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- Herausgeber: John Wiley & Sons
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- Sprache: Englisch
In a competitive and complex world, where requirements from different fields are ever-growing, organizations need to be responsible for their actions in their respective markets. However, this responsibility must not be deemed one-time-only but instead should be seen as a continuous process, under which organizations ought to effectively use the different resources to allow them to meet the present and future requirements of their stakeholders. Having a significant influence on their collaborators performance, the role developed by managers and engineers is highly relevant to the sustainability of an organization s success. Conscious of this reality, this book contributes to the exchange of experiences and perspectives on the state of research related to sustainable management. Particular focus is given to the role that needs to be developed by managers and engineers, as well as to the future direction of this field of research.
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Table of Contents
Cover
Title page
Copyright
Preface
1 Choice Architecture: Nudging for Sustainable Behavior
1.1. Choice architecture and nudging
1.2. Theoretical roots and applications around the word
1.3. Nudging for sustainability
1.4. Challenges and final remarks
1.5. References
2 Embedding Corporate Sustainability in Human Resource Management Practice
2.1. Introduction
2.2. Corporate social responsibility and corporate sustainability
2.3. Human resource management
2.4. The nexus of human resource management and corporate sustainability
2.5. Embedding corporate sustainability in HRM practices
2.6. Conclusion
2.7. References
3 Competency Cultivation of Mechanical Engineers in the Process of Social Sustainable Development
3.1. The importance of the basic qualities of mechanical engineers for the sustainable development of society
3.2. Mechanical engineers must observe ethics and laws
3.3. Mechanical engineers shoulder responsibility for environmental protection
3.4. Mechanical engineers must be familiar with traditions and learn to innovate
3.5. Mechanical engineers should pay attention to product quality management and quality assurance systems
3.6. Mechanical engineers should have a time view, a cost view and a risk view
3.7. Mechanical engineers should have a global vision
3.8. Conclusion
3.9. Acknowledgements
3.10. References
4 Essentials of Sustainability: A Roadmap for Businesses
4.1. Introduction
4.2. Definition of sustainability
4.3. History of sustainability
4.4. Sustainability entrepreneurship
4.5. Sustainable business
4.6. Sustainability leadership and culture
4.7. Sustainability innovation
4.8. Conclusion
4.9. References
5 Styles of Leadership and Perceptions of Corporate Social Responsibility
5.1. Introduction
5.2. Styles of leadership and SR perceptions
5.3. Method
5.4. Results
5.5. Discussion of the results
5.6. Conclusion
5.7. References
6 Corporate Social Responsibility Reporting: Background, Evolution and Sustainability Promoter
6.1. Introduction
6.2. A brief history of CSR development and conceptualization
6.3. Corporate social reporting – standardization and policy
6.4. Analysis of the GRI reporting enterprises between 2007 and 2017 . . .
6.5. Conclusion
6.6. References
7 Integrated Management Systems Under the Banner of Sustainable Development: Risks and Opportunities
7.1. Introduction
7.2. Evolution of approaches for management systems
7.3. Conclusion
7.4. References
8 Mentoring… Really? And Why Not?
8.1. Introduction
8.2. Concept of mentoring
8.3. Conclusion
8.4. References
9 Stop Camouflaging it in Green: Do Not Confuse Corporate Social Responsibility with Sustainable Management
9.1. Introduction
9.2. Ecological Economics
9.3. Sustainable Management
9.4. Corporate Social Responsibility
9.5. Where do the concepts match and mismatch?
9.6. Conclusion
9.7. References
List of Authors
Index
End User License Agreement
List of Illustrations
Chapter 3
Figure 3.1. The relationship between the sustainable development of mechanical e...
Chapter 4
Figure 4.1. Pillars of sustainable development
Figure 4.2. Players in sustainability
Figure 4.3. Definitions of entrepreneurship
Figure 4.4. Main characteristics of ecopreneurship
Figure 4.5. Main characteristics of social entrepreneurships
Figure 4.6. Main characteristics of a sustainability entrepreneurship
Figure 4.7. Sustainability ladder
Figure 4.8. PDCA cycle
Chapter 5
Figure 5.1. Model of research
Chapter 6
Figure 6.1. Pyramid of corporate social responsibility (source: [CAR 91])
Figure 6.2. The three-domain model of CSR (source: [SCH 03])
Figure 6.3. Countries with reporting policy 2020. For a color version of this fi...
Figure 6.4. GRI reporting evolution of large enterprises from the energy sector ...
Figure 6.5. GRI reporting evolution of MNEs from the energy sector by region, 20...
Figure 6.6. GRI reporting evolution of SMEs from the energy sector by region, 20...
Figure 6.7. GRI reporting evolution of large enterprises from the chemicals sect...
