Embedding ESG Means Change Management
"If anything is certain, it is that change is certain. The world we are planning for today will not exist in this form tomorrow." - Philip Crosby
Investors, boards, and senior executives are advocating for ESG to be part of our organizational DNA. Every decision needs to take into account the long-term consequences. Returns require risk recognition and risk mitigation. In fact, if we do our jobs, there should really be no need for an internal sustainability team - it’s just the way we do business.
I recall a survey after my MBA in Business Sustainability program in which our school asked for input on the program. Indeed it was an excellent program, but there was one class that was missing - change management.
ESG touches every aspect of the organization, and a solid ESG program requires looking at our current norms, behaviors, and how our current processes encourage or discourage ESG. Change is going to encounter resistance. Fortunately, we have a discipline that can address this issue, yep, change management.
The concept of change management is nothing new and dates back to the early 1900s. Half a century later, the process was refined by Kurt Lewin and his introduction of the 3-step model for change.
If unfamiliar, Lewin’s first step is to “unfreeze.” The status quo is locked into human behavior and can even influence our perception of our abilities. Take the 4-minute mile, for example - a feat thought impossible for most of human history. Impossible until 1954, when Roger Bannister was the first known man to run a mile in under 4 minutes. A barrier that has now been broken at least 1,663 times. Once the feat was accomplished, breaking the 4-minute mark moved from impossible to achievable, even expected.
Lewin argues that change follows similar resistance. In order to enable us to realize that change is possible, we must “agitate the equilibrium state in order to instigate a behavior that is open to change.” One method of agitation might be an emotional stir-up, which could disturb the group dynamics. Of course, there are other ways to shake up the present status quo, but the end goal is to establish an environment that is more receptive to change. Help to imagine that the change is possible.
The second step is change. Organizations have complex relationships which require a well-planned change process. That well-planned process, however, does not guarantee predictable results. Therefore, you must prepare a variety of change options that include alternative scenarios and even trial-and-error. With each attempt at change, examine what worked, what didn’t, what parts were resistant, etc.
During this evaluation process, there are two essential drivers of successful and long-term effectiveness of the change implementation process: information flow and leadership.
Information flow refers to sharing information across multiple levels of the organizational hierarchy, making various skills and expertise available, and coordinating problem-solving across the company.
Leadership, whether formal or informal, every organization has certain individuals who can influence the organization’s direction. A well-planned change process requires enlisting leadership to help define the vision and motivate the transition to the new paradigm.
During the Change phase, companies should:
Communicate widely and clearly about the planned implementation, benefits, and who is affected. Answer questions, clarify misunderstandings, and dispel rumors.
Promote and empower action. Encourage employees to proactively engage with the change and support managers in providing daily and weekly direction to staff.
Involve others as much as possible. These easy wins can accumulate into more significant victories, and working with more people can help you navigate various stakeholders.
Finally, Lewin emphasizes the importance of an iterative approach to change. According to Lewin, a change left without adequate reinforcement may be short-lived and fail to meet the objectives of a change process.
The third step is refreezing. You have worked hard to figure out the strategy to make the change stick successfully; you need the people involved to consider this new state the new status quo, so they no longer resist forces trying to implement the change. The group norms, activities, strategies, and processes are transformed and become the “new normal.”
Similar to the change step, it is vital to stay on defense to sustain and reinforce the change to prevent the previously dominant behavior from reasserting itself.
In the Refreeze phase, companies should do the following:
Tie the new changes into the culture by identifying change supports and change barriers.
Develop and promote ways to sustain the change long-term. Consider:
Ensuring leadership and management support and adapting organizational structure when necessary.
Establishing feedback processes.
Creating a rewards system.
Offer training, support, and communication for both the short- and long-term. Promote both formal and informal methods, and remember the various ways that employees learn.
Celebrate success!
In 1979, the Bridges’ Transition Model was developed by William Bridges. This model helped change professionals understand and more effectively manage and work through the personal and human side of change. The model identifies the three stages an individual experiences during change: Ending What Currently Is, The Neutral Zone, and The New Beginning.
The Bridges model begins with the realization that the first step is ending the status quo. People in the organization identify what they are losing and learn how to manage these losses. This is where we begin to understand what is over and what they will keep. These may include relationships, processes, team members, or locations.
Once we let go of the past, we move into the neutral zone. During this time, we are transitioning between reminiscing about the old, but the new is in view, just more fully in place. This is a time of psychological realignment and repatterning. It is the time between the old reality and sense of identity and the new one. People are creating new processes and learning what their new roles will be. They are in flux and may feel confusion and distress. There is hope for the future, but still uncertainty.
The third step in the Bridges Model is a new beginning which involves new understandings, values, and attitudes. This is excitement for the new direction – an expression of a fresh identity. A well-managed transition will allow people to establish new roles with an understanding of their purpose, the part they play, and how to contribute and participate most effectively. As a result, they feel reoriented and renewed. This is when we accept and embrace.
You may notice a theme to change management - it doesn’t happen by chance. It is planned in advance. We think about what if. We think about perception. We try to find a safe landing place. It is purposeful and deliberate, and we think about stickiness. - a lot. We are constantly on the alert for old ways creeping back in.
John Kotter’s book, Leading Change, is a handy resource for change management. Kotter lays out a roadmap to consider in implementing change:
Create a sense of urgency, telling stories about the consequences of NOT changing—actual and potential—to evoke emotions and create competition.
Form a guiding coalition of ambassadors to help move the change forward. Get key senior leaders and middle managers who have influence on the organization on board.
Create a vision for change, moving together towards a new and better frontier.
Communicate the vision early and often, both organization-wide as well as to specific audiences, in terms that are meaningful to them.
Remove obstacles using training, make sure resources are adequate, and encourage communication so that you can identify barriers.
Plan short-term wins. Report positive changes and recognize the accomplishments of early adopters to share stories of success.
Build on success to produce more change, not letting up when milestones are passed but doubling down and accelerating.
Institutionalize change, making formal changes to your organization, incentive programs, etc., to reinforce change.
Your organization may have organizational change experts already working on change management. If so, collaborate with them. If not, learn what you can about change management. A little upfront work will increase reaching success.
Portions of this week’s blog were inspired by Muhammad Razaof of BMC.
You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness, and we succeed with teamwork.
Stay well!
Chris Laughman is the ThirtyNine Blog author, a blog dedicated to reducing the built environment’s impact. When not blogging, Chris is helping residents, clients, and investors reduce their energy, carbon, waste, and water impact as the Senior Director of Energy and Sustainability for Greystar. Our team’s insight into the utility consumption of our managed and owned portfolios provides insight into opportunities to identify and mitigate risk. We leverage innovation and experience to ignite solutions with real impacts while tracking performance, ensuring the trendline stays laser-focused on the goal. All of us in real estate have a tremendous opportunity to make a difference in the built environment. Standing shoulder to shoulder, we will get this done. I can be contacted at: chris.laughman@greystar.com for questions, concerns, or collaboration.
The opinions expressed in this blog are my own.
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