Month: September 2018

Linking Compensation to Sustainability

It is one thing to make suggestions for great changes that will help your company thrive. It is quite another to offer changes that might take years and a lot of money to adopt, or could be more expensive than business as usual. So how do you get people to stick with changes that they may morally approve of but be nervous about when it comes to their bottom line?

One easy way is to hold employees accountable. Now, this can seem like parenting. How am I supposed to get the accounting department to recycle? Not invite them to the company holiday party if they don’t? Maybe. But you can also offer incentives for people to make these changes. The best way to do that is through their compensation. Everyone is concerned about their paycheck, so if you make it worth their while to enact new company sustainability practices, they are more likely to follow through.

There have been a few tech and energy companies that decided instead of giving management fat bonuses for keeping shareholders happy, they would tie some of that bonus money to environmental causes – less greenhouse gas emissions or renewable energy goals, for example. This gives people at the top more incentives to make better choices for the environment!

These incentives can trickle down, too. You can offer incentives to employees for carpooling or taking mass transit, provide compensation for things like hybrid or electric car purchases, or give discounts on health insurance for people who ride their bikes to work every day. It may cost little in the short-term, but policies that help employees reduce their global impact can really add up. Energy and waste reduction especially have great impacts on the company’s bottom line, and it is a great idea to send at least some of those savings back to the employees making it possible.

Another great way to tie compensation to sustainability is by improving workplace safety. Nobody wants to get hurt on the job but everyone wants to hit their performance goals or product quotas. By instead focusing on safety and instituting compensation goals based on safe working conditions, morale improves while workplace injuries and illnesses go down. Managers don’t push their workers past their breaking points, employees don’t stress as much about their production, and the workplace is safer for everyone.

While considering changes like these might make you worry about antagonizing shareholders, know that more and more people are investing ethically. They would rather choose a company that has sustainable practices in the long term, and invest their money into something that doesn’t treat the environment or developing countries in harmful ways. Releasing corporate proxy reports with information about your compensation packages and sustainability goals will go a long way toward establishing trust and providing potential investors with the information they need to make sound decisions.