Assessing and Selecting Sustainable Leaders

Russell Reynolds Associates recently partnered with the United Nations Global Compact to study the characteristics and behaviors that differentiate sustainable business leaders from other top-tier executives, the findings of which were summarized in our joint whitepaper Leadership for the Decade of Action. The article below builds upon this research to focus on the question of assessing and selecting sustainable leaders in the hiring process. Please refer to the original study for full details on methodology and findings.

The dynamic forces of ecological, social and technological transformation are fundamentally changing the way businesses operate and succeed. Business leaders around the world must now wrestle with the real operational challenges and impact to supply and demand patterns created by environmental and social degradation. The COVID-19 pandemic has only served to emphasize the urgent need to address these challenges.
 
The good news is that commercial leaders have never been more united in their belief that change is necessary, and that progress will only be achieved through the active participation of the private sector. In fact, one recent study found that 88 percent of CEOs see a need for economic systems to refocus on equitable growth.1  Despite that number, significant barriers to change remain, with fewer than half of CEOs reporting that they have actually integrated a sustainability-lens into their operations.2  
 
Every year we help place thousands of leaders into C-suite and board positions, and we know that what organizations look for when they select new leaders has big consequences for organizational strategy and culture. We believe that the gap between what business leaders say they want to achieve when it comes to their sustainability agendas and what is actually being achieved is caused by the fact that sustainable leadership is rarely a selection requirement for senior leadership positions.
 
In a recent analysis of nearly 4000 executive placements, we found that only 4 percent included sustainability experience or mindset as a candidate requirement. It is clear that—despite genuine commitments towards sustainable practices— companies have not yet integrated these priorities into how they identify, assess and select their senior leaders. While roles such as chief sustainability officer are becoming more common, the scale of change required necessitates that senior leaders across the organization bring a sustainability lens to their decision-making, not just those with a dedicated remit. Without intentional effort to bring sustainability expertise into the C-suite, companies’ sustainability initiatives will remain stalled, no matter the authenticity of their commitments.

Embedding sustainable leadership in the position specification 

The selection decisions that organizations make about candidates are informed by two inputs: the position specification and the recruitment process itself. Companies must bring a sustainability lens to both in order to identify sustainable leaders who can help drive their sustainability agenda.
 
The position specification guides the search—it informs how the hiring team identifies prospective candidates and who is most likely to be attracted to the opportunity, and it acts as a framework guiding the assessment of candidates and subsequent selection. To embed sustainability into the position specifications for your most senior leaders, consider how it can be integrated in two key sections:

• The role description: Be clear about where the organization is on its sustainability journey—whether it is nascent, evolving or already well integrated—and how sustainability is embedded into the both the objectives of the company as a whole but also the business unit or function within which the role sits. Articulate how the successful candidate will contribute to achieving these objectives, and stipulate that they will be expected to identify and embed sustainability Key Performance Indicators (KPIs) into their specific area of responsibility.
• The candidate description: Explicitly incorporate candidate requirements related to sustainability as part of the ideal candidate description. These should relate to both the “sustainable mindset” that a candidate will bring to their work, as well as the experience required for the relevant sustainability goals at your organization. (For more information on the sustainability mindset and related traits please see our publication Leadership for the Decade of Action.)

Making sustainable leadership core to assessment and selection 

Once the position specification has been well-defined, it is critical to ensure that the same emphasis on sustainability flows through to the assessment and selection process that follows. To do so, compare candidates across three elements:

• Their track record: What have they accomplished?
• Their competencies: How have they accomplished this?
• Their mindset and values: Why were they driven to accomplish this? And what are they driven to accomplish in the future?

Sustainable leaders are marked out by a strong belief in and commitment to driving sustainability in business. Interview questions that help uncover an individual’s values, motivations, and broader beliefs about the purpose of business and how leaders should behave can be a helpful input to identifying leaders that can positively impact the sustainability agenda of your organization. While specific questions will vary according to your company’s strategic context, these questions can serve as a good starting point:

• How should businesses in your industry define and measure their long-term success?
• In your current role, who do you view as your major stakeholders and what are your responsibilities to them?
• Which of the world’s major social or environmental challenges are you most passionate about solving, and why?

It is important to triangulate the most important sources of information, to ensure that your decision is informed by more than the candidate’s own self-assessment. In addition to candidates’ interview responses, carefully selected references and psychometric testing can provide valuable inputs as to the sustainability mindset, competencies and track record.
 
Last but not least, it is important to field the right interview team. Top-tier sustainable candidates will want to get a sense of how genuine and advanced the company’s sustainability ambitions really are. Therefore it is important to have at least one executive or board member in the interview panel who can authentically, realistically and convincingly convey that message.
The diagnostic below can be used to assess an individual’s potential to succeed as a sustainable leader. By evaluating aspiring leaders against the readiness levels presented here, organizations can begin to determine if an individual holds the potential to serve as a sustainable leader, or whether they are in need of further development to refine these skills. Senior executives must of course also be assessed against all of the standard expectations of top tier leaders, in addition to those that help determine their sustainable leadership capabilities.