Figure 6.8. GRI reporting evolution of MNEs from the chemicals sector by region,...
Figure 6.9. GRI reporting evolution of SMEs from the chemicals sector by region,...
Figure 6.10. GRI reporting evolution of large enterprises from the metal product...
Figure 6.11. GRI reporting evolution of MNEs from the metal products sector by r...
Figure 6.12. GRI reporting evolution of SMEs from the metal products sector by r...
Figure 6.13. GRI reporting evolution of large enterprises from the mining sector...
Figure 6.14. GRI reporting evolution of MNEs from the mining sector by region, 2...
Figure 6.15. GRI reporting evolution of SMEs from the mining sector by region, 2...
Figure 6.16. GRI reporting evolution of large enterprises from the automotive se...
Figure 6.17. GRI reporting evolution of MNEs from the automotive sector by regio...
Figure 6.18. GRI reporting evolution of SMEs from the automotive sector by regio...
Chapter 7
Figure 7.1. The place and role of management in the current situation. For a col...
Figure 7.2. Integrated management systems: QMS – quality management system; EMS ...
List of Tables
Chapter 5
Table 5.1. Internal consistency test
Table 5.2. Mean and standard deviation
Table 5.3. Correlation analysis
Table 5.4. Analysis of the regression model
Table 5.5. ANOVA regression analysis
Table 5.6. Coefficients
Chapter 6
Table 6.1. Voluntary and mandatory distribution of policy instruments (source: h...
Chapter 7
Table 7.1. Main stages, objectives and responsibilities in the field of quality
Table 7.2. Some differences between EMAS and ISO 14001
Chapter 8
Table 8.1. Definitions of mentoring
Guide
Cover
Table of Contents
Title page
Copyright
Preface
Begin Reading
List of Authors
Index
End User License Agreement
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Sustainable Management for Managers and Engineers
Edited by
Carolina Feliciana Machado
J. Paulo Davim
First published 2020 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:
ISTE Ltd
27-37 St George’s Road
London SW19 4EU
UK
www.iste.co.uk
John Wiley & Sons, Inc.
111 River Street
Hoboken, NJ 07030
USA
www.wiley.com
© ISTE Ltd 2020
The rights of Carolina Feliciana Machado and J. Paulo Davim to be identified as the authors of this work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Library of Congress Control Number: 2020944442
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library
ISBN 978-1-78630-439-1
Preface
Based on two main concepts – sustainability and management – Sustainable Management is understood as the application of sustainable practices in different areas, namely business, the environment, society as a whole, as well as in daily life, and managing them in order to benefit both current and future generations. With the possibility of being applied to all aspects of our lives, sustainable management is critical as it is seen as the ability to successfully maintain the quality of life on our planet.
In a competitive and complex world where requirements from the different fields are ever increasing, organizations need to be responsible for their actions in the markets in which they operate. However, this responsibility cannot be seen as a one-time action but as a continuous process, under which organizations ought to use the different resources effectively, that will answer to the present and future requirements of the different stakeholders. Indeed, if from one side the organization influences the market, from the other side, the market – understood in its different perspectives, economic, social, environmental, political – also influences the organization. As a result of the interaction between the organization and the market, in order to be effective, the organization needs to think and act in a sustainable way. Occupying critical positions within the organizational structure, with a significant influence on their collaborators’ performances, the role developed by managers and engineers is highly relevant in the sustainable success of the organization.
Taking into account these concerns, and giving particular attention to the needs of managers and engineers as they look to develop sustainable management – able to answer to the present and future needs of the organization – this book covers the issues related to sustainable management in a context where organizations are, increasingly, facing deep challenges such as the need to introduce recycling and repurposing practices, waste reduction, lower cost and more timely production, add value, as well as develop sustainable behaviors. Nowadays organizational activities should be managed under strategic and sustainable policies.
Conscious of this reality, this book contributes to the exchange of experiences and perspectives about the state of the research related to sustainable management, with a particular focus in the role that needs to be developed by managers and engineers, as well as the future direction of this field of research. The content provides support to academics and researchers, as well as to those operating in the management field who need to deal with policies and strategies related to sustainable management issues.
Organized in nine chapters, this book covers the following: Chapter 1 focuses on “Choice Architecture: Nudging for Sustainable Behavior”; Chapter 2 covers “Embedding Corporate Sustainability in Human Resource Management Practice”; Chapter 3 centers on “Competency Cultivation of Mechanical Engineers in the Process of Social Sustainable Development”; Chapter 4 addresses the “Essentials of Sustainability: A Roadmap for Businesses”; Chapter 5 looks at “Styles of Leadership and Perceptions of Corporate Social Responsibility”; Chapter 6 focuses on “Corporate Social Responsibility Reporting: Background, Evolution and Sustainability Promoter”; Chapter 7 covers “Integrated Management Systems Under the Sign of Sustainable Development: Risks and Opportunities”; Chapter 8 analyzes “Mentoring… Really? And Why Not?”; and finally, Chapter 9 draws a distinction, “Stop Camouflaging it in Green: Do Not Confuse Corporate Social Responsibility with Sustainable Management”.
