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Home arrow Management arrow Strategic Management in the 21st Century. The Operational Environment

Top Management Commitment

Top management commitment in stressing environmental and social programs positively influences employees in the organization. Putting emphasis on areas other than the financial bottom line signals to the organization that these social goals are equally valid, and offers opportunities for creative programs and integrative solutions that work to meet the triple bottom line. Lack of emphasis, on the other hand, communicates apathy toward social responsibilities and an unwillingness to devote time or effort into anything other than maintaining the profit margin of the organization. Industry leaders in creating social and economic value demonstrate their commitment in the following ways:

Top Management Commitment

• Does management emphasize environmental and social programs?

• Has the company developed a formal policy statement that addresses environmental practices?

• Has the company developed a formal policy statement that addresses social issues (i.e., human rights, diversity)?

• Does the top management provide the resources required to meet environmental/social goals or objectives?

• Does the top management seek periodic audits of environmental/ social activities?

The CEO, senior management, and the board of directors express the company's position on social and environmental issues through annual reports, letters to shareholders, and corporate mission statements. A formal policy statement demonstrates a public commitment by an organization to take responsibility for their social and environmental imprint. It communicates to members of the organization that environmental and social efforts are an organizational priority, positively influencing the corporate culture and encouraging individuals to present solutions. For example, the CEO of P&G states in a letter in their 2011 Sustainability Overview report:

The opportunity to make a difference that lasts generations—whether through our brands and services, our operations, our environmental sustainability efforts, or our philanthropy—is what attracts people of remarkable character and caliber to P&G. We are committed, together, to improving life every single day. We're proud of the progress we make year after year, and we are inspired by the challenge to do more. (Robert A. McDonald, Chairman of the Board, President and Chief Executive Officer)39

Incorporating environmental and social goals into the corporate culture through the positive communication of top management is essential, but without monetary and human resources, such communication becomes irrelevant. Of the top management questions in the survey, this is the one topic where the majority of all businesses see room for improvement. In particular, smaller companies view any programs beyond regulations for social and environmental responsibilities as an expense that would inflate costs and lose customers. One company states, "If you're smart about balancing, then you can really drive most of the way there without incurring much cost, but if you're not careful you can spend lots of money and not get any real return out of it. You can be a good corporate citizen but you won't be around. That's not sustainable."

Articulating a sustainability strategy entails leadership to develop measures to identify and manage the social and environmental effects of corporate activities in order to gain reputational advantages. For example, the auditing of these activities by an outside agency can provide corporations with expert measuring techniques and perspectives that benefit from experience with similar corporations. Top management encouragement of, and cooperation with, such practices is crucial in order to properly examine how the company environmental and sustainability efforts are improving over time. Consequences of not delivering on promises of sustainable business practices can be long lasting. As Meyer and Kirby state, "When the public perceives that a company is producing an externality that it could take greater responsibility for but isn't, that's when mechanisms of compulsion are brought to bear, from regulation to riots."40 Thus, top management emphasis on social and environmental issues through formal policies, resources, and auditing is a critical success factor for implementation of a sustainability strategy.

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