental protection initiatives, and at least one employee conservation, materials conservation and sustainability measurement initiative. These firms were more likely than other firms to establish an internal sustainability team, address climate change or promote conservation at employees' homes.

People-focused (N=28). This group, comprising 37 percent of the sample, had a strong showing on two of the six sustainability dimensions: employee orientation and volunteerism. These firms clearly excel at becoming an employer of choice and creating a great place to work. Our results suggest that these firms have just begun implementing environmental initiatives, and are significantly behind the leaders on the environmental dimensions.

Laggards (N=28). This group showed no discernible strength in any of the six sustainability dimensions and lagged behind the other firms on five of the six dimensions. Virtually none in this group had implemented initiatives such as valuing diversity, encouraging innovation and risk taking, reducing pollution, encouraging telecommuting, promoting conservation at employees' homes, establishing an internal sustainability team or conducting life cycle analysis of new products.

The Role of HR in Sustainability

To gauge the level of involvement of the HR function in implementing sustainability initiatives, we asked the respondents to rate the extent to which the HR function either facilitated or led their sustainability efforts. Results of our analysis are summarized in Exhibit 2. As expected, leaders and people-focused firms were significantly different from laggards in the facilitating role played by the HR function. However, when it came to the HR function leading the sustainability effort, leaders were significantly different from both people-focused and laggard firms.

Our results suggest that a leading role for the HR function can be crucial for firms implementing the full-range of sustainability initiatives. HR possesses an array of tools that can help to change an organization's culture {e.g., employee selection, training and reward systems).

We examined the extent to which specific HR practices were changed to support developing a sustainability culture within an organization. The results are summarized in Exhibit 3. In general, leaders and people-focused firms had modified their HR practices to a significantly greater extent than laggard firms, and ANOVA tests confirmed this. This was most apparent for recruiting, employee selection and new employee orientation--practices that enable organizations to change their culture, one hire at a time. This strategy of changing these practices first also might be prudent given the dual benefits of attracting an applicant pool with different characteristics and the possibility of encountering minimal resistance within the organization to implement new strategy. Training, development and mentoring practices also were modified to support sustainability initiatives, though not to the same extent as the recruiting and selection practices.

Modifying HR practices to help build a sustainability culture is an evolutionary process, with the firms we observed at different stages of implementing their sustainability strategies. Our results suggest that HR practices targeted at the external community, i.e., potential applicants, were modified to a greater extent than HR practices governing internal stakeholders, i.e., current employees. Logically, we expect HR managers to modify performance management and compensation practices at a later date. Our results imply a natural progression beginning with modifying recruiting and selection practices to impact the characteristics of new hires, then to alter training and development practices to help current employees develop new competencies, and finally changing the way employee performance is measured and rewarded.

We analyzed the correlations between the eight HR practices and the six sustainability dimensions. As expected, firms that are doing more sustainability practices also changed their HR practices to a greater extent than other firms. Firms that are leading in the social dimensions of sustainability practices (employee orientation and employee volunteerism) modified all eight HR practices to a greater extent than others (correlations ranged from .28 to .48, all significant at p < .01). When it comes to the environmental dimensions, the pattern also is clear. HR practices were modified to support employee conservation and materials conservation, but not the other two environmental dimensions (environmental protection or sustainability measurement). For employee conservation, modifying HR practices related to recruitment, selection, orientation, training, development and performance management have the greatest impact, with correlations ranging from .21 to .31. Firms that implemented materials conservation initiatives to a greater extent also significantly altered HR practices, especially with regard to training and development.

In summary, our results suggest that leaders differed significantly from people-focused and laggard firms in the extent to which they implemented different sustainability initiatives. The human resource function played a critical role in these firms in leading and facilitating their sustainability efforts. Leaders and people-focused firms modified their HR practices to a greater extent than laggards to support their sustainability agenda. These changes in HR practices also are aligned with certain sustainability initiatives: supporting our argument that HR practices play a strategic role in implementing specific sustainability initiatives and creating a sustainability organizational culture.