The mission of this book is to provide a channel of communication to disseminate knowledge of how to manage in an environment where concerns around sustainable management present a challenge, among academics/researchers, managers and engineers.
In other words, in order to be used by academics, researchers, human resources managers, managers, engineers, and other professionals in related matters, this book looks to:
– share knowledge about sustainable management through debate and information exchange;
– find out how organizations around the world are defining and implementing their sustainable management strategies;
– keep at the forefront of innovative theories and the latest research activity related to sustainable management;
– participate in an international, interdisciplinary exchange of information, ideas and opinions about the new challenges and changes in the sustainable management field.
The editors acknowledge their gratitude to ISTE-Wiley for this opportunity and for their professional support. Finally, we would like to thank all the chapter authors for their interest and availability to work on this project.
Carolina Feliciana MACHADOBraga, PortugalJ. Paulo DAVIMAveiro, PortugalSeptember 2020
1Choice Architecture: Nudging for Sustainable Behavior
Sustainable management demands an in-depth understanding of current global economic, social and environmental pressures. This chapter deals with the use of choice architecture and its potential to influence decision-making. It focuses primarily on the discussion of how nudges influence choice, their applications to design interventions to promote behavioral change, and the challenges and ethical concerns to individuals’ freedom of choice.
1.1. Choice architecture and nudging
1.1.1. Choice architecture
People are becoming more concerned about the impact of their choices and are increasingly motivated to engage in sustainable behavior. Being environmentally sensitive in consumption, making healthy choices, and changing troublesome habits are critical to individual and societal well-being.
Choice architecture refers to the context or environment in which people make choices. Behavioral science has come to realize that the way in which options are presented can have a significant impact on the option that is chosen, and that small changes in the decision environment may influence the decision-making process.
People make countless choices in daily life, including decisions on how to use money, time, effort and attention. As individuals face a wide range of possible choices, have limited cognitive resources, and need quick decisions, they use heuristics to facilitate routine choices. Heuristics are shortcuts or rules of thumb that simplify and facilitate decisions. They are not bad per se but do not always produce the best outcomes. Frequently, they produce systematic biases in thinking and judgment that generate expected mistakes and postponement of complex decisions. For instance, in terms of formal logic, having more options should always be better than having fewer options. Nevertheless, due to limitations of time, attention and self-control, individuals often feel overloaded when given too many options. They may perceive having more options as worse than having fewer options, when, rationally, adding more options should always be better. Indeed, people do not have time, motivation, or attention to carefully and consciously think about every decision. For instance, research has shown that we make more than 200 daily food-related decisions [WAN 07]. In general, habits and impulses govern our decisions without awareness. Nudging overcomes this problem by recognizing that choice architecture has a huge impact on the decision-making process and that small changes in that process may generate better outcomes. Small changes, such as organizing the way the food is displayed in cafeterias, where healthy food is made more visible, contribute to healthier choices.
1.1.2. Nudging: using choice architecture for good
Nudges are changes in the choice architecture or in the design of the choice environment that facilitate better decision-making without affecting the freedom of choice. Coined by Thaler and Sunstein [THA 08], the term gained immediate worldwide notability when Thaler was awarded the 2017 Nobel Prize in Economics.
Nudges are nearly imperceptible premeditated changes in the choice environment that influence the chosen option. A nudge does not regulate, sanction, or ban certain choices. Rather, it simply emphasizes particular options and moves individuals’ choices onto a more sustainable track. A nudge is a slight change in the way options are presented, enhancing the best option without removing the other set of options to promote the best interest of the individual. Techniques that can be used to encourage or discourage certain behaviors range from a cue to boost individual self-interest to an incentive to avoid self-defeating behavior. Most people want to make better choices but routinely persist in making poor choices, by default, or because they are seemingly easier. By defaulting or facilitating better choices without restricting individuals’ freedom of choice, it is possible to promote sustainable behavior and improve individual and social welfare.
One example of a breakthrough use of nudging is organ donation policy design. Organ donation saves lives, but donations are scarce around the world when compared with waiting lists. For instance, in the US, according to the Health Resources and Services Administration (HRSA)1, approximately 20 people die each day waiting for an organ transplant, and more than 112,000 people needed an organ donation in March 2020. In general, research has shown that more people support organ donation than are actually registered to donate [JOH 03]. Based on this knowledge, in recent decades, many countries have changed their human organ transplant systems from explicit-consent to presumed-consent systems. Instead of an explicit opt-in organ donation system that requires the individual to express their consent to become a potential donor, many countries have moved to an explicit opt-out system where consent is presumed unless the individual explicitly refuses to become a potential donor. Countries such as Austria, Belgium, the Czech Republic, Finland, France, Greece, Hungary, Israel, Italy, Luxembourg, Norway, Poland, Portugal, Slovenia, Spain, Sweden and Turkey have significantly increased their organ donation rates by changing the default status from explicit to presumed consent [JOH 03, UGU 15].
