GPM First
Powered by Gower
Chapter 3 of No Waste (978-0-5660-8803-2) by Uly Ma

Going Forwards, Backwards, Sideways or Nowhere?

3

Welcome to a different world. With a credit crunch, things became a lot less fun, with a recession, doing business became very hard and a slow recovery does not necessarily make things easier either. Furthermore, with the contributions from climate change, the weather probably will not be too good either.

This is the world many of us suddenly woke up to in mid-2008, when the construction sector fell over. Of course, some people have been telling us it has been coming for a long time, but let us not worry about these people. Instead, think about what this means for you, your organisation and your job. Although there are signs that recovery is just around the corner in mid-2009 (or 2010, or 2011), there is little to indicate that we will return to the former ways of working any time soon.

I briefly examined the various options facing a construction sector company in the depressed business environment in the Introduction. From there the book is focused on improving the way we work followed by enabling everyone to participate by transforming the organisation.

But there are many different ways of going forward.

The best way forward in this different world (see Figure 3.1) is the one that fits your organisation. It may be a ‘big bang’ or it may mean meandering a bit to collect everyone first; or it can mean only taking short steps or even going sideways or backwards before going forward.

 
Figure 3.1 Going forward is not always straightforward

graphics/fig3_1.jpg

Going Backwards?

Unfortunately, my experiences on introducing changes, such as Lean construction with some major contractors, showed that before kicking off, there may be a need to go back to basics first, such as establishing good workplace organisation or a discipline of waste reduction. Many of these initiatives, whether environmental management or Lean construction, require a certain level of knowledge within the management and workforce if they are to participate successfully. For these companies to go forward, there is a need for everyone to have the necessary knowledge and this can mean starting at Step 0 or -1 or -2.

Whether going forwards directly, via small or large steps, or even going backwards matters less than making sure everyone is on board and travelling in the same direction. This means getting the entire workforce to participate, it means persuading your suppliers to come on board and getting the support of your customers. This is a crucial element in any success in sustainability. Without this wholehearted support, the risks of something going wrong becomes much higher. These come in several varieties: the visible ones like pollution and other physical blots on the landscape; the semi-visible one of low morale because people are not sure why they are doing these things; and the invisible risks of damages to your corporate and personal reputation.

Despite my gloom about our industry being ready, Peter Head believed that the transformation to sustainability in construction has already started. When Claudine Blamey was at British Land, she told me that more and more companies are adopting a thinking outside the box mentality which is good news.

Reputation Matters

Even though we defined sustainability as managing a combination of financial, social and environmental elements in the business, there are some factors to consider as well and one of these is corporate reputation (see Figure 3.2). A poor reputation may be less important in the era of conglomerates when ‘getting the numbers in’ was really all that mattered. In our more progressive and more connected era, reputations can be made and destroyed easily by campaigners, blogs, specialist newsletters as well as the traditional media. A company’s reputation can be turned upside down simply by its drivers keeping their delivery truck engines running while unloading. The drivers probably care about the environment as much as anyone else but are likely to have no ownership of the corporate sustainability initiative.

Technology further compounds company indiscretions, from software like Google Earth to smartphones that takes videos, everyone has the capability to report poor performance to the whole world – very rapidly. This means if members of your teams are pouring oily sludge down the drains, it may readily end up on YouTube for everyone to see. Reputation takes a lot longer to rebuild than to destroy. For example, the Three Mile Island and Chernobyl incidents shaped the thinking on nuclear energy for decades in the USA and Europe respectively.

Getting suppliers and customers on board is also difficult, but imagine an irrational public response to the following:

ABC Architects designed the presidential palace for the blood-thirsty dictator XYZ.

RST Construction, a household name, gets its timber from a company that robs indigenous people and rips out virgin rainforest.

LMN, a leading developer, tears up picturesque town centres and replaces them with soulless shopping centres.

 

Whether it is bad luck or poor judgement, your reputation is going down the pan if this sort of headline greets your company on breakfast TV, the internet, social media or via the red banner tabloids tomorrow morning.

The impact of having a bad reputation can be quite severe in a society like the UK that seems to thrive on bad news and corporate villains. The best case scenario for a first stumble with duff clients and suppliers is to claim that you had bad luck. If it happens again, then the public perception can change quickly from accepting your company having a spell of bad luck to corporate incompetence and a third occasion? I think it will be time for resignation letters from the Board.

The perceptions of a poor reputation go in two directions: internally within your organisation and externally with business partners; and society generally.