Obstacles on the Pathway to Sustainability

Despite a growing consensus that firms can "do well by doing good" and considerable empirical evidence confirming a positive relationship between a firm's social and environmental performance and financial performance (Orlitzky, Schmidt & Rynes, 2003), our results suggest a lack of widespread adoption of sustainability initiatives. Either there is no acceptance of the basic premise, despite evidence to the contrary, or the task of building a sustainability culture may be considerably more challenging and complex.

We asked the respondents what challenges and obstacles they encounter in creating a sustainability culture. We reviewed these open-ended responses for common themes and how frequently they occurred across the three distinct types of firms. Our research suggests three possible reasons for why firms either have not undertaken any sustainability initiatives or continued building on their early efforts to become a sustainable organization. These were (1) lack of commitment and buy-in from both management and employees, (2) lack of resources, and (3) cultural and institutional resistance to change. We also found systematic differences in the obstacles identified by laggards versus leaders.

Lack of Commitment and Buy-in. As we expected, this was a primary obstacle among laggards and an important issue for people-focused firms who felt there was widespread "apathy," and "lack of interest from top management" regarding environmental issues. This was not the case for leader firms. Without top management support and employee buy-in, it is very difficult to generate the momentum needed to implement any new sustainability initiatives (Wirtenberg, Harmon, Russell & Fairfield, 2007). One respondent stated the difficulty of building a sustainability culture without senior management commitment as follows:

"I work for XYZ Co. and they just don't care about sustainability ..."

We also heard other comments such as "lack of understanding and endorsement at the top of the organization" and the need for "changing the mindset of middle managers," reinforcing our conclusion that the lack of commitment and buy-in is a major obstacle. These comments suggest that it might be due to lack of awareness of sustainability issues or the fear of dealing with change.

Lack of Resources. This was a critical issue for people-focused firms and an important issue among leaders as well. Only two laggard firms identified lack of resources as an obstacle to creating a sustainability culture. Resources were broadly defined to include financial, human and knowledge resources. A respondent from a people-focused firm captured the need for specialized knowledge to create support and buy-in among employees:

"... having a hard time coming up with a clear definition of sustainability that can make sense and be motivating to employees"

Another respondent expressed the difficulty of "getting employees to understand why we are pursuing this and understand the benefits rather than just comply," due to lack of knowledge or the resources to provide additional education/training to their employees. Respondents recognized that they are asked to do more with less resources and indicated that they "do the best they can" with limited resources.

Cultural and Institutional Resistance. This was a primary obstacle among leader firms. Even when there was commitment from the top--buy-in from employees and available resources, albeit limited, for sustainability initiatives--there remained cultural and institutional resistance to creating a sustainability culture. "Changing behavior and habits" is possibly the biggest and the most deep-seated hurdle. Comments such as the ones reproduced below confirm how hard it is to manage this cultural transformation effectively:

".. silos, business as usual, and established business metrics that do not yet reflect sustainability"

".. large company, so layers of politics and hierarchy"

This effort to change the culture and "educate employees of the alternatives" may "take more time upfront, but produce better, longer-lasting, successful outcomes."

Strategies for Dealing with the Obstacles

We also asked respondents to identify possible solutions to the obstacles and challenges they identified. A content analysis of the responses indicated significant differences among the three groups of firms. Laggard firms identified "education and communication" to improve awareness as the single best strategy to deal with the obstacles and challenges. People-focused firms wanted information and tools for building the "business case" for sustainability, and leaders unanimously pointed out the strategic benefit of sharing "best practices" in sustainability.

Education and Communication. Only respondents from laggard firms identified education and communication as the primary strategy for overcoming the obstacles, possibly due to their position. Suggestions for educating both management and employees ranged from "information posters" and "... radio, newspaper, billboards, etc. telling of the importance" to "... trained executive leadership on the models (of sustainability), otherwise you'll experience flavor of the month." For laggard organizations starting on the path to sustainability, education and communication of all employees is a first step to build a shared understanding of sustainability, generate interest and support for the initiatives, and lay the foundation for the sustainability culture.