Neutrality is a key feature of nudging incentives, which means that all options should remain easily available at no relevant cost or effort to the participant. Nudges are neutral because the entire set of options is still available (individuals can still choose whether or not they want to be a donor), and individuals can opt-out of the nudge “incentive” without difficulty or relevant cost. However, in practice, nudging may strongly influence the decision-making process and, consequently, the final outcome.
Singapore, Israel and Chile went even further in organ donation policies by establishing an allocation priority clause for donors [ZÚÑ 15]. This clause states that if a person opts out of the donation system, he or she will lose priority if they need an organ donation in the future. While priority for donors is part of policy design, it is not classified as nudging because it is not neutral, and therefore, there is a clear advantage for those who are donors and a sanction against those who are not. To be classified as a nudge, the intervention cannot change incentives significantly.
Moreover, all organizations that use nudging should be transparent about why they aim to influence choices. For example, when organ donation default is altered from explicit consent to presumed consent, the purpose of the change is clearly to increase organ donation. This begs the question of whether transparent nudges are effective. If people understand that they are being nudged, they might deliberately choose to deviate from the suggested choice. However, evidence has shown that nudges can be transparent yet effective [BRU 18, SUN 16]. Transparency is key to making nudging policies ethically acceptable. For example, being aware that organ donation policies have been designed to increase donations does not discourage people from donating. It has been an effective policy and has saved lives.
Nudges are neutral and transparent interventions that specifically aim to steer people’s behavior, ethically using behavioral insights to do good. However, the dark side is the emergence of the symmetric term: sludge. Sludging techniques use the same behavioral insights to favor others’ interests, at the expense of self-interest. The main difference between nudging and sludging is the intention: if the purpose is to increase individual welfare, then it is classified as nudging; if the purpose is to deliberately harm individual interest, however, then it is classified as sludging. The main goal of nudging is to promote effective and ethical ways to improve behavior which conventional policies have failed to reach.
1.2. Theoretical roots and applications around the word
Improving decisions while preserving freedom of choice is clearly ideal. These theoretical principles are not new and have been developed by behavioral sciences for the last four decades. The major contribution of nudge theory was to aggregate and bring the concepts to the public debate and encourage its application by governments and policymakers in large-scale public policy.
1.2.1. Heuristics and systematic errors
Behavioral economics has developed over the last few decades in opposition to rational economics, which assumes that people rationally maximize self-interest. Humans are not homo economicus, who consistently use rational judgment, as defined by John Stuart Mill in the 19th Century in his Principles of Political Economy [MIL 48]. Rather, humans behave in surprising and irrational ways. Due to cognitive limitations, people use heuristics or rules of thumb to speed up the process of finding a satisfactory outcome and to ease the cognitive load of making a decision. These mental shortcuts are quick, effortless and work efficiently in routine decision-making, however, mental shortcuts do not work well all the time. Frequently, people are affected by cognitive bias as they process information and, consequently, act against their own self-interest [TVE 74]. And, they do so in ways that are systematic and predictable.
Daniel Kahneman, an influential psychologist – who was awarded the 2002 Nobel Prize in Economics for bridging economics and psychology – has distinguished two types of thinking that govern the decision-making process – System 1 (S1) and System 2 (S2). S1 is a fast, unconscious, effortless, automatic and error-prone system used in everyday decision-making (based on heuristics and rules of thumb). S2 is a slow, conscious, effortful, reliable system used for complex decision-making. S1 works quite well in routine decisions – most of the time. While S2 produces better decision-making, it makes heavy demands on our cognitive resources, and would therefore require an effort beyond what is humanly possible; humans cannot constantly be in S2 mode. Humans fluctuate between S1 and S2, and most often, rely on S1 [KAH 11]. Nudging can be very effective when used with the S1 way of thinking because nudging does not compete with this way of processing information. It respects S1 thinking and uses clues to influence a person’s choice. Nudges often seek either trigger or avoid the use of certain heuristics of S1.