 
Figure 3.2 Perceptions – the impact of poor reputation

graphics/fig3_2.jpg

Internally, your disillusioned employees may start to look at the world differently.1 [34] Your customers are suddenly seen as social pariahs – most people dislike working for ‘nasty people’, you will have deflated the motivation of your people if your clients are publicly blacklisted. Since these clients are seen as nasty, then the money they pay your company may be perceived as ‘dirty’. This moves the entire bad reputation agenda onto a more personal level: does your income derive from a dubious source?

Bad corporate reputation can also tarnish the personal reputation of the employees. Whether true or not, outsiders may think that if you work for a ‘bad’ company, then what does this say about you as an employee?2 [35] Nobody likes this type of stress. Similarly, a bad corporate reputation is not going to help build employee morale unless there is a visible and drastic corporate clear-up.

Essentially, a bad corporate reputation can mean your company being viewed as incompetent in the way it runs its finances, manages people and it also pollutes the environment. Even if these beliefs are totally untrue, you need to make sure every stakeholder, from financial analyst to the neighbours of your project site, knows that they are untrue; and that is hard work. In a depressed business environment, a bad corporate reputation can mean it is even harder to make money or to raise capital, and life becomes a lot less fun.

Construction companies are there to make money and this was evident a few years ago when UK government PFI3 [36] policies encouraged many traditional construction companies to move into the service sector. Why? Probably because the money is better there. Shareholders and investors demand ever better returns on their investment and companies are driven to grow: growing their turnovers and growing their profits. In the market economy, it seems if your company is not growing, then it is sinking. All this puts a tremendous pressure on making more and more money. Making money is not just critical to keep the company running but companies need to earn ‘enough’ extra money to pay for the social and environmental aspects of sustainability.

Nowadays corporate reputation can be made or broken by individuals or groups which have no direct connection to the company but have an interest in how the company behaves – these can range from political/social activists to neighbours of a construction project.

Sustainability and Money – a Matter of Balance

One issue that is often present when discussing any ‘tension’ in sustainability is money. Whether we are talking about tensions between financial, social and environmental issues (see Chapter 2). Money is not always the answer to problems but it does cover up a lot of irritations. What money does, however, is to offer opportunities to ease tensions.

In a recession, money is rather harder to come by and this can lead to a lot more tension in sustainability activities. Unlike other products, there is not a lot of scale economy in a corporate sustainability initiative. You cannot go and get a ‘one size fits all’ solution because every company and its circumstances are different. Some companies can go forward immediately in doing sustainability while others need to start at a level low enough that everyone can readily get on board.

With sustainability belonging to everyone, we now have a bandwagon that can have more than a million possible definitions (see Figure 3.3). How do we hop aboard a bandwagon like this? Getting everybody on board is hard in this situation because everyone has their own definition of what sustainability should be.

In a construction project made up of many subcontractor, you also get a constantly varying set of ‘different definitions’ since contractors and their teams rotate in and out. The suggestion of taking a balanced approach towards sustainability for this cast of thousands is hard enough but is made even harder by three other reasons.

The first reason is the vested interest of the individuals involved. This is not about your personal convictions on sustainability but about the way we have been trained professionally. For example, a grounding in accountancy will offer you reassurances that financial controls may be a good approach towards sustainability. Similarly, a knowledge of human resources will encourage deploying people-led techniques to realise the sustainability goals. A builder may reckon it is poor design that causes the problem and a subcontractor may think the welfare policies on site are just not working.

 
Figure 3.3 One million+ different definitions of sustainability

graphics/fig3_3.jpg

This is a generalisation but we all have our bias in selecting the best (or our preferred) way to ‘do’ sustainability. In an organisational context, this can mean that various individuals, departments and functions will all want to pull the organisation down their preferred path. Although this is nothing new and internal fights over corporate directions have always been with us, these conflicts can harden the attitude towards corporate sustainability goals (especially when it is your budget that had been cut to accommodate their goals).

A second reason for the difficulty in achieving balance is that although everyone knows what sustainability should be, only a few are recognised experts or certified specialists in sustainability. Many sustainability experts come from environmental management and their expertise is well grounded in environmental technology principles or legislative compliance.

In these situations, all those environmental managers are certainly going to apply their skills as effectively as possible to serve their organisations. And since they are experts in environmental management (and technologies) those are likely to be the approaches they will adopt (see Figure 3.4). This then adds an ‘official’ voice to unbalancing the corporate sustainability policy.

