Fuelled by globalization, technological change, population growth and shifting demographics, sustainability mega-forces will affect the ability of business to succeed and thrive over the next 30 years.
With the global population expected to balloon from 7 billion to 9 billion people by 2050, companies will need to reinvent themselves to secure their access to resources and the social license to operate and grow.
Collectively, humanity is already consuming 1.5 times the resources that can be renewed in a year. Just as concerning, the income inequality gap continues to widen, further threatening social cohesion.
Businesses that anticipate, plan for and help alleviate these trends not only will build their competitive advantage, but will contribute to building a viable society for all.
The catch: For business to prosper in this new global context, current and future leaders will need a host of new skills and competencies.
Leading companies will retool their talent management systems to reflect the new competency imperatives to position their firms for future success. They will define the mission-critical skillsets and mindsets leaders need to create and protect value for the firm and society in the future, and embed these in their organizational competency models.
Competency models are a key strategic organizational tool to identify, develop and deploy top talent to drive high performance and realize business results. They define the performance and behavioral expectations — the skills and the knowledge — which contribute to business success.
Leading companies use competency profiles to inform their talent management strategies, including: recruitment and hiring; onboarding; training; career development planning; job descriptions; performance management; compensation; and succession planning.
Well-managed companies upgrade their competency profiles as a result of mergers, a change in business model or a new strategic direction. But even if none of those particular dynamics is in play, the changing business environment necessitates a competency model update.
In the past, organizations operated within a fairly predictable, stable system. Today’s organization functions within large and complex interdependent networks, requiring it to be more external and forward-looking.
To foster effective decision-making in the new business reality, traditional leadership skills such as analysis, relationship-building and change leadership need to be enhanced. Business leaders will need proficiency in managing complex systemic change and organizational transformation and more advanced cognitive, relational and emotional capacities.
Addressing the competency gap
Many executives believe there is a sustainability skills and knowledge performance gap in their organizations, as revealed by the Ashridge Business School in a 2008 global study conducted with 194 business leaders.
More than three-quarters of respondents believed that developing sustainability skills and knowledge in their organization is important, while fewer than 10 percent believe their organization is doing this well. They also think business schools and professional membership bodies should be delivering sustainability education and training, but few are doing this effectively.
While much has been written and said about this competency gap, there is a lack of guidance on how to address it through organizational competency models.
A review of literature published over the past 10 years by HR and corporate sustainability consultancies, sustainability business networks, management experts and academic institutions identified the key competencies deemed critical to drive high sustainability and thus organizational performance.
The research formed the basis of a new report, “Sustainability Talent Management: The New Business Imperative — Five Sustainability Leadership Competencies for Your Competency Model,” which outlines the top recommended competencies regarded as essential for business leaders to steer their organizations through the dynamic sustainability terrain of the coming decades.
It builds upon a companion study that examined corporate social responsibility (CSR) criteria boards should employ in CEO recruitment and succession planning.
What are the key sustainability leadership competencies?
The five sustainability competencies — three skills and two knowledge areas — which companies should add to their existing leadership competency models to position the firm for future success include:
These five competencies are highly interwoven: one set of behaviours reinforces another set, creating a virtuous circle whereby one competency enables and enhances the others in a mutually beneficial fashion.
The competencies and their interdependence is illustrated in the diagram included at the top of this article, and forward-thinking companies would be wise to consider adapting them to their existing leadership profiles.
Practiced together, they will build strong leaders, teams, organizations and societies and position the business for success over the medium to long-term.
The business benefits of doing so include: better ability to anticipate and manage risks; increased innovation and opportunity identification; early access to new markets with sustainable products and services; enhanced problem solving and more effective decision-making; greater ability to respond to changing economic conditions; and improved employee attraction, retention and engagement.
Organizations that recruit, select, develop, incentivize and deploy talent with these characteristics not only will reap business benefits, but also create healthy workplaces, resolve personal-commercial tensions and realize more harmonious communities and societies within the ecological carrying capacity of the planet.
These competencies do not necessarily define what makes people and firms successful today. And what made leaders successful in the past may not equip them to be effective in the future.
They anticipate, however, the talent investments companies should make to cultivate commercial and social success over the next 10 to 20 years.
While change starts at the top and requires vision, everyone has a role to play: Boards, executives, sustainability managers and HR professionals are encouraged to adapt them to their competency models and use them to select, develop, deploy, reward, recognize and promote leaders.
As well, professional associations, management education and business schools should consider their role in equipping future leaders with these competencies.
HR, talent and learning and development professionals can take the first step by identifying gaps in their current approach to leadership development. Then build these leadership qualities and skills to enhance the talent pipeline and develop the next generation of leaders and the organizational capacities.
Doing so will set the course toward transforming a lofty goal into a business imperative and a sustainable future for all.