1.2.2. Libertarian paternalism
Nudging is sometimes considered libertarian paternalism. A paternalist state, also denominated a nanny state, interferes with individuals excessively, in an effort to protect them by controlling several aspects of their behavior. The mandatory use of helmets, high taxes on junk food and road markings can be considered state paternalism. Although welcome in many cases, paternalism is frequently criticized in many others because it assumes that the state knows better than the individual and has the duty to protect people from themselves. Libertarian paternalism is a soft form of paternalism that rearranges the structure of choice so that it emphasizes and facilitates the so-called “best choice”, without mandatory regulation or reducing personal freedom of choice [SUN 03, THA 03]. Ethical limits to the use of nudging, and whether or not paternalistic libertarian interventions influence freedom of choice, are under examination, and in some cases, generate strong opposition to nudges. The discussion is rooted in the concept of liberty, as discussed by John Stuart Mill. In his essay “On Liberty” [MIL 59], he defines liberty – from a civil and social point of view – as the limits of the power that can be legitimately exercised by society on individuals. Governments must respect individuality and diversity of choice, and nudges generate choices that threaten that diversity.
1.2.3. Pro-self and pro-society nudges
In this respect, pro-self nudges addressing individual self-interest and private welfare generate better acceptance than pro-social nudges addressing social welfare. Thaler and Sunstein [THA 08] stress that the goal of a conscientious choice architect is to help people make better decisions “as judged by themselves”. Nudges addressing overall social welfare are more likely to be disapproved of by individualistic societies that may interpret the nudge as contrary to freedom of choice. Even if the intervention aims to benefit society, using nudges may depart from individual interest, and is the sum of those individual interests that produces desirable social welfare.
1.2.4. Nudging around the world
Nudging initiatives are increasingly widespread. They are used in varying ways and at different levels throughout the world. International governmental and non-governmental organizations are leading the dissemination of the design and implementing of a wide range of public policies, based on the understanding of individuals’ behavior biases and rationality boundaries. According to Whitehead et al. [WHI 14], a total of 51 states worldwide have developed policy initiatives using behavioral science insights. These are centrally orchestrated policies that are applied uniformly to the entire population of a state in a large range of areas such as health promotion, pension planning enrolment, tax payment initiatives, and opt-out organ donation policies. However, the way in which some nudging units work may produce loose and scattered interventions with very specific aims, instead of a systematic definition of politics.
The following are some breakthrough initiatives of nudging around the world.
1.2.4.1. The United States
In 2009, the Obama Administration appointed Cass Sunstein (President Obama’s friend and former colleague from the University of Chicago Law School) as the head of the Office of Information and Regulatory Affairs (OIRA). OIRA was established in 1980 and is, among other roles, responsible for reviewing the writing of regulations as well as developing and overseeing their implementation. Sunstein used his knowledge of behavioral and social sciences – particularly of nudging – to improve the effectiveness of policies. Sunstein worked with several national agencies to write rules that are clear and generate a consensus based on facts and evidence. The book Simpler [SUN 13] describes his experience during the four years he served in the Obama Administration and his vision of regulation based on a realistic, informed view (rather than a fanciful conception) on how people behave, to reduce complexity and increase effectiveness. Recognizing the benefits of this process, in 2015 President Obama established the White House Social and Behavioral Sciences Team and signed an executive order to make federal government agencies apply behavioral science insights to improve the effectiveness of their policies and to benefit the people.
1.2.4.2. The United Kingdom
In 2010, David Cameron established the Behavioural Insights Team (unofficially known as the Nudge Unit) led by David Halpern, which has been promoting initiatives related to public health, energy, financial fraud, and charitable contributions. “Since its formation, it has successfully designed several interventions” and, in 2012, it was estimated that the Nudge Unit would save over GBP 300 million in the next five years [BEH 11]. The Behavioural Insights Team is now independent of the UK government and works in partnership with local authorities, businesses, charities and governments in 31 countries. Areas of intervention cover a broad range, including education, equality, health, wellbeing, energy, environmentalism and sustainability [BEH 18].
1.2.4.3. The European Union
The European Union has also used behavioral insights in policy initiatives. The European Commission first used such insights to inform policymaking back in 2009 when it acknowledged the impact of default options. It approved a Directive on Consumer Rights that included a clause to limit the use of default options in consumer contracts. Thereafter, behavioral insights have been explored in several policy fields and, in 2014, the European Commission created the Foresight and Behavioural Insights Unit within its Joint Research Centre [LOU 16]. Several countries in the European Union, such as the Netherlands and Germany, have also developed and implemented national policy initiatives based on behavioral insights.
1.2.4.4. The Organization for Economic Co-operation and Development
The Organization for Economic Co-operation and Development (OECD) also highlights how behavioral economics can be applied to regulatory policy across the world. In 2014, the OECD classified this understanding as critical for businesses and governments, presented the description of several successful behaviorally-informed policies, and urged their broader dissemination [PET 14].
