November 22, 2010
To remain viable in the future, companies must focus on sustainability and pay attention to three key components of the sustainability puzzle: people, profit, and planet. Safety also is an important part of this puzzle.
During the first quarter of 2010, I was privileged to speak at the Fabricators & Manufacturers Association Intl.’s Annual Safety Conference event in the Chicago area, which featured many presenters and some really great discussion.
The obvious macro topic of the conference was safety, but as the FMA Safety Council was in the early planning stages of this annual event, some heated exchanges occurred between members about specific topics that really have a major impact on business in today’s world. (It is important to note that the Safety Council comprises a diverse group of members with diverse competencies in the manufacturing and insurance industries.)
The council arrived at one conclusion: During this time of economic uncertainty, sustainability is the key issue in every business.
Different entities look at sustainability from different perspectives. Companies may look at it from a corporate point of view and countries from a national viewpoint. Individuals obviously look at it from the individual point of view. What is it? In a nutshell, sustainability is the ability to survive and thrive. Mediocre companies think it suffices to survive. The companies of tomorrow must not only survive but thrive. And no company survives and thrives unless it makes safety a priority.
After much discussion, the council decided to design a model that embraced the topic of global business sustainability. As we conducted our research, we found that no single concrete business sustainability model exists, and the global marketplace desperately needs one.
My colleagues and I agreed that there is more than one piece to the sustainability puzzle and that our business model must address three key areas: people, profit, and planet.
Are you hiring the right people to maximize sustainability efforts in your organization?
At the conference, I heard attendees from many companies say that maximizing sustainability was as simple as hiring the right people the first time. No doubt, we must do our collective best to hire the right people, but as my good friend and colleague Brian Roberts at CNA pointed out: What happens if a person reaches a point where he can no longer perform his job safely and at the same level?
Change is inevitable. I am not downplaying the necessity of hiring good people; I am simply saying that getting them in the door is only the first step in a long process.
I have heard CEOs say, “I hired the best MBA I could find; why do I need to spend additional time training him? He has already spent the greater part of his life learning or in school.”
Sadly, I also have heard CEOs say, “I wish I could unlearn the guy so that we could teach him our business.”
I cannot overstate the value of the individual in your companies. You must hire, develop, and train the right people. You also must make sure that your people-management system detects problems and offers immediate short-term corrections until long-term corrections can be verified and implemented.
A company will not succeed if its employees are not perceived as valuable. Remember that the people component of your business model also extends to your customers.
Businesses and companies do not make ultimate decisions. People make decisions. Sustainable companies will never neglect the power of people — internal or external.
In September I was in Switzerland as part of an innovations experiment within our company. We had many hours of classes, and just before lunch one day our CEO gave us a piece of brutal enlightenment. He explained how our company would fail without innovations. This was an important point, but his next statement resonated in each of our minds well after he left the room. He said, “In the bloody end, it is about ROI.”
Sustainable companies never forget this concept. How can we pay our people without profit?
Hearing risk managers dancing around the connection between safety and profitability is sickening. I often am asked how safety is linked to corporate sustainability and profitability. I answer with the same question every time: How is safety not connected to corporate sustainability and profitability?
I challenge you to list five reasons a company can neglect safety and still remain sustainable and profitable. I also challenge you to consider the differences in “short-term profits (achieved by bypassing safety)”and “corporate sustainability.”
It’s my belief that corporate sustainability is not possible in the absence of safety. Show me a company that has the right people and has developed a positive safety program, and I believe I can show you a company that has a great potential to be profitable.
On the other hand, mediocrity within the ranks and a lack of commitment to the sustainable safety culture will result in reduced profits, period. Business is especially tough now, and you simply cannot be both profitable and unsafe.
The world is becoming smaller. What we do in North Carolina now has a direct impact on South Carolina. An oil exploration company with headquarters in Europe can directly impact the lives of millions of people in the U.S. Industrial waste and carbon emissions in one country can directly impact the world’s climate.
Sustainability is very important to our planet. Are we using our resources efficiently? Are we taking more from the earth than we ever intend to give back? It makes me sad that most companies have only recently realized the great importance of wisely using our precious resources.
You may ask how your company’s sustainability efforts could ever have an impact on your employees or profit levels. Just look at the cap and trade legislation being proposed in the U.S. Global legislation is being pushed not only in the U.S., but also in countries around the world with the goal of forcing companies to reduce their carbon footprint. This is a global macro-trend that will not disappear. Smart companies will heed the handwriting on the wall and begin taking steps to reduce their energy consumption or find alternative green sources for the energy that they do consume.
U.S. manufacturing has consumed vast amounts of resources and energy for many years, but the world is changing, and this practice is coming to an end. Sinking financial markets have caused many people to question the lavish excesses not truly required to be sustainable. During the 1960s, the gas-guzzling Chevy was the American way; now this would be considered taboo. The prudent individual now brags about his family car that has the ability to travel 40 miles on 1 gallon of fuel. Remember, our planet is an entity with limited resources. We must use them wisely if we are to remain sustainable.
Companies that refuse to employ sustainable practices that benefit our planet run the risk of losing their people—both employees and customers—and profit.
This article is a very broad overview of how people, profit, and planet have an impact on your business. It is intended to provoke your thoughts and inspire you to look at each piece of your company’s puzzle. Every viable company of the future must make people, profit, and planet part of its sustainability equation.