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The human resource function in companies can be crucial to embedding a culture of sustainability
Many companies have worked hard in pursuit of sustainability. The reasons vary, but hard-nosed business objectives are usually predominant. The goals may include savings from energy efficiency or fewer lost-time accidents, increased customer satisfaction derived from shared non-financial goals, or the morale boost that employees get from a stronger organisational commitment to the environment or the community.
In most cases, the drive for sustainability involves finding the overlap between business interests and the needs of society, which we call the sustainability sweet spot (figure 1).
Figure 1: “The Sustainability Sweet Spot”
But even companies that have found profitable sweet spots and are deeply committed to sustainability are often frustrated by the slow pace of progress.
If your company is having problems with sustainability, an unsupportive corporate culture may be to blame. It’s often the chief executive and leaders of the organisation who are trying to move the enterprise in the direction of greater sustainability. In other cases, rank-and-file employees are pushing for a more sustainable organisation. But whether the drive for change comes from the top or the bottom, our research has shown that human resources professionals can have a surprisingly powerful impact in aligning the organisation’s culture with sustainability.
Many crucial functions that affect the socialisation and mind-set of individuals within the organisation – from employer branding, hiring, and onboarding to training, evaluation, compensation, and promotion – are heavily influenced by the HR department. HR is also considered to be the steward of company values, attitudes, and beliefs and often manages the corporate ethics programme and the company’s code of conduct, which shape and embody some of those values and attitudes.
In summarising its latest survey on the role of HR in sustainability, the Chartered Institute for Personnel and Development says: “[HR] is ideally placed to be able to gauge, understand and help change organisational culture, the critical aspect to corporate responsibility that is often summed up as ‘how we do things around here’.”
According to the CIPD survey and the most recent surveys from the Society for Human Resource Management, and the Centre for Organisational Effectiveness at the University of Southern California, HR professionals feel that they should do more for their organisations when it comes to sustainability. HR is thus a powerful, valuable and underutilised resource when an organisation seeks to shift its culture towards sustainability.
The three levels of organisational culture
Edgar Schein, professor emeritus at the MIT Sloan School of Management and widely recognised as one of the world’s leading authorities on corporate culture, defines organisational culture as “a pattern of assumptions, values, and beliefs that shape individual and organisational behaviour”.
Schein identifies three elements or levels of culture, all of which are important in understanding the true culture of an organisation (see figure 2). A company with a strong safety culture, for example, will exhibit a commitment to safety at all three levels.
- What you do: Safety must be observable as part of a company’s artefacts – its behaviour, programmes, processes, rituals, and other activities. Safe behaviour (such as wearing protective goggles when operating machinery) or safety training are evidence of a safety culture – the visible signs or observable actions that an auditor might look for in defining and describing the organisation’s safety culture.
- What you say: Safety must be part of the company’s espoused values, which include explicit statements (eg “safety is our top priority”) as well as strategies, goals, budgets, plans, shared stories and company folklore that incorporate these values and serve to guide the organisation.
- What you believe: Safety must be embedded in the organisation’s underlying assumptions, which Schein describes as “unconscious, taken-for-granted beliefs, perceptions, thoughts and feelings … [that are] the ultimate source of values and actions.”Because these assumptions or beliefs are impossible to observe directly, they may often go unnoticed, even by those within the organisation.
Figure 2. Three Levels of Corporate Culture
When all three parts of corporate culture are aligned, the culture is coherent, effective, strong and able to fully support organisational objectives. But when they are not aligned, it becomes much harder to implement strategy or to reach goals.
Many companies have buried beliefs that are out of alignment or clash with values or behaviour that are designed to advance sustainability. When the beliefs held by employees clash with sustainability, non-believers are likely to resist every step of the way. By contrast, when beliefs and assumptions support sustainability – or any aspect of it such as workplace safety, environmental protection, sustainable innovation, or stakeholder engagement – employees tend to lead the way to the desired results themselves, often devising creative new adaptations that work far better than mandated guidelines or procedures.