[ILLUSTRATION OMITTED]

Building the Business Case. Having identified lack of knowledge resources as primary obstacles for implementing sustainability initiatives, respondents from people-focused firms sought information and tools to make the business case. They wanted to convince other internal stakeholders of the benefits of such initiatives. Comments such as "(need) documentation of how it impacts profitability" and "... the benefits of functioning with greater efficiency, saving $ and resources" highlight the need for making the winning argument to other stakeholders, using language and metrics critical to their decision making.

Sharing Best Practices. Respondents from leader firms recognize the importance of collaboration both within and across firms, and seek the sharing of best practices to further their sustainability agenda. They commented on the need for sharing "... best practices for metrics that make sustainability everyone's responsibility" and "tips on how to create excitement within the organization." This is consistent with the observation by Wirtenberg, Harmon, Russell and Fairfield (2007) that some firms view sustainability not necessarily as a source of competitive advantage, but as an opportunity for holistic integration to build and be part of a sustainable ecosystem. After all, as one of their respondents indicated, it is not possible to be a sustainable company when the ecosystem, as a whole, is unsustainable. Seeking and sharing best practices is possibly one way of creating a sustainable ecosystem.

Stairway to Sustainability

Past research in both TQM (Blackburn & Rosen, 1993) and Environmental Management Systems (Daily & Huang, 2001) argued for the human resource function to play an active role in implementing these new systems. Blackburn and Rosen (1993), in their research of Baldrige Quality Award winners, found the HR function played a leading role in designing HRM policies and practices to create quality-oriented work cultures. Specifically, HR policies and practices helped communicate the importance of quality initiatives, empower employees to contribute to the initiatives and design appropriate rewards and reinforcements to ingrain the total quality orientation into the firm's DNA.

Implementing a comprehensive sustainability strategy is no different a challenge than the TQM challenge of the 1980s and 1990s. Like TQM, sustainability is about managing change. We believe the HR function can and should play an active role in ensuring that change toward sustainability happens.

One of the biggest blunders in leading change toward sustainability is the failure to institutionalize sustainability within the firm (Doppelt, 2003). If the internal policies and practices are inconsistent with the needed sustainability culture, "the risks are high that old thinking and behavioral patterns will eventually rise up and overwhelm efforts to adopt more environmentally and socially responsible paths" (Doppelt, 2003, p. 36). We recommend an active and early role for HR to help create the systems and processes (for example, selection, training and reward systems) to reinforce the wide range of sustainability initiatives and institutionalize the change.

Our earlier observation that the adoption rates of different sustainability initiatives are not uniform across firms suggests that firms might not adopt a practice, either because of its relative difficulty or the need to follow a sequence for maximal effectiveness. Extending this logic, we suggest a definitive pathway to sustainability that incorporates three decision-making dimensions:

1. the need to maintain a strategic sequence to build on prior efforts,

2. the relative difficulty of adopting the initiative, and

3. the strategic pay-off over the long-term.

In a useful strategic sequence, the first step toward sustainability is to be employee-oriented-valuing employee diversity, ethics, risk taking and innovation. The strategic HRM literature provides convincing evidence of the benefits of starting here: engaged employees resulting in increased organizational identity and commitment leading to superior performance. A quick review of different rankings of "green companies," such as the recent list by Newsweek, reveals that the top companies are also among the most-admired companies and the 100-best companies to work for. Absent this "employee-first" philosophy, efforts to promote other sustainability initiatives are unlikely to gain traction, creating a lack of coherence in an organization's sustainability strategy. Makower and Pike (2008) coined the term "random acts of greenness" to identify firms that had no internal coherence or strategy when implementing "green" initiatives. This is primarily due to their weak foundation.

