LAST week, we tackled sustainable taxonomy, namely the challenges and opportunities it presents for Philippine banks. With this heightened prioritization of sustainability across industries, it is apparent that these initiatives must come from the top down.
In the current business landscape characterized by rapid evolution, the integration of sustainability into corporate operations has become a critical priority. Leadership styles play a pivotal role in determining how effectively a company can adopt sustainable practices. This article explores the significant differences between transformational and traditional leadership and their impact on sustainability.
Transformational leadership is characterized by a focus on inspiring and motivating employees to transcend their own self-interests for the sake of the organization and its broader goals. Transformational leaders are visionary, charismatic and proactive, emphasizing innovation, change and the development of team members.
Key attributes of transformational leaders include:
– Inspirational motivation: They articulate a clear, compelling vision that inspires and motivates employees.
– Intellectual stimulation: They encourage creativity and innovation by challenging assumptions and soliciting new ideas.
– Individualized consideration: They provide personalized support, mentorship and coaching, fostering a supportive and inclusive work environment.
– Idealized influence: They lead by example, demonstrating ethical behavior and a strong commitment to the organization’s values.
Meanwhile, traditional leadership — often referred to as transactional leadership — is based on a system of rewards and punishments. Traditional leaders focus on maintaining the status quo, ensuring compliance with established procedures and achieving short-term goals.
Key attributes of traditional leaders include:
– Contingent reward: They use incentives to motivate employees, rewarding them for meeting specific performance targets.
– Management by exception: They intervene only when performance deviates from standards, either to correct mistakes (active) or to address issues after they occur (passive).
– Directive approach: They provide clear instructions and expect employees to follow established protocols without deviation.
– Focus on efficiency: They prioritize operational efficiency and adherence to established processes.
The integration of sustainability into corporate operations requires a shift from traditional and short-term profit-driven strategies to long-term holistic approaches that consider environmental, social and economic impacts. The leadership style adopted significantly influences an organization’s ability to successfully integrate sustainability.
Transformational leaders are well-suited to drive sustainability initiatives due to their visionary and inclusive approach. They can effectively do this by:
– Creating a sustainability vision: They can articulate a compelling vision for sustainability that aligns with the company’s mission and values. This vision inspires employees to embrace sustainable practices and to innovate solutions.
– Fostering a culture of innovation: By encouraging intellectual stimulation, transformational leaders create an environment where employees feel empowered to develop and implement sustainable practices. This is crucial for identifying and addressing sustainability challenges.
– Engaging stakeholders: Transformational leaders prioritize stakeholder engagement, recognizing that sustainability requires collaboration with employees, customers, suppliers and the community. They build strong relationships and foster open communication to drive collective action.
– Long-term focus: Transformational leaders emphasize long-term goals and the broader impact of the company’s operations. This perspective ensures that sustainability initiatives are integrated into strategic planning and decision-making processes.
Meanwhile, traditional leaders may face challenges in integrating sustainability due to their focus on short-term goals and adherence to established procedures. However, they can still contribute to sustainability efforts by:
– Implementing compliance-based initiatives: They can ensure that the company complies with environmental regulations and industry standards. While this may not drive innovation, it establishes a baseline for sustainable practices.
– Efficiency improvements: By focusing on operational efficiency, traditional leaders can identify opportunities to reduce waste, conserve resources and improve energy efficiency.
– Structured programs: Traditional leaders can implement structured sustainability programs with clear guidelines and performance metrics. This approach provides employees with a framework for adopting sustainable practices.
While leadership styles significantly influence sustainability integration, the manner by which company policies are implemented also plays a critical role. Overly stringent management, often justified as a passion for policy implementation or a desire to protect the organization, can have detrimental effects on organizational culture and sustainability efforts.
Excessive strictness, such as unreasonable criticism, unrealistic demands and punitive measures, can lead to decreased employee morale and engagement. When employees feel undervalued and mistreated, their motivation to contribute to company growth and development diminishes. This stifles creativity and innovation, hindering the company’s ability to develop and implement effective and sustainable solutions.
Effective sustainability integration requires trust and collaboration among employees and stakeholders. Unduly severe behavior erodes trust and creates a culture of fear and resentment. Employees are less likely to share ideas, collaborate on projects or take initiative. This lack of collaboration undermines the collective effort needed to make an organization sustainable.
High employee turnover is a common consequence of overly stringent management. Talented employees are likely to leave in search of a more supportive and respectful work environment. This turnover disrupts continuity and results in the loss of valuable knowledge and skills, further impeding sustainability efforts.
Justifying unduly severe behavior as a sign of passion for policy implementation or protection of the organization is a flawed rationale. Leaders who are genuinely passionate about their role should inspire and support their teams. Passionate leadership involves empathy, respect, and a collaborative approach to achieving shared goals.
The integration of sustainability into corporate operations is a complex and multifaceted challenge that requires effective leadership. Transformational leadership, with its visionary and inclusive approach, is well-suited for this. Traditional leadership can still contribute through compliance-based initiatives and structured programs but may be shortsighted and fail to see the negative impact on people.
The way policies are implemented is equally important. An overly stringent management style has negative consequences that undermine sustainability efforts. True passion for a company’s welfare and sustainable development should be reflected in a supportive and respectful leadership style. By adopting transformational leadership principles and prioritizing positive employee relations, you can successfully integrate sustainability into operations and achieve long-term success.
Chris Ferareza is the chief sustainability officer and a partner for advisory services at P&A Grant Thornton. One of the leading audit, tax, advisory, and outsourcing firms in the Philippines, P&A Grant Thornton is composed of 29 partners and 1,500 staff members. We’d like to hear from you! Connect with us on LinkedIn and like us on Facebook at P&A Grant Thornton and email your comments to [email protected]. For more information, visit our website at www.grantthornton.com.ph.
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