To illustrate how Schein’s model of culture works, let’s consider how American Electric Power (AEP) changed its culture to align with its ambitious safety agenda, and contrast that effort to the failure of BP to do the same.
How AEP changed its safety culture
Ohio-based AEP has been supplying energy to American businesses and homeowners for more than a century. Operating in 11 states across the US midwest and southwest under a variety of company names, AEP is one of America’s largest electricity companies, owning nearly 39 gigawatts of generating capacity as well as the US’s largest electricity transmission grid.
In 2004, AEP was averaging three fatalities a year and was ranked in the lower half of the industry in terms of safety. Incoming chief executive Mike Morris decided to make safety the company’s number-one priority and set the far-reaching goal of “zero harm” based on the stated value that “no aspect of our operations is more important than the health and safety of our people”. Although many said this was an impossible goal for a giant utility company, “zero harm” became a leadership mantra throughout the company.
But the path to zero harm would mean overcoming a number of cultural impediments within AEP, especially the following taken-for-granted beliefs:
- The assumption that the decision whether to follow routine safety procedures was up to the individual employee, especially when it came to senior line workers, who supposedly knew which rules were important and which could be safely ignored.
- The corollary that co-workers, especially junior linemen, should not comment on what their seniors were doing when it came to protecting themselves from harm.
The company identified these underlying assumptions through confidential sessions with workers. Ken Frazier, AEP’s vice-president for safety and health, recalls a typical worker comment: “I got three years, this guy’s got 30 years. Who am I to tell him he’s not doing it right? I don’t want to suffer that wrath.”
Frazier says: “We thought that people would follow safety procedures and stop the job if they thought it was unsafe – that’s what the surveys all told us. But it wasn’t true, because of the existing culture where the senior lineman was the man, and you don’t question the man.”
To change these assumptions, the company began to publicly recognise employees who dared to challenge older colleagues when they noticed corner cutting on safety. Company leaders publicly praised these safety champions, feeding both formal and informal communication channels with news about their positive behaviour – while also praising the older workers for their willingness to work collaboratively with junior employees on safety.
Eventually, some of the older linemen began to acknowledge that this was a safer way to operate, and the desired safety behaviour began to take hold. The company then began to raise the bar: in some egregious cases, those who stood silently by while safety rules were broken were disciplined, along with the violators themselves.
AEP thus worked deliberately to alter the corporate culture by challenging and changing the underlying assumptions that had impeded safety efforts.
AEP leaders eventually discovered a third and even more deeply rooted anti-safety assumption: the belief, prevalent throughout the electric utility industry, that injuries and fatalities are inevitable. Ken Frazier says: “Everybody knows this is dangerous work, so people came to believe that if we do this work, somebody is going to get hurt. We wanted a culture that does not accept that as part of the business.”
To reverse this dangerous assumption, senior safety engineers and company leaders began to present data to at-risk employees showing that it was possible to do their jobs without injuries, gleaning examples from the US Bureau of Labour Statistics, the National Safety Council, and the Edison Electric Industry.
But the most persuasive evidence came from within AEP itself. The company aggressively began to profile employees who’d filled risky jobs for decades and had never had an injury or even a “near-miss”. Frazier explains the impact this has had on AEP employees: “Recognising exemplary performance is the biggest part of our safety programme … What matters is the positive message that people don’t have to get hurt. It makes people say, ‘If he can do it, then why can’t we?’”
AEP’s shift to a zero-harm culture isn’t nearly complete. But the company has succeeded in changing its culture to support that goal.
Figure 3: AEP before changing employees’ underlying beliefs
Figure 4: AEP after changing employees’ underlying beliefs
The company also reinforced the culture change by embedding safety standards in performance, pay, and promotion decisions and in its value statements, thus “working the culture” at all three of Schein’s levels – saying, doing and believing.
Now, safety adherence at AEP, which used to earn percentage ratings in the 80s and low 90s, is typically in the high 90s. In 2011, AEP completed its first five-year Path to Excellence with a recordable injury rate of 1.00, just shy of its 0.97 goal. From the lower half of the electric utility industry in safety in 2004, AEP has moved into the top quarter of the industry on safety and is now aiming to reach the top 10%.
