Chapter 4 – Individual Considerations

Now, the choice we face is not between saving our environment and saving our economy. The choice we face is between prosperity and decline. We can remain the world’s leading importer of oil, or we can become the world’s leading exporter of clean energy. We can allow climate change to wreak unnatural havoc across the landscape, or we can create jobs working to prevent its worst effects. We can hand over the jobs of the 21st century to our competitors, or we can confront what countries in Europe and Asia have already recognized as both a challenge and an opportunity: The nation that leads the world in creating new energy sources will be the nation that leads the 21st-century global economy. (Barack Obama, 2019)

The previous chapter focused on the organizational form and the pressures and societal constraints that lead organizations to implement social responsibility (also known as CSR at the firm level) and more generally responsible management (RM).  However, organizations are composed of individuals joining together for a common purpose. As the example in this chapter describes, the fact that Canada is a resource-rich country requires the negotiations and accomodations between different stakeholders to ensure a balance is struck among conflicting needs in the societal, environmental and economic dimensions.

In a for-profit firm, individuals join this organizational form towards capitalistic end results of making a profit within the ethical, rational, and economic constraints of what society imposes (1).

In a not-for-profit organization, individuals can choose aims that are aligned along multiple purposes, often-times in a way that aligns with the triple bottom line or the 5P model of sustainability (see Figure 1 that illustrates the 5P model) (2).

In governance-based organizations such as political groups or governments such as local councils, governing bodies, and other similar bodies, individuals can be elected or appointed to represent constituencies.  The principles of responsible management here reflect the will of the society that the governing body represents in democratic institutions and the will of the governing body in more autocratic organizations. Our concern here is not with the political form but more with the implications for responsible management in the context of sustainability.

We can view individual considerations through the lens of several organizational theories which will be described with examples as to the individual contribution through these lenses to responsible management, to social responsibility, and to sustainability.

Agency theory is an important one to consider as responsible management by its very definition implies that the manager or leader is actually acting responsibly.  The theory as initially proposed (3) was one that described the principal to agent relationship as a governance issue relating to conflict resolution between the two – owner to manager, employer to employee, etc. The important take-aways of agency theory are the resolution of information asymmetry between a principal and the agent, and the resolution of risks and uncertainties that result from this imperfect knowledge sharing (4). In the case for responsible management, agency theory is a factor that can determine the organizational behavior of a firm. For example Rimanoczy (5) studied the sustainability mindset of leaders and found an impact of mindfulness  and reflective practices that translated into an organizational wide vision and mission. Providing a unified purpose and reducing uncertainty through the action of leaders can address some of the challenges identified through agency theory (3)

From a broader viewpoint, Freeman (6), reflected on the importance of identifying and considering all stakeholders as important to organizational strategy making.  Stakeholders are identified as “any group or individual who can affect or is affected by the achievement of a corporation’s purpose” (7, pp. 6).  Replace corporation by organization and you will have a more contextually accurate description of how stakeholder theory can be viewed in today’s environment.

There is concern to ensure responsible management by managing for stakeholders (7). In that vein, it is important to identify who in fact are the stakeholders that should be prioritized as it is impossible to prioritize everyone. Mitchell and colleagues (8) described a conceptual model that prioritizes stakeholders according to their power, their legitimacy, and urgency as viewed by the management of organizations.  This PUL model (shown in Figure 2) has been used in various project management settings and adjusted to account for additional vested interests (9).  It is also used in considering the PUL from the viewpoint of sustainability (10)(11).

As responsible managers need to understand their organizational stakeholders, they also need to understand the relevance of contextual issues and how the organizations react to those issues. Zadek (12) provides an analysis that combines the salience of an issue with the organizational response by using real-life examples such as Nike, BP, Nordisk, and Rio Tinto. There are five stages that organizations exhibit systems-wide or specific to an issue (defensive, compliance, managerial, strategic, and civil) in the context of four stages of issue maturity (latent, emerging, consolidating, and institutionalized). Navigating through these issue-specific stages and how an organization reacts to their current issue illustrates the importance of stakeholder salience.

When there are institutions that promote responsible management such as the Principles for Responsible Management Education group of the United Nations, it is important to consider whether institutions would consider whether joining PRME is relevant or adds value to their organization? Majoch and colleagues (13) reviews the empirical evidence and concludes that in fact, there is value in organizations joining PRME and that institutionally, this type of stakeholder salience analysis provides benefits to the firms.

Leadership theories abound  and have developed in line with societal developments. Perceptions of what makes a leader, what makes a follower and the relationship of the leader and followers with each other and within their organizations are important in relating to responsible management in the context of sustainability (14).  For example, the question to be reflected on is whether leadership affects behavior or sustainability performance in organizations, does gender matter, what about indigenous leadership? (See Figure 3 for an illustration of current indigenous conflict between pipeline construction and native land sovereignty.) Go to the ‘take-aways’ section to explore some of the recent articles discussing these topics.

Ultimately, all individuals when faced with complex (or simple) problems follow a heuristic of decision making that can be derived from their ‘gut feeling’ (implicitly developed) or normative.  Research theorists such as Jones (15) have proposed a model of decision making through the contextual lens of ethics, moderated by internal and external factors.  Figure 4 describes the general steps towards ethical decision making.  This model has been proposed and can be used in almost any situation.  The complexity of decision making can increase when decisions are to be made as a group or need to be conveyed by a leadership team and may result in various stages of negotiations towards a consensus or a best alternative to a negotiated agreement (BATNA as discussed in the negotiaton literature)(16).

Contemporary concerns with sustainability – particularly the existential dilemma faced in today’s anthropogenic age requires stakeholders to reflect deeply and make decisions that affect organizations, individuals, and political systems.  This is where individual and organizational considerations overlap – as holistic considerations (often viewed through a systems theory lens) need to be viewed at multiple levels of analysis, at different times to arrive at decisions that are often just satisficing current problems rather than resulting in optimal solutions (17).

Responsible management is thus not just a leadership responsibility but cascades through all stakeholders involved in any issues (18).  Results may be agreeable to many stakeholders but not provide evidence of an impact on sustainability which then results in other stakeholders actively reacting (see the example of stakeholder activism as a result of the laying of pipelines across Northern BC).

In the next chapter we will explore the linkages between organizational and individual considerations for responsible management in the context of sustainability.

References used in the text – you are encouraged to consult these references through your institutional library services or through the internet