 
Figure 3.4 …but we also know what sustainability is

graphics/fig3_4.jpg

A third reason for the difficulty is that in practice, sustainability is often driven by a combination of legislation, public sentiment and media hysteria. There is some research4 [37]to show that companies respond to regulations faster than to investor demands, competition or customer needs. So it is not surprising that a good-sized chunk of the consultancy market in UK construction is supported by the need to interpret legislation and provide training for compliance. And guess what, a big element of this set of legislation is environmental legislation. If you do not believe this, just go and visit the website for environment legislation at ‘Netregs ’,5 [38] run by the UK Environment Agency.

Since most organisations are in business strictly to do business, then compliance with the law is a major obligation. Environmental legislation is a big deal and companies spend considerable effort and time sorting out their responsibilities and liabilities. This is not to say that traditional legislation is no big deal, but their compliance is now part of the corporate furniture and people just get on with it as part of daily work. A more difficult problem is that the amount of environmental legislation just keeps on increasing and that distorts the sustainability balance more and more towards compliance.

Not in Balance

Should our sustainability strategies be balanced? Since everyone in the industry is working under a somewhat unbalanced sustainability portfolio, does it matter at all?

Simply put, an unbalanced set of policies leaves a company more vulnerable in both good and bad times. In the good times, an unbalanced company may not be looking in the right direction for opportunities (see Figure 3.5). During bad times, these companies are still not looking in the right direction for opportunities or threats. Either way, an unbalanced company is less likely to do as well.

Is achieving balance in sustainability that difficult? Actually it is. Besides overcoming the three difficulties described earlier, it also takes leadership and good management. 6 [39] Just before John Elkington came up with the Triple Bottom Line (see Chapter 1), conventional management thinking was tipped out of its comfort zone by the arrival of the Balanced Scorecard (see Figure 3.6).7 [40] The Balanced Scorecard was designed to encourage companies to shift away from a pure financial focus towards a range of factors that all contributed towards corporate success.

 
Figure 3.5 Missed opportunities and threats

graphics/fig3_5.jpg

Nowadays with our modern outlook, the Balanced Scorecard actually looked a bit obvious – and possibly politically incorrect (no mention of stakeholders, the environment or legislation). However, in the early 1990s when the corporate focus was ‘numbers’ (this was the era of the conglomerates), the mere suggestion that processes and the developmental needs of the staff should get equal billing with finance was a new thing to the corporate landscape. Since then, there have been many attempts to update the Balanced Scorecard by bolting on extra elements, such as the environment, legislation and so on.8 [41]

 
Figure 3.6 The Balanced Scorecard

graphics/fig3_6.jpg

I mentioned earlier that the importance of balance is to allow the organisation to be more flexible so that it can respond better towards good fortune or crisis. This means a company is ready to pick up the opportunities as well as to deal with the threats.

‘Be Ready’ and Sustainability

Although ‘be ready’ looks like some vague marketing slogan, but it is actually based on sound management practice. Being ready is about the following:

  • maintain discipline at work;

  • deploy effective methods;

  • practise techniques regularly; and

  • always able to innovate.

 

Does this sound unusual? Well, this is how trained professionals approach any situation. Practise effective methods until you gain expertise, rely on your professional discipline when encountering new situations (so no panic decisions) and use your experience (from practise) and competence (from the methods) to innovate a new way of doing things. The four factors of ‘being ready’ are also pre-requisites for good sustainability performance.

Discipline at work: this means people are moving in the same direction. Makes sustainability easier as it avoid individuals following their own whim as well as any subsequent embarrassments arising from the freelancing.

Effective methods: by having the discipline and following effective working methods, we can reduce quality variations and with consistency, quality can be improved. Improved quality means fewer mistakes and a reduction in cost, reduced impacts to the environment and a happier workforce (nobody likes mistakes) and hey – are we doing sustainability or what!

Practise regularly: means we gain expertise, capability and competence. It also means we can reduce mistakes and errors. The gains in experience and knowledge means we are in a better position to innovate. With innovation and continuous improvement, we can make sustainability happen a lot faster and more effectively.

An ability to innovate: critical for businesses competing in a closed market, such as the UK where most companies offer broadly similar level of capabilities.

Being ready: it is important in good times, but crucial in bad times. However, ‘being ready’ is an outcome from a corporate commitment. An effective sustainability statement needs to send a message that encourages and enables every employee to get ready. If your sustainability policy is not balanced, then your people will also not have balance in their preparations, and as a result, they will miss some pieces in their readiness. We do not want corporate messages that are finely crafted words with no emotion, and no real substance.

More importantly, since everyone knows what sustainability is, you need to make sure that you have the right message to get across to the every employee including the sceptical ones who reckon you may have got it wrong.

Submit your own content for publication

Submit content