AEP’s safety programme has also become an important sweet spot for the company, yielding significant financial gains along with the benefits to people. Since 2004, workers’ accident compensation costs have dropped from about 1.1% of payroll to less than 0.7%, in 2011, saving AEP some $30m.
Safety failures at BP
In contrast to AEP, BP represents a classic case of corporate culture defeating the efforts of its leaders to make change. The British energy company trumpeted its progressive environmental and safety commitments for years, only to find itself at the centre of a series of ecological and workplace incidents from 2000 to 2010, culminating in one of the most serious industrial disasters in history – the 2010 Deepwater Horizon explosion and oil spill in the Gulf of Mexico.
BP is one of the world’s largest oil and gas producers, with annual revenues of more than $375bn and more than 80,000 employees in more than 70 countries (2011 figures). Although BP was for a long time the darling of the corporate social responsibility community, it appears that the culture of the company was not aligned with its bold statements, goals, and initiatives related to sustainability. The result was confusion, ambiguity, uncertainty, and misunderstanding that ultimately proved fatal to workers, harmful to the environment and bad for shareholders.
John (now Lord) Browne, the company’s chief executive from 1998 to 2007, led the rebranding of the company once known as British Petroleum into “Beyond Petroleum” and personified BP’s public embrace of sustainability. The company also made specific commitments to improve safety for BP workers, repeatedly stating that safety was BP’s “number-one priority” and declaring that the company’s values included the “ultimate goal … of no accidents, no harm to people, no damage to the environment”.
Yet from 2000 to 2010, while BP’s executives were proudly trumpeting the company’s public commitment to worker safety, BP was issued an astronomical $109m in penalties by the US Occupational Safety and Health Administration for numerous safety violations, including the Texas City oil refinery explosion in March 2007, which resulted in the deaths of 15 people and injuries to 170, considered the worst workplace accident in the US since 1989.
These amounts don’t include the penalties and other costs related to BP’s latest and largest environmental and safety catastrophe, the Deepwater Horizon disaster in April 2010 that killed 11 crew members, injured 17, and produced a gigantic uncontrolled oil spill that eventually poured more than 900m litres of oil into the Gulf of Mexico.
The company was forced to sell more than 20% of its assets, valued at about $38bn, to pay for the penalties, fines and accident-related costs and claims, which are now pegged at a total of $42bn. The company’s stock price dropped dramatically from a high of $60.98 on 15 April 2010 (just before the spill), to a low of $26.75 on 28 June 2010, reducing shareholder value by more than 55% and putting the company itself at risk of liquidation.
How did this disaster happen? The first official US federal government report issued in response to the disaster, “Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling” (January 2011) hit the nail on the head when it talked about the “culture on the rig”.
Despite BP’s proclaimed commitment to safety, the underlying assumptions of the workers on the rigs and in the refineries were to cut costs and increase production. Even a decade-long string of expensive, high-visibility safety and environmental accidents did very little to change those long-held beliefs and assumptions. Hence the chilling comment by one BP engineer in the wake of a near-fatal accident on a North Sea drilling rig: “The focus on controlling costs was acute at BP, to the point that it became a distraction. They just go after it with a ferocity that is mind-numbing and terrifying. No one’s ever asked to cut corners or take a risk, but it often ends up like that.”
BP demonstrates painfully that it isn’t enough to have safety – or any aspect of sustainability – enshrined in value statements or even embodied in policies and procedures. Two out of three isn’t good enough – especially if the unaligned cultural element is the beliefs or underlying assumptions of the employees. For organisational culture to fully support safety or sustainability or any other organisational change, employees need to believe in the espoused values and to let go of any contrary underlying assumptions.
Creating a culture that supports sustainability
Leaders in HR, sustainability and other business areas can learn some valuable lessons about culture change from comparing the approach to safety of AEP and BP. Here is some guidance to follow if you want to align your culture to support your sustainability goals:
1. Work on your top priorities first. Don’t try to change everything at once. AEP’s top priority was to improve workplace safety and the company worked to change the culture to support it. Later, the company moved to change the culture to support other priorities, including stakeholder engagement and an increase in outward focus. Decide what’s most important to change and get that done.
