Succession planning is the latest aspect of business life where the environment, social and corporate governance (ESG) agenda is having a profound impact.
Companies slow to catch on may find themselves at a strategic disadvantage down the line.
HR, succession planning and ESG:
The Carbon Trust reported that good performance across the social aspects of running a business has myriad impacts, from increased brand value (reported by 72% of companies) to reduced shareholder pressure and brand activism (37%).
Around a fifth reported increased valuation. Employees are the driving force of any business, and the issues companies have with attracting and retaining talent, will be increasingly, and intrinsically, linked to valuation.
A common theme at every company I talk to is that workers now want more.
Not necessarily more money, but often a desire for a greater say in the future direction of the company.
Study after study shows that workers favour employers which address the environmental and social challenges of their communities, and they want their own efforts to make a positive impact.
Of course, this is not always easy to hear for those leaders who hail from a different era.
Some feel the tables have been turned, that they are being interviewed by candidates who are emboldened by the knowledge they have attractive offers waiting for them elsewhere.
But when many people now choose who they work for, or buy from, based on the organisations’ environmental, social and governance choices, they cannot be ignored.
Leaders who are nearing retirement often share the same ultimate goals as their aspirational younger team members.
Both groups seek prosperity for all, a just society and a more fulfilling work/life balance, but may use different language to describe those goals. Ensuring ESG-friendly values are not just in place, but also communicated clearly, is crucial.
Many candidates will not even take an interview if the organisation’s ESG credentials aren’t evident to them as they research the company.
If business owners double down on the value of embedding ESG into their strategic plans, they will realise the opportunity they have to empower their next generation of leaders. Diversity in corporate leadership leads to diversity of thought – and that has been noted to increase an organisation’s ability to respond more quickly to market forces.
Tomorrow’s successful leaders will intuitively engage with investors, customers, vendors and the community through an ESG strategy woven inextricably into the organisation’s growth strategy – and they don’t want to be starting from scratch.
For those company founders that want their legacy to continue, this is the only way forward.
They must create opportunities for workers to make an impact outside the walls of the business, and make sure their ESG principles are embedded in their organisation today, allowing them to become tomorrow’s employers of choice.
Mary Tressel is the global leader of ESG for the Moore Global network of accounting, audit and advisory firms