The Culture of Responsible Decision Making at Melhema, PART 2
The resulting report of the management survey assesses the responses based on the two previously mentioned elements of responsible decision making.
Author: Ali Abou Melhem
Please click here to read PART 1.
Analyzing Survey Results
The resulting report of the management survey assesses the responses based on the two previously mentioned elements of responsible decision making:
- Leadership Culture
- Corporate Environment
These elements are described below.
This part of the assessment looks at leaders’ dedication to sustainability topics. We try to understand how visionary the leaders on sustainability issues are, and how knowledgeable they are on those topics. The term "leaders" refers to the senior management of Melhema, including the Managing Board. On the other hand, we asked the sustainability people the same questions with respect to the management of local units. We then compare the results.
Seventy-one percent of the sustainability people believe that leaders at Melhema have a clear vision for sustainability. This is compared to 65% for management in local units. On the contrary, local units have seemed to have a better appreciation of the management’s understanding of sustainability topics (68% for senior management vs. 77% for local units). One possible explanation for this finding comes from stakeholder interviews conducted after the survey; leaders at Melhema usually set strategic goals and seek major changes without necessarily getting involved in the implementation of the strategy, such as, setting a long term target to become carbon neutral by 2030. On the other hand, regional management is closer to operations, provides the know-how for reaching the target, and, therefore, becomes more knowledgeable of its challenges.
With respect to challenges, our survey collected several thoughts with respect to advancing the sustainability agenda and to integrate sustainability into decision making. We observe that local units are challenged with resources availability, such as headcount, budgets, and the capacity to work with sustainability, on top of other duties.
Sixty-four percent of survey respondents believe that Melhema’ leaders take a long-term view when making decisions, and 65% believe the leaders of Melhema have a clear business case for pursuing the goals of sustainability. This shows a positive view of leadership which is supported by the example of the decision to go ahead with the carbon neutral project, as discussed earlier, which had demonstrated a very good business case for the organization.
Melhema scored less well on two other aspects of decision making. Only 38% of survey participants agreed that Melhema’ leaders are willing to take measured risks in pursuit of sustainability, and, linked to that, 47% agreed that the leaders of Melhema integrate sustainability into their decision-making.
One question that comes to mind is: What is Melhema trying to achieve by addressing sustainability issues? The general opinion of the sustainability people reflects high commitment to the triple bottom line approach, with 62% suggesting that Melhema is trying to create economic, social and environmental value. On the contrary, 28% believe that Melhema is only trying to create economic value for the company and its shareholders. On the other hand, 7% believe that Melhema wants to contribute to solutions towards critical societal challenges. Looking at local units within Melhema, the survey reveals that 53% of them focus on sustainability engagement in operational matters such as risk mitigation, communication, and business related topics; 45% focus on social topics.
The survey also reveals that 68% of participants believe that Melhema adopts an active approach to sustainability, while just 10% believe that Melhema implements a proactive approach. To the contrary, 21% believe that Melhema is reactive in its approach to sustainability. Similarly, 21% believe that Melhema’ level of engagement with sustainability is average, while 79% rate Melhema’ level of engagement to be above average.
At organizational environment level, the survey shows that 71% believe that commitment to sustainability is essential to the company's success in the long-term. This reflects a very high level of awareness of the importance of sustainability for the future of the company. Also, 81% acknowledge that Melhema is a company that rewards innovation. Moving to operational level, 71% of survey participants said that Melhema has embedded sustainability into its operating procedures and policies, but only 38% believe that the company has integrated sustainability-related goals into the performance management system. Moreover, we observe that as little as 16% believe that rewards and compensation are clearly linked to the organization’s sustainability goals. Additionally, only 33% believe that employees and mid-level managers at Melhema integrate sustainability in their daily operations decision-making.
Results of the survey show that Melhema is doing well on some issues, including a clear vision for sustainability on behalf of leaders. The organization rewards innovation and has embedded sustainability into its operating policies and procedures. Moreover, most people, according to survey participants, believe that sustainability is critical to the company’s long-term success.
Issues where “Responsible Decision-Making” was challenged include linking sustainability to rewards, compensation for the organization’s sustainability goals and integrating sustainability-related goals into the performance management system. Some key leadership behaviors were seen by respondents as less supportive of sustainability, such as leaders’ long-term views, their integration of sustainability into decision-making and risk-taking in pursuit of sustainability.
Local unit management scored a little higher than Melhema’ leadership with respect to having a good understanding of sustainability. Regional management is apparently closer to operations and provides the know-how for reaching targets, therefore becoming more knowledgeable of its challenges. On the other hand, local units are challenged with resources availability such as headcount, budgets, and the capacity to work with sustainability on the top of other duties.
Advancing In Sustainability
In order to advance its sustainability performance, Melhema may consider boosting responsible decision making along all its leadership tiers. But not all decision makers are the same; they are not all driven by the same motivations, and their decisions are rather driven by their leadership styles. In other words, there is not one recipe for all decision making processes.
We, therefore, classify our recommendations into four different categories: recommendations for all employees; recommendations for team leaders and managers, recommendation for regional leadership, and recommendations for corporate leaders.
Employees in general see the world through their own eyes and, consequently, evaluate the impact of decisions according to their own needs. Usually this type of decision making is uncommon at the leadership level, but could be more frequent at employee and operational levels of the organization. For Melhema to influence this type of decision maker, certain motivation systems need to be put in place. As identified through the management survey, rewards and compensation need to be directly linked to sustainability targets and performance metrics. In this way employees become more motivated to take those steps that reflect positively on their own performance as individuals.
Team leaders and managers, on the other hand, respond to systems and norms rather than self-interest. This type of decision maker sees the world through the opinions and perspectives of their leaders and the organization they are working for. Melhema may need to integrate more aspects of sustainability into its operating procedures and policies, thereby, motivating those who enjoy complying with procedures and policies into more responsible decision making.
Regional leaders are individuals that have advanced in their leadership development and taken a more ownership approach in decision making. This type of decision makers is able to examine various rule procedures and systems and assess them. As with the two other recommendations. For those decision makers, Melhema should continue to maintain a high level of awareness about sustainability topics. Decision makers at this level, as also seen in the results of the management survey, usually find value in sustainability and, therefore, will make and author many new decisions that will advance sustainability topics.
At corporate leadership, there are those rare individuals who have realized that there are business needs and higher challenges that exceed the capacities of compliant mindsets. Those challenges usually originate from aspects that go beyond organizational boundaries, such as the society and environment, as well as the overall economic development of the countries where the business operates. Decision makers, at this level, are able to see opportunities in what could have been falsely described before as challenges. Our research recommends that the company seriously identify and empower those leader and to take advantage of the riches of this decision-making mindset.
Berger, J. (2012). Changing on the job. Stanford, Calif.: Stanford Business Books, an imprint of Stanford University Press.
Eccles, R., Perkins, K. and Serafeim, G. (2012). How to become a sustainable company. MIT Sloan Management Review, 53(4), pp.43--50.
Goodwin, N., Harris, J., Nelson, J., Roach, B. and Torras, M. (2015). Principles of economics in context. New York: Routledge, pp.177-187.
Rockström, J. et al. (2009): A safe operating space for humanity. Nature, 461(7263), pp.472--475.
WBCSD (World Business Council Sustainable Development) (2010). Vision 2050: The new vision for business in brief. Available at: http://www.wbcsd.org/pages/edocument/edocumentdetails.aspx?id=219&nosearchcontextkey=true [accessed May 2014