2. Set goals first and work to change actions around them before addressing culture change. AEP set its goal of zero harm and worked to change employee actions. If you can get the desired behaviour without having to change your culture you’re that much further along. Beware, however, of employees who hold contrary underlying beliefs and are just going through the motions. They could be creating problems, as was the case at BP.
3. If you can’t embed sustainability or make progress, look for underlying assumptions that may need to be changed. When its safety programme failed to make sufficient progress, AEP used confidential, in-depth surveys, employee meetings and countless informal conversations to get a realistic look at its safety culture. The company discovered underlying (and almost universally held) assumptions of “don’t question the man” and “injuries are inevitable,” revealing why a strong leadership commitment to the goal of zero harm accompanied by a highly rated safety training programme weren’t enough to produce real change.
Every organisation is different, but if you’re looking for oppositional underlying assumptions, we suggest you look at middle managers. They are frequently the cultural roadblocks to sustainability, insofar as they have a deeply ingrained commitment to the traditional culture of the organisation. Dealing with the middle manager challenge may also lead to a moment of truth for senior leaders: are they committed to real, sustainable change, or are they saying one thing while accepting and rewarding something else? Either way, the oppositional assumptions need to change for the programme to succeed.
4. Show, don’t tell. While executives at BP talked about the importance of safety, AEP modelled it, by highlighting AEP employees in risky jobs that had gone decades and entire careers without harm. Demonstrating the change you want adds credibility and usually has a far greater impact on the average employee than any amount of exhortation or encouragement.
5. Culture change sometimes requires personnel change. AEP’s safety programme floundered for a time, partly because the executive in charge lacked the personal commitment – and the cultural grounding – required to carry it out convincingly. The company put new safety leaders in place and changes in attitudes and behaviour began to happen.
Culture change is difficult. Many companies claim they have a “learning culture,” a “service culture,” a “safety culture,” or even a “culture that supports sustainability,” without ever having analysed their culture, much less tried to change it.
Because corporate culture wields enormous influence over the behaviour of employees, it’s crucially important for any organisation that wants to transform itself around the concept of sustainability to ensure that the culture is fully supportive of the new array of values, capabilities, and activities involved. HR can play a vital role by helping other business leaders to understand the importance of cultural factors and educating them on the steps needed to launch the kind of cultural change that may be required.
Readers should note (1) Andrew Savitz is an adviser to AEP and (2) BP were offered the opportunity to comment by the writers of this essay, but the company declined.
This is the first in a three-part series on the role of human resources and employees in advancing sustainability within their organisations. The second and third instalments will focus on employee engagement and organisational capacity, focusing on the partnership that ought to exist between HR and those working on sustainability.
The articles are based on the new book, Talent, Transformation and the Triple Bottom Line: How to Leverage Human Resources for Sustainable Growth, by Andrew W Savitz with Karl Weber (Wiley, 2013). For more information on the overlap between human resources and sustainability visit www.savitzreport.com.
 As students of management will recognise, much of our discussion of corporate culture throughout this chapter is based on the insights of Edgar H Schein as described in his many books on the subject, including his well-known introductory work for practitioners, The Corporate Culture Survival Guide, New and Revised Edition (San Francisco: Jossey-Bass, 2009), 4.
 Schein, Edgar, Corporate Culture Survival Guide, p21.
 Ken Frazier interviewed by Andy Savitz, November 7 2011.
 Ken Frazier interviewed by Andy Savitz, November 7 2011.
 Ken Frazier interviewed by Andy Savitz, November 7 2011.
 American Electric Power, Transition, Accountability, Performance: American Electric Power 2012 Corporate Accountability Report, 2012,
 Maura Ciccarelli, “BP’s Bubbling Cauldron,” Human Resource Executive Online, March 1, 2011,
 Quoted by oil industry blogger Oberon Houston in an email message to the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling report Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling.Andrew Savitz business strategy human resources Karl Weber sustainability