Sustainable mindset

How success of strategy is defined

• Nascent
  Defines business success via commercial outcomes alone.

• Evolving
  Defines business success via combination of discrete commercial, social and environmental outcomes.

• Best-in-class
  Views commercial, social and environmental outcomes as inextricably linked and positively correlated.

Multi-level systems thinking

How success of strategy is defined

• Nascent
  Limited interest in or understanding of the broader ecosystem in which the organization operates.
  Has a very narrow view of organizational goals and only responds to the external impacts of the organization when there is a reputational risk.

• Evolving
  Has interest in and understanding of the organization’s connection with parts of the ecosystem.
  Effectively thinks through the consequences of organizational goals on the eco-system and seeks to eliminate unintended consequences.
  Highly results oriented but may struggle to balance organizational goals against the needs of the broader ecosystem.

• Best-in-class
  Understands, and has a deep interest in, the interconnectivity of the ecosystem in which business operates and the externalities it creates.
  Defines goals at the level of the ecosystem, not just the organization, and seeks to add net-value to the ecosystem.
  Is able and willing to reframe problems and opportunities through the ecosystem lens and, when necessary, identify different solutions to address them.
  High levels of results orientation rooted in achieving positive outcomes for the ecosystem as a whole.

Stakeholder inclusion 

Who is included in strategy and how

• Nascent
  Primary or sole stakeholder group is shareholders.
  Dynamic is transactional.

• Evolving
  Considers “first degree of separation stakeholders” (customers, employees and suppliers).
  Dynamic may be consultative or transactional.

• Best-in-class
  Views commercial, social and environmental outcomes as inextricably linked and positively correlated.

Disruptive innovation

How are new opportunities evaluated

• Nascent
  Risk averse and focused on steadystate management.
  Rarely challenges existing practices.
  Seeks consensus to a fault.
  Rarely asks probing questions about the logic of traditional tactics.

• Evolving
  Applies incremental improvements to existing products and practices.
  Willing to challenge existing practices but only when the risk of doing so is low.
  Acts independently but occasionally gets bogged down by unnecessary consensus building.
  Sometimes asks probing questions about the logic of existing practices.

• Best-in-class
  Constructively contrarian.
  Achieves dramatic improvements to existing products/practices and develops entirely new ones.
  Entirely unafraid to challenge existing practices, even in the face of political risk.
  Strikes the right balance between consensus building and individual action.
  Highly inquisitive; asks penetrating questions about the logic of existing practices and the potential of new ideas.

Long-term activation

Timeframe for strategic-decision making

• Nascent
  Employs short-term time horizon (<3 years) for decision-making.

• Evolving
  Defaults to short-term time horizon for decision making (>3 years).
  Willing to champion longer-term strategies (5+ years) when political risk is low.

• Best-in-class
  Employs longer-term time horizon for decision-making (5+ years).
  Set audacious goals and rigorously drive concerted action and investment in their pursuit.
  Highly impatient with bureaucracy; finds creative solutions to overcome bureaucratic roadblocks.
  Adeptly tests organizational limits and pushes boundaries, with courage and resilience to stay the course in the face of pushback.

Spotting sustainable leadership potential  

It is important to distinguish between those that are already fit for the future and those that have potential but little experience to date. For organizations looking to hire a CEO or Head of Supply Chain, hiring someone who is already a sustainable leader will be important.
 
However, as organizations think about positions that sit earlier in their leadership pipeline it is important to not get overly hung-up on limited sustainability experience. As you assess leadership candidates you will find that some spike highly on the raw capability aspect but lack a sustainable mindset, and as a result have not translated that raw capability into actual action— these are Misdirected Leaders. A second group will have the right sustainable mindset but have not yet fully developed the capability to translate that into real outcomes—these are Aspiring Sustainable Leaders. Being able to distinguish between these two groups is important. By and large organizations will want to focus on the Aspiring Sustainable Leaders and invest in their growth and development.

The challenges of our current moment—whether defined by the COVID-19 pandemic, the push for racial justice, or the creation of a more equitable economic system—have made abundantly clear the need for a new type of business leadership, one that makes the long-term sustainability and resilience of our world a top priority.
 
Identifying and developing this next generation of sustainable leaders will require concerted effort on the part of boards and CEOs to embed sustainability into their leadership frameworks and processes, starting with what they look for and prioritize in new hires. This is not a matter of hiring a single individual to own sustainability. The systemic challenges the world faces today mean that sustainable leadership cannot be confined to a small minority; companies must instead cultivate sustainable leadership at all levels. This is not something that can wait. It is not a conversation for tomorrow, it is a conversation for today.

Acknowledgements 

Tom Handcock is the global head of Knowledge Management at Russell Reynolds Associates. He is based in London.
Emily Meneer is a global Knowledge Management Leader at Russell Reynolds Associates. She is based in Portland. 
The Decade to Deliver: A Call to Business Action, The United Nations Global Compact—Accenture Strategy CEO Study on Sustainability, 2019
The Decade to Deliver: A Call to Business Action, The United Nations Global Compact—Accenture Strategy CEO Study on Sustainability, 2019