The Boardrooms in many construction companies are starting to debate and consider the adoption of Responsible Management & Stainability leadership principles. Viewing it as an efficient way for construction, asset management and development organisations to enhance their leadership companies to attune with wider Responsible Construction practices.
Responsible management is more extensive and operates at a higher level than many responsible construction of building sector certificates. It involves much more than meeting attributes of on-site Environmental management, considerate construction, the monitoring of construction-site impacts and the sustainability inherent in construction materials. As a leadership approach, it helps develop the organisational mindset that understands the strategic business value behind such initiatives. Helping business leaders and owners move their approach from ‘add-on’ within construction sites to ‘business critical’ issues within the Boardroom.
Increasingly construction projects, their supply chains and contractors are adopting a Responsible Construction approach. Many have adopted them through choice, others through client or contract requirements. In all scenarios, the objective is to set a higher control of on-site activities and greater alignment with Corporate Social Responsibilities (CSR) or Good Neighbour policies.
This article looks at the leadership role of the Board or Business Owner in promoting Responsible Construction practices within the business. It examines why responsible management is not just the responsibility of a Project Manager or Sustainability Champion. The ultimate message is that responsible management is a leadership role, that combines CSR activities with the business benefits of adopting greater sustainability in business.
There are 5 good reasons why construction and asset management businesses, their owners and managers are driving forward responsible management practices:
The hard days of being a start-up or one-man business are long gone. Hard work and ambition have built up the business into a successful local or regional construction player. The business has an expanding portfolio and an increasing wage bill!
The days of on-site hands-on management practice have receded. A new tier of supporting managers and partners now help share responsibility for the business. The downside – lack of fresh air and a growing list of business administration practices. The organisation now has management control issues as structures and business responsibilities stretch and expand. The purpose of some responsibilities is clear. Financial accounts, payrolls and asset logs form distinct tangible links to assets, employees, business practices and ultimately profit & loss accounts. New responsibilities in other areas seem less important, vague and confusing. You recognise that these intangible issues are important, but it is easy to set them aside as you are uncertain about how they add to the bottom line.
In this growing portfolio of ‘other stuff’. Intangible terms such as responsible construction, corporate social responsibility, climate change, carbon balance and sustainability seem to pop up regularly. They are also increasingly common in trade journals and business networking meetings. Worse, they are now a regularly occurring component within tenders and business winning certification programmes.
The days of simply adding a 1-page photocopy of your ‘Environmental Policy’ – usually cribbed from another source have receded. Clients & procuring sub-contracting no longer accept simple EHS assurances but now demand evidence within tender invitations. The growing list of on-site audit requirements that project managers now demand are also impacting the cost of tendering. You are beginning to consider more and more whether these are threats or opportunities:
There has been a growing trend of CSR (corporate social responsibility) activities across the construction sector in recent decades. Many businesses have understood for years their links into local and regional economies. As successful businesses, they are targets for fundraising charities and community enterprises. While charitable donations or corporate giving programs have always been part of the business. Few business owners or companies fully understand the benefits of pursuing wider and more substantial social impact agendas in their business communities.
Climate change and climate-induced impacts in the last few years have moved up the media agenda. The world is changing rapidly and adverse weather impacts are starting to hit construction build times! Client awareness of unsustainable elements in property portfolios has grown. They are now increasingly keen to minimise issues impacting running costs, asset value, longevity or future saleability. Media attention to unethical construction behaviours remains newsworthy in the public eye. In political debates, there is a discussion for a balance between development and environmental issues. This has been fuelled by an altered societal perception that future construction & infrastructure programmes should address wider societal needs. To add to this pressure there is also significant background pressure being applied through NGOs, policy-makers, consumers, and the media for wider adoption of considerate and responsible construction approaches.
Carroll’s Pyramid of Corporate Social Responsibility (CSR), published in 1979 remains one of the more comprehensive models to help business owners and managers understand the need for responsible management as a leadership and controlling hand in business.
The pyramid describes a hierarchy of leadership responsibilities that, together, makeup CSR:
Economic. Forming the pyramid base is the simple message that to engage in CSR activities a business must first be profitable. It is an obviously essential business requirement to keep your costs to a minimum, maximize income, invest in future development, and provide a return on activities. However, being economically responsible also means that there is a balance to be drawn between excessive profit and financial insolvency. The balance allows businesses to create and sustain jobs in their local communities, and contribute useful, non-harmful services to Society.
Legal. A straightforward requirement for businesses to obey the law. At the very least, it is about protecting your business or organization from prosecution or financial penalties, which would impact profit, reputation and continued viability.
Ethical. An obligation to do what is right and fair, even if it’s not legally required. In construction, this may involve ensuring that employees have the safety equipment, clothing and training above statutory minimum levels. It involves the leadership adoption of a responsible outlook that is ‘moral’ and above all caring about the needs and human rights of others. It can be as simple as supporting flexible working for employees so that they accommodate family issues within their job.
Philanthropic. I interpreted this as going beyond and above any expectations. It’s about being a considerate and responsible business and actively seeking to improve the world around you. Mot only in financial donations to bodies that provide no direct social linkage with your business, but also investing in your future business through the promotion of construction skill and learning within education, research into unsustainable construction issues, investment in ‘added value’ elements within construction projects – environmental and social amenity elements., or offering out the leadership team to provide mentoring expertise to non-profits.
We can thus summarise Carrol’s CSR pyramid more closely with business leadership and responsible management elements applicable to the construction sector, and its various stakeholders (clients).
