Agility: The New Core Competency for EHS and SustainabilityFeb 5th, 2011 | By Scott Nadler | Category: Environmental Management
For years Environmental, Health, and Safety and Sustainability (EHSS) leaders have periodically reviewed their strategies to make sure they are aligned with “the business” of their company.
That’s no longer good enough. Increasingly, the business itself is evolving quickly. It’s changing its organization, structure, and focus. It’s a moving target. That’s pretty tough to align with. To make the situation more challenging, in some companies there are multiple targets for alignment, as different business units move in different directions.
Now, EHSS leaders have to develop the core competency of agility — the ability to adapt continuously and flexibly to
- Company changes, including what the company is, who is in charge, and what ownership and executive management want. Some of these changes can be world altering, such as going from being a publicly traded company to one owned by a private equity investor, or from being a holding company to being a single-focus company.
- Business shifts, which may lead to changing EHSS expectations. Businesses expanding into services have different needs than those that are manufacturing products. Similarly, businesses expanding into emerging markets have different needs than those rooted in mature markets.
- Organizational changes, including where you report in the organization. Life is very different if you report to a risk-managing chief counsel, an internally focused chief operating officer, or a market-oriented business unit vice president.
Traditionally, neither EHSS organizations nor programs nor management systems nor staff (nor leaders!) have been developed with agility as a core competency. (The big EHSS challenge used to be “management of change.” Now, it’s “change of management”!) All of these have to be looked at with fresh eyes to see how EHSS can function effectively and learn to be more flexible, more adaptable — and more agile.
Signs of Change
All of these changes were taking place before the recession, of course. Now, though, the pace is faster and the changes are more brutal. The resistance to change is lower. The market is more demanding. Emerging markets are moving more quickly. Mature markets have lost their margin of error and see no signs of it coming back. And the financial markets are less patient with everyone.
The indicators of these changes show up in many different places:
- In market data within companies. These data show double-digit growth in markets where companies have the least experience and comfort but a decline in the mature home markets. (See Scott Nadler’s EHS Journal article “Geographic Mismatch: Coping with Dislocation in the Global Economy” for more information.)
- In the business section of the newspaper (or its on-line equivalent). Within one recent week in Chicago, papers reported changes in locally based, multi-billion-dollar, publicly traded firms that included a packaging company’s takeover by a New Zealand–based private equity firm, a holding company’s split into three companies, a technology company’s split into two firms, a consumer brands icon’s potential acquisition by a multinational firm from Brazil, and shake-ups at two major pharmaceutical–health care firms.
- In your e-mail inbox. There are notes from colleagues looking for new opportunities, notes from headhunters looking to fill new corporate sustainability jobs, and cheerful reminders such as one from LinkedIn noting that “42 of your connections changed jobs in 2010.”
- In the increased tension between internal and external expectations. Increased transparency and public attention drive external stakeholders to expect consistent, enterprise-wide answers. Increased internal and market changes drive leaders within the business to demand diverse, business- and region-sensitive solutions. EHSS leaders must constantly pivot between external “black box” expectations and internal customized demands.
The result is that it’s harder than ever to keep aligned with the business—and to get and keep business leaders’ attention.
How to Create EHSS Agility
Agility in EHSS Strategy
- Understand and fit with the business strategy. There are groups and processes within your company that are looking forward, anticipating opportunities and risks for the business and plotting new directions. Do you know what these processes are? Do you know how they assess and incorporate EHSS issues?
- Understand and fit with the business objectives. Focus on opportunities and risks for each major business. Understand where and when the “pinch points” might occur and avoid them.
- Focus on top-line growth. Costs have been squeezed by years of steady cuts, followed by the Great Recession and 18 to 36 months of extreme budget cuts. While no company is willing to let costs float upward again, few business leaders believe they can affect their bottom line, share price, or careers by more cost cutting. Therefore, the name of the game is top-line growth: what can companies do that will produce step-changes in revenues (without eating up all of that revenue with new costs)? How do EHSS issues support or hinder that growth?
- Understand the difference between values and strategies. Know the core values that you believe should persist through changes in strategy, fortunes, and people. Know which ones you are prepared to fight for.
- Minimize consistency rather than assuming that more consistency is better. Be very strategic about which programs and requirements need to be globally consistent, which need to have some variability but still be comparable across business and geographic boundaries, and which need to be free to vary widely (while still being communicated for governance and learning).
Agility in EHSS Management Systems
- How comprehensive is your EHSS management system? Is it still designed primarily for owned and operated fixed sites, or is it truly designed to address the infinite variations of joint ventures, distributors, contract operators and manufacturers, remote and mobile operations, and services provided in customers’ facilities?
- Is your system simple or complicated? Is it based on “12 elements” like some, or on 72 principles and 270 elements, like the systems of some long-gone companies?
- Is your system robust? How has it fared over the last few years of growth or perhaps shrinkage, new acquisitions, and other changes? Has your management system helped you manage through these changes?
- Have you minimized adding new processes? If old processes are not doing the job, seek to inject new content into existing business processes before replacing them. Adding new processes on top of existing processes should be a distant third choice.
Agility in EHSS Organizations and People
- Keep your operations lean. Large organizations adapt less quickly—and become attractive targets for wholesale reductions.
- Develop real business skills—not just at the top but at every level of the organization.
- Focus more on communication skills and processes. EHSS work is less about control and more about influence. That requires being able to communicate effectively with the business in the language that matters to each business.
- Deploy your people flexibly. Train and develop staff to play double roles, both as subject-matter experts and as internal customer relationship managers with key businesses and functions.
Personal Agility in the EHSS Leader
- Update your network periodically and keep it relevant. Expand it to include business leaders, especially in marketing and sales roles and in growth markets. Recall the discussion above of strategy processes and groups in your company. Do you know who these people are? Are you involved in their conversations?
- Keep your old network, but with lower investment of your time. You never know who’ll come back around and may become much more relevant tomorrow.
- Know and update your elevator speech. Have a clear, simple explanation of your priorities and your value to the business. Be able to present it in conversation, with no PowerPoint or props. Keep it current.
Prepare to be Boarded!
The best way to stay agile is to be ready for change. Don’t wait to react.
Imagine you woke up tomorrow and found that your company had just been sold. Your CEO and your boss took attractive packages and disappeared. You are on your own facing new owners who don’t know you, your company, your accomplishments, or your programs. Assume they see their options as eliminating your entire function or only half of it. What would you say? What would you propose? What would you defend? What would you give up? What would you highlight? What might you even suggest should be started new or expanded?
Agility is being ready for that moment every morning. On any given day, dozens of different situations short of a takeover could still require you to answer these questions. Or, if you’re ready, they might give you opportunities to propose changes without waiting to be asked.
About the Author
Scott Nadler is a partner in the Chicago, U.S.A. office of Environmental Resources Management (ERM). He helps senior business managers identify and implement the role that environment, health, safety, and sustainability should play in their businesses. Mr. Nadler speaks and writes on a number of EHS and sustainability topics. His recent presentations include “Citizenship & Sustainability as a Vital Component of the Strategic Planning Process” and “The Corporate Governance and Sustainability Landscape” for The Conference Board. Mr. Nadler’s publications include “Leading from Below,” with James Kelly, in The Wall Street Journal (March 2007); and “The Financial Climate: Survive and Thrive,” with James Clayton, in Safety and Health Practitioner (January 2010). He is a Lecturer in Social Enterprise at Northwestern University’s Kellogg School of Management, and he also teaches an undergraduate course at Northwestern.
Image: Water Droplets by Claudia Meyer, Paris, France.