The strategic implementation sequence identified in our Stairway to Sustainability model is based on the assumption that successive stages of building a sustainability culture depend on the successful implementation of the previous steps. This provides coherence to the strategy and organizational readiness to implement the next initiative. If a well-thought-out strategic implementation sequence is not followed, the likely result is the "flavor of the month"--leading to the random acts of greenness mentioned previously. The diffusion of sustainability practices as observed in this study as well as other research on successful sustainability implementation, led us to the specific sequence identified in Exhibit 4. Our Stairway to Sustainability framework complements Wirtenberg, Harmon, Russell and Fairfield's (2007) work on the role of human resources in building a sustainable enterprise, by focusing on the "Foundation" and "Traction" stages of their Sustainability Pyramid.

As firms climb up the steps, the relative difficulty of implementing initiatives increases. The assessment of the degree of difficulty includes convincing the relevant stakeholders of the benefits of the focal initiative, as well as the resources required to implement it. Due to their higher adoption rates, there is abundant evidence of the positive effects of early stage initiatives, such as materials conservation (Esty & Winston, 2006). Yet evidence is scarce or the returns unclear as firms take on late-stage initiatives, like conducting life cycle analyses or measuring a firm's eco-footprint. The payback periods on these initiatives may be longer, and the time horizons for returns on investment might be more than the firm generally uses as hurdle rates for new projects. As a result, firms have to base decisions on the cultural and ethical rather than economic rationale.

The impact of a firm's sustainability strategy is indicated by the third dimension--strategic payoffs. As a firm moves up the stairway, there is a greater pay-off in making the firm sustainable. We have evidence of the performance implications of employee orientation and materials conservation; however, the linkages become weaker for other dimensions because of the excessive emphasis on measuring performance concurrently or at best, one or two years ahead. The benefits of the later initiatives are more strategic than financial, long-term than short-term, and as indicated above, the usual decision criteria may not be applicable.

Building a sustainability culture requires the sequential approach suggested here for two reasons. First, there is considerable evidence that the principle of "success breeds success" applies to individuals as well as organizations. Early tangible wins from employee orientation and materials conservation efforts should increase the likelihood of creating a self-reinforcing, virtuous cycle that creates excitement and potency among stakeholders that changes can become sustainable.

Second, successful early initiatives help build organizational capacity for taking on the more challenging late-stage initiatives, increasing the likelihood of both adoption and success.

Implications for Managers. The first implication for executives creating a sustainability culture is that they need to start by creating HR policies and practices that embody becoming an employer-of-choice. Then, they should encourage their technical, scientific and environmental managers to work more closely with human resources to change the ways they handle recruiting, selection, orientation, training, development, performance management and compensation to reinforce sustainability as a core organizational value. They should begin their sustainability journey with initiatives on the lower steps of the stairway, and progress toward the highest level.

The three types of firms we identified will face very different sets of challenges to creating a sustainability culture. Leader firms already have climbed quite a few steps on the stairway to sustainability, and now have to deal with resource constraints to implement initiatives with less clear pay-offs, amid resistance from forces entrenched in the current system. HR managers in these firms are faced with leading deep change, and will benefit by collaborating with other leader firms to identify best practices. They also may benefit by aligning their performance management and reward systems with a comprehensive sustainability strategy. People-focused firms already have taken the first step of becoming an employer of choice and now should focus on building a business case for adopting a broader set of sustainability initiatives and implementing innovative practices to create buy-in and employee commitment. Laggard firms would do well to first focus on the social initiatives (i.e. becoming a great place to work) and then invest in education and training in sustainability so as to create awareness of sustainability issues and motivation.

Limitations. Our sample provides a glimpse into current HR practices drawn from a single geographic region. As such, it should be looked at as the tip of an iceberg. What was highlighted here as both obstacles and solutions may reflect the region's industrial history. Still, we strongly believe that the results provide valuable lessons for all managers. The amount and different kinds of sustainability initiatives and the challenges of implementing provide ample opportunity for further discovery and continued research.