The attractiveness of a business is often reflected in its reputation and organisational culture – as percieved by clients, its own employees and wider society. Such behaviours and attitudes are determined by, displayed through and communicated within its leadership team’s mindset and CSR worldview – for the betterment or detriment to the business.
There is pressure on the construction sector and its lobbying groups to move away from a narrow view of business purpose (maximising value for owners and shareholders) to a broader view, which is more socially responsible. Although governments have often been compliant in allowing lower construction and performance standards, these are now acting against larger carbon and climate change obligations that they have signed up to.
Change is not new within the construction industry and earlier socially responsible practices – such as on-site health and safety within the workforce, and now being implemented such as environment and anti-corruption governance, human slavery and diversity initiatives.
The scope and uptake of CSR within the construction sector, in particular amongst SMEs remains largely undefined. The sector is highly fragmented and wide open to interpretation. CSR has often been put behind more immediate on-site badges such as BREEAM and LEED, compliance often being led by project managers and sustainability professionals.
The term CSR can cover a myriad of meanings, issues and definitions that are both daunting and confusing to leadership groups within SME businesses – terms such as: stakeholder management, governance, corporate ethics, responsible sourcing, environment and sustainability, human resource management, supply chain management, sustainability, circular economy, discriminatory labour practices, equality and human rights, corruption and modern slavery. They all sound daunting and expensive to address and resource.
There is a lot of information out there, all giving out conflicting messages to SME Boardrooms and business owners. The lack of clarity and the fact that little practical organisational support has been directed towards SMEs and helping their leadership teams map out and address CSR issues. Many now require a wider understanding of the concept, how they can use it as a rewarding business business tool, and how the adoption of CSR practices can aid them in their quests for continued growth in a manner aligns with their often limited or yet to be developed CSR resources.
How businesses address and lead on the long list of CSR issues identified above, has slowly starting to coalesce and morph into what is now commonly termed ‘responsible management’. A simpler handle that allows businesses to focus on key areas where they may be exposed to risk or deem growth opportunities to existing. Responsible Management (or individually Responsible Leadership) is the leadership approach that many in the construction industry are using as the springboard to get them attuned with the many CSR and ‘Responsible Construction’ programmes that have sprung up over the last decade. It is thus an offset of normal business governance which particularly focusses on the social and environmental elements of the business.
Responsible management requires that the leadership teams within a construction company (and increasingly the business leaders within thier suppliers, consultant and contractor support services take responsibility and act in a manner that makes their organisation more accountable to the leadership team in terms of leadership control and wider business management practices.
Within individual SMEs and larger construction firms Responsible Management can start off taking a variety of forms and is often characterized as business leadership teams that has seized the opportunity to differentiate themselves from competitors by taking into consideration elements such as:
Steps to raise the leadership awareness and its undertanding of environmental and sustainability issues impacting the sector. The Objective is to minimize and have controlled on the businesse’s behalf any negative environmental, social and cultural impacts its activities can have on its clients and its local community
Mapping costs and risks to generate greater economic benefits for the business by reviewing retention levels and working conditions for staff, to retain valuable skills in-house, developing the % of skilled staff employed, to boost the brand as a good local employee and the construction firm to work for.
Reviewing procedures and events that impact client, regulatory and community perceptions of the business, or which allow competitors to gain a foothold in client businesses. The strategic objective being to safeguard the business from adverse media and criticism from natural and cultural heritage impacts, harm to protected species or habitats.
Time Cost & Quality are often quoted as the 3 defining elements of the business. However, it is pointless being the cheapest in the market, if no one trusts your construction management practices or quality to give you work. The objective of the leadership is thus to develop a responsible organisational culture within which staff act responsibly on behalf of the business when potential risks or shortcuts present themselves.
A strategic leadership approach to build up not only their own leadership development and business mindset to be better prepared for future business trends and cycles, but also safeguarding their access to and availability of skilled employees. Outward-facing programs that encourage diversity, physically challenged people or opportunities within the local community that can help retain the organisation’s employee needs in competitive areas
Responsible Management represents a mix between safe and responsible construction activities during site preparation, construction, transportation to/from site, material usage, design and local community relationships, and the controlling leadership’s wider business objectives.
Whilst many construction companies still view these as potential obstructions to ‘time, cost and quality’, more established firms view these more in terms of brand, local reputation and employee benefits. Benefits that they can use to grow their business while providing differentiation between themselves and other local competitors. This helps them build strong relationships with clients through added WoW!’ amd can help safeguard projects from delays, additional costs and adverse PR.
Reputations are built up over years and lost in minutes
Responsible Management in the construction sector should help underpin the core business strategy or specialisation by promoting a high-quality service for future customers and clients. In respecting all regulations regarding nature and HR management, growing construction businesses safeguarding long term relationships through good communication with local authorities, which can pay back significantly in times of economic downturn or mishaps on site.
To summarise in the boardroom it involves:
Part 2 of this blog will look at how Boardrooms can start laying down the foundation in responsible management. It will also examine how to align activities with tangible outcomes in growth and performance.
Responsible Construction
Increasingly SME companies within the construction sector are seeking to build in business strategies that, through choice or through client requirements, build in Corporate Social Responsibilities (CSR).
Leading Green provide strategic and operations level training, support and consultancy services to Construction and Asset Management leadership groups on topics such as Sustainability in Business, Environmental Leadership, Project Management and EIA and CSR related activities that are essential on BREEAM and LEED certificated projects.