1.2.4.5. The World Bank
In 2015, the World Bank addressed the need to understand human behavior and apply that understanding to economic development, early childhood development, household finance, productivity, health and climate change [WOR 15]. The World Bank pursues better solutions in policymaking to achieve development, particularly for those who are in regions of extreme poverty. Understanding the context of the regions is considered critical for successful interventions for behavioral change.
1.2.4.6. The United Arab Emirates
In 2016, the United Arab Emirates (UAE) appointed a Minister of State for Happiness and Wellbeing who supervised plans, programs and policies to achieve a happier society. The responsibility of this office is to align and drive government policy to create social good and satisfaction2. The program consists of five pillars: the science of happiness and positivity, mindfulness, leading a happy team, happiness and policies in government work, and measuring happiness. The minister’s goal is to make the country among the top five happiest in the world by 2021 by harmonizing all government plans, programs and policies. In 2019, as per the United Nations World Happiness Report, the UAE ranked 21st among 157 countries. Interestingly, one factor that influences the classification is the freedom to make life choices, in which the UAE was ranked fourth.
1.2.4.7. Other initiatives worldwide
Nudging has also gained increased relevance among companies and micro-initiatives that, based on individual insight, generate behavioral change toward healthier, wealthier, or more sustainable choices. Companies and governments are widely taking advantage of behavioral science. Those designing nudging interventions can draw on apparently trivial clues and characteristics of the environment, which people are often not aware of. By adjusting the social context, emotions, mental shortcuts and automatic responses jointly with small stimuli, nudges can keep people on a better path. Protecting individuals from themselves and others, while maintaining freedom of choice, is a puzzle that introduces new challenges and ethical concerns.
1.3. Nudging for sustainability
1.3.1. Nudging tools for sustainable behavior
Nudging is often described as the application of behavioral economics. However, the systematic application of nudging to macroeconomics and management is still rare. Using behavioral change to promote sustainability involves approaches that can be applied in several areas, such as consuming, saving, investing and productivity.
Nudging uses different sets of behavioral insights and we distinguish between two kinds of nudges: heuristics-based nudging and information-based nudging.
1.3.1.1. Heuristics-based nudging
Heuristics-based nudging acts mainly in automatic S1 for fast, everyday decisions where people rely on rules of thumb. Interventions to promote behavioral change can be designed to trigger or cease specific heuristics. It optimizes fast thinking and unconscious behavior.
1.3.1.2. Information-based nudging
Information-based nudging acts throughout conscious S2, creating awareness and encouraging reflexive thinking for better choices and behavior. It promotes information, learning and rational thinking in the decision-making process, to form true preferences.
Behavioral change and nudging initiatives can use both types of behavioral insights, despite their different nature.
1.3.2. Behavioral insights
The application of nudging has been increasingly generalized in recent years and some of the most common insights used as nudging tools range from simplification, framing and defaults to inform campaigns.
The following are some of the most disseminated insights in policy design.
1.3.2.1. Simplification
Simplification is always the first step in the decision-making process. If you want to make someone do something, make it simple and easy. The message or action should be short and focused on improving efficiency.
Simplification heuristics are generally used due to constraints of cognitive resources, attention, processing capacity, and memory [HIR 01]. Individuals often ignore information and create intentional selective barriers to focus only on some relevant features of the decision process [GOL 99].
Nudging initiatives based on simplification must be easy but reliable. For instance, Newell and Siikamäki [NEW 14] demonstrate that simple information, such as on energy efficiency labels, is the most important element pointing to cost-efficient energy investments. Even when there are several relevant elements, individuals tend to use an aggregator indicator to make their decisions. For example, energy companies often provide indicators of energy consumption to encourage better usage. To be effective, information should be simple and the recommended action should also be easy to follow.
1.3.2.2. Environment or context
Slight changes in the environment may have a significant impact on the final choice. Tversky and Kahneman [TVE 74] claim that availability is an important heuristic for determining choice. People do not have access to the same information to the same degree and the more accessible the information, the more frequently it is considered. Collecting information occurs mostly at the unconscious level. However, decisions on how to use information with different levels of accessibility are made at the conscious level [GOL 99]. Depending on how important a decision is and how much a person wants to avoid bias and error, an individual will decide whether to access layers of information stored at less accessible levels. In this way, the term cognitive availability arises to refer to the information that is potentially accessible to the individual, but not currently available [TVE 73].
The information available currently defines the decision environment. Small changes in the disclosed information may encourage better behavior. This knowledge can be used in several areas to highlight features in order to improve consumer behavior, such as environmentally sensitive production practices, nonanimal testing, or sustainability consciousness.