Conclusions

Sustainability starts with a guiding philosophy or strategic vision of achieving profits through people, while minimizing one's impact on the planet. Human resource professionals have a very important role to play in developing and implementing sustainability strategies. The success of every sustainability initiative depends on the extent to which the firm's human capital is knowledgeable, engaged and committed to implementing new initiatives. Recognizing the need for a strategic rather than piecemeal approach to sustainability, the HR function can facilitate, if not lead, the sustainability effort by laying the groundwork, designing systems that help build a sustainability culture, and become the champion of the organization's transformation to sustainability.

Description of Statistical Procedures Used In This Study

Identification of Sustainability Dimensions

We asked respondents to indicate whether or not they had implemented 21 different sustainability initiatives. We subjected their Yes/No responses (coded 1/0) to these 21 questions to an exploratory factor analysis to identify the underlying dimensions. We next used the principal components extraction method with varimax rotation procedure to obtain six coherent factors. Questions that were not loading highly on one factor (factor loading less than .5) or were loading highly on more than one factor were eliminated from further analysis. Descriptions of the six factors, represented by 15 sustainability initiatives, are summarized in Table 1.

Because we used a Yes/No response for each of the initiatives, we computed the score for each dimension by adding the number of initiatives that the responding firm had implemented. For example, the first factor, employee orientation, comprises three specific initiatives: "Value diversity & inclusion"; "Promote ethics & integrity"; and "Encourage innovation & risk-taking." Hence the score for this factor ranged from 0 (had implemented none of the initiatives) to 3 (had implemented all three initiatives). This dimension score was used in all further analyses.

Identification of Distinct Groups

Finally, we used the scores on the six sustainability dimensions to group firms into clusters. We used the K-means clustering procedure to identify groups of firms, and compared the group profiles for multiple solutions (2, 3, 4 & 5 cluster solutions). We also compared these results to cluster solutions derived from an alternative method of clustering procedure (2-step clustering). We sought to identify the smallest number of clusters that best explain the variance in the scores for the six dimensions. A three-cluster solution was identified as the best representation of the data based on analysis of variance results and the convergence with alternative methods. Based on the mean scores on the six sustainability dimensions, we labeled these three clusters of firms as leaders, people-focused and laggards.

References

Barney, J.B., (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.

Barney, J.B. and Wright, P.M. (1998). On becoming a strategic partner: The role of human resources in gaining competitive advantage. Human Resources Management, 37 (1), 31- 46.

Blackburn, R., & Rosen, B. (1993). Total quality and human resources management: Lessons learned from Baldrige Award-winning companies. Academy of Management Executive, 7 (3), 49-66.

Daily, B.F., & Huang, S. (2001). Achieving sustainability through attention to human resource factors in environmental management. International Journal of Operations & Production Management, 21 (12), 1539-1552.

Doppelt, B. (2003). Leading change toward sustainability: A change-management guide for business, government and civil society. Sheffield, UK: Greenleaf Publishing Limited.

Epstein, M.J. (2008). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. San Francisco, CA: Berrett-Koehler Publishers.

Esty, D.C., & Winston, A.S. (2006). Green to gold: How smart companies use environmental strategy to innovate, create value, and build competitive advantage. New Haven, CT: Yale University Press.

Makower, J., & Pike, C. (2008). Strategies for the green economy: Opportunities and challenges in the new world of business. New York, NY: McGraw-Hill.

Orlitzky, M., Schmidt, EL., & Rynes, S.L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24, 403-441.

The Greenest Big Companies in America, (2009). Newsweek, Sept. 28, 34 52.

Wirtenberg, J., Harmon, J, Russell, W.G., & Fairfield, K.D. (2007). HR's role in building a sustainable enterprise: Insights from some of the world's best companies. Human Resource Planning, 30 (1), 10-20.

Robert Sroufe, (Ph.D., Michigan State University) is the Murrin Chair of Global Competitiveness in the Palumbo-Donahue Schools of Business at Duquesne University, Pittsburgh, PA. His research interests include environmental management systems, sustainable business practices, green supply chain management, performance measurement and human resource management.

Jay Liebowitz, SPHR (Ph.D., from the University of Tennessee, Knoxville) is an associate professor of Organizational Behavior & Human Resource Management in the Palumbo-Donahue Schools of Business at Duquesne University, Pittsburgh, PA. His research interests include the role of HR in sustainability, and new product development teams.

Nagaraj Sivasubramaniam, (Ph.D., Florida International University) is an associate professor of Leadership in the Palumbo-Donahue Schools of Business at Duquesne University, Pittsburgh, PA. His research focuses on measurement of sustainability orientation, climate protection strategies & models, and organizational impacts of individual and team leadership.

Robert Sroufe, Jay Liebowitz and Nagaraj Sivasubramaniam John F. Donahue Graduate School of Business, Duquesne University

TABLE 1: SUSTAINABILITY DIMENSIONS (1)

Sustainability Dimension        Sustainability Business
                                Practices (2)
SOCIAL

1. Employee Orientation         * Value diversity & inclusion
                                * Promote ethics & integrity
                                * Encourage innovation & risk-taking
2. Employee Volunteerism        * Support community volunteer
                                  programs on company time
                                * Encourage biking to work & taking
                                  mass-transit

ENVIRONMENTAL

3. Employee Conservation        * Promote conservation at home
                                * Encourage telecommuting
4. Environmental Protection     * Address climate change
                                * Conserve electricity
                                * Reduce pollution
5. Conserving Materials         * Develop "green" products & services
                                * Purchase recycled products

6. Sustainability Measurement   * Establish an internal
                                  sustainability, team
                                * Conduct life-cycle analysis of new
                                  products
                                * Calculate the carbon footprint of
                                  the company

(1) We did not include an economic dimension, as corporate
financial performance is an outcome of social and environmental
practices and not a strategic initiative in and of itself.

(2) The dimensions were identified using factor analysis; an index was
constructed for each dimension by summing up the Yes/No (1/0)
responses to the set of practices that comprised each dimension.

EXHIBIT 1: CHARACTERISTICS OF LEADERS, PEOPLE-FOCUSED AND LAGGARDS

                              Leaders    People Focused     Laggards

Employee Orientation            2.5           2.43            0.43
Employee Volunteerism           0.85          0.68            0.29
Employee Conservation           1.1           0.29            0.14
Materials Conservation          1.15          0.57            0.54
Environment Protection          2.3           0.5             0.39
Sustainability Measurement      1.05          0.32            0.11

Score for each dimension was computed by summing up the Yes/No (1/0)
responses to the set of initiatives that comprise each dimension
(see Table 1 for information on specific practices).

Note: Table made from bar graph.

EXHIBIT 2: ROLE OF HR IN SUSTAINABILITY EFFORTS

                              Leaders    People Focused     Laggards

Facilitating Sustainability
  Efforts                       2.1           1.79            1.19
Leading Sustainability
  Efforts                       1.95          1.5             1.26

Response Scale: 1--To a little extent; 2-- To a moderate extent;
3--To a great extent

Note: Table made from bar graph.

EXHIBIT 3: ROLE OF HR PRACTICES IN SUSTAINABILITY EFFORTS

                              Leaders    People Focused     Laggards

Recruiting                      2.89          2.68            1.78
Employee Selection              2.72          2.52            1.56
New Employee Orientation        3.00          2.41            2.00
Training                        2.41          2.59            1.46
Development                     2.78          2.58            1.56
Mentoring                       2.59          2.42            1.57
Performance Management          2.28          2.31            1.59
Compensation                    2.29          2.16            1.48

Response Scale: 1--To a very little extent; 2--To a little extent;
3--To some extent; 4--To a significant extent; 5--To a very great
extent

Note: Table made from bar graph.