1.3.2.3. Framing and salience
When deciding on options, the choice architecture frames the features an individual should pay attention to, or make salient, and those an individual should disregard. This is another form of simplification that was identified by Kahneman and Tversky [KAH 79] as the isolation effect. According to this, in order to simplify alternatives, people often ignore the characteristics that the alternatives share and decide by comparing the components that differentiate them. This form of choice can produce inconsistent preferences because a pair of possibilities can be decomposed into common or different characteristics in many ways, and different decompositions may lead to different preferences; therefore, framing is critical in driving preference.
Tversky and Kahneman [TVE 86] present a paradigmatic example of how framing and salience may influence decision-making. In an experiment3, patients with lung cancer were presented with two different frames of the same treatment options. In one group, patients received a “survival frame” and were told that through surgical treatment, of 100 people, 90 individuals who had the surgery lived through the post-operative period, 68 were alive at the end of the first year, and 34 were alive at the end of five years; alternatively, through radiation therapy, of 100 people, 77 were alive at the end of one year and 22 were alive at the end of five years. Patients in the second group received the same figures in a “mortality frame” and were told that through surgical treatment, of 100 people, 10 died (instead of saying that 90 were alive) during surgery or within the post-operative period, 32 died by the end of the first year and 66 died by the end of five years; however, through radiation therapy, of 100 people, none died during treatment, 23 died by the end of one year, and 78 died by the end of five years. The seemingly inconsequential difference in the presentation of the procedures produced a marked effect. The preference for radiation therapy was 18% in the survival frame and 44% in the mortality frame. The same effect was also identified with physicians and business students. The terminology is critical: while the survival frame is centered in hope, the mortality frame is centered in fear. People in both cases receive the same information and should logically show the same preferences, despite the wording. This violates the principle of invariance because different representations of the same choice problem produced different preferences and it can easily be used in nudging interventions by simply choosing the wording carefully.
1.3.2.4. Defaults: automatic enrolment and presumed consent policies
People are frequently passive and tend to maintain the status quo, particularly when a decision is difficult and produces permanent or lasting results. The psychological phenomenon known as conservatism or status quo was identified by Edwards [EDW 68]. Conservatism or the status quo is observed in many decision problems in which individuals demonstrate a predisposition to what has already been established. The status quo can result from a decision, delaying a decision, or simply the inability to decide – also referred to as decision paralysis. The theory of choice under conflict by Tversky and Shafir [TVE 92] argues that the decision to postpone action or to take no action becomes more frequent when several attractive options exist. An individual is more likely to delay a decision or search for new alternatives when the conflict between alternatives is high because the alternatives are difficult to contrast (for instance, one alternative may have simultaneously more advantages but also more disadvantages when compared to the alternative options). The more alternatives there are to consider, the more difficult it will be to rank choice preferences, and the longer a decision is delayed, the more likely a person is to continue to hesitate, therefore maintaining the status quo.
Defaults work well for passive individuals who struggle to make a decision. Using defaults as the status quo makes people adhere simply because they do not need to take any action. Automatic enrolment works well for retirement planning, automatic saving planning, immediate bill charging or credit card payment. By the same order of ideas, presumed consent removes the burden of the decision. Organ donation is one example of presumed consent that does not require any action and also yields substantial results.
Despite the benefits of defaults, many people defend the importance of active decision-making because it ensures that they will be responsible for their choices. For instance, the banning of pre-ticked boxes on websites tends to become the rule. In 2009, the European Union Directive on Consumer Rights prohibited pre-ticking for charging extra payments. Additionally, in 2019, the Court of Justice of the European Union determined that active consent is required for a website to store cookies on user devices. A pre-ticked box, that users can actively deselect to opt-out, is not considered a valid form of consent; instead, affirmative (opt-in) consent is required. However, in general, active consent is often obtained in a routine and distracted way by ticking a box on a form. It is a slightly different way to drive the same result, where there is tenuous involvement of the individual. Personal data protection policies require active consent, and although ticking a box on a form is considered active consent, it does not genuinely engage the individual. It assumes awareness but is mainly based on presumed trust and routine clicking (namely, the unread rules of data protection).
1.3.2.5. Reminders and deadlines
Reminders, gentle reminders and deadlines create urgency for action. Digital nudging often uses these strategies and helps people accomplish their tasks and obligations on time.
Government institutions and corporations actively use reminders and deadlines to nudge people. Taxpayers receive recurrent reminders about tax payment deadlines and information on simple steps to complete their taxes, such as pre-completed tax declarations, bank transfer codes and automatic debit (or credit) payments from their bank account. Likewise, Gmail users are nudged in several ways. By default, Gmail accounts have a nudge option activated to remind users to reply to important emails (as classified by the Gmail account) and follow up on emails sent for which no response was received (again, Gmail classifies emails to which a response would be desirable). It uses artificial intelligence to scan and identify which emails should come to the top of the inbox. Being nudged can be helpful but also annoying if it occurs too frequently. If users prefer, they can manage their nudges by turning off the nudge feature and using the snooze feature to create a custom reminder; alternatively, both options can be used. Additional productivity tools offered by Gmail include “Smart Reply” and “Smart Compose”. When reading an email, Gmail suggests an answer that is just one click away (this is not offered with every email as Gmail needs some context to generate a reply). Such features drive people’s actions and sometimes cause users to feel guilty if they do not act in accordance. And, guilt avoidance is a strong incentive for action.
1.3.2.6. Social norms
Emphasizing what most people do is a strong cue to make others engage in the same desirable behavior. Highlighting positive behavior, recognizing accepted social norms and cultural dynamics may influence people’s actions accordingly. Educators know that reinforcing good behavior is far more effective than calling attention to and correcting bad behavior. Policymakers use this insight frequently and are often criticized for creating a nanny state. Nevertheless, the results may justify the intervention.
The Behavioural Insights Team in the UK proved to be very efficient when it informed taxpayers that 9 out of 10 people in their area had already paid their taxes. The more personal and focused on their residential area the message, the more effective the nudge proved to be. Moreover, positively reinforcing taxpayers’ good behavior could eventually also be used as a cue. It has not been tested, but one could argue that if the government added a sentence stating that a taxpayer was one of the 9 out of 10 who paid their taxes on time, their motivation to continue to comply would increase.
Banks use this kind of message to help improve payment time, and companies use this idea with bill recurrent payments. For instance, when sending a bill letter, a company could reinforce that other customers pay on time or that the customer always paid on time. It can also be very effective to reinforce good behavior in areas such as recycling, energy-saving, and reducing plastic use. Demonstrating that others have sustainable behaviors encourages individuals to develop these same behaviors.
1.3.2.7. Information: generate awareness and empower people for better decision-making
Generating awareness to help people make informed decisions is much more powerful than using soft persuasion by turning on or off some heuristics. People who make active decisions and commit to sustainable behavior generate real and lasting behavior changes.
Educational campaigns can be very effective. Financial literacy campaigns and programs have been used to promote financial knowledge and help people improve their financial decisions. They facilitate responsible and sustainable financial behavior and give people confidence in making financial choices, engaging in long-term financial planning and saving and investing. It is always better for individuals to feel in control of their choices instead of feeling that a policy designed their choices for them.
Individuals may avoid judgment bias and consequent decision errors as they learn from their own mistakes. Learning by experience enhances decision-making if individuals receive disclosure, proper information and feedback. In the long run, educated people taking control of their own decisions eliminate ethical concerns about excessive intervention in policy design. Behavioral change based on information and disclosure generates conscious, diverse behavior based on participation and true active choice.
1.3.2.8. Self-nudging and self-regulation
People often realize that they are biased or make poor decisions and seek mechanisms to overcome these shortcomings. In general, people want to save more, be more conscious of their consumption and be more productive at work.
Individuals can use self-nudging to regulate their behavior when they recognize systematic self-control failures. Examining the larger picture, enhancing education and data-driven decisions, planning for the long run, and defining rules a priori increases individual autonomy to create an environment architecture that encourages better choices. Individual self-nudging may be self-motivated or promoted by policymakers through education, information disclosure and programs.
To save more and invest better, individuals can set up automatic savings plans by defining an amount to save monthly or saving with a pension scheme. Planning a priori for the long-term, and considering tax efficiency, is a key feature for success in saving and investing. Individuals can also nudge themselves to control consumption by paying off credit cards in full each month (avoiding high penalty interest rates of 20–30%) and can avoid overconsumption by reducing credit card debt. For more sustainable consumption choices, it is possible to subscribe and receive local, seasonal and organic fresh food boxes (for example, weekly boxes catered to household size) or to subscribe for recurrent supply needs. Individuals stay on track to make better choices when they are in control of defining simpler choices or suitable defaults.
Individuals can likewise define a priori rules to reduce temptation. For instance, to develop self-discipline in deep work, people can use apps that reduce distraction, such as access to social media or recreational websites. Many free apps set rules of productivity a priori, such as blocking certain websites completely or at specific dates and times (e.g. from Monday to Friday, from 9 a.m. to 5 p.m., no more than 30 minutes per day). Once set, some apps require the user to wait up to 24 hours before changing the settings. Obviously, it is possible to get around these limits, but the goal of self-nudging is not to block access but to filter negative impulses, improve self-regulation and facilitate self-determination.
1.3.2.9. Reducing sludge
Nudging can also come in the form of reducing sludging, that is, eliminating the barriers that make otherwise good decisions difficult. Nudging and sludging are the good and evil sides, respectively, to the architecture of choice and use the same behavioral insights.
Legislation has been issued to reduce the risk of misleading information and enhance the consistency and comparability of the information provided. However, the same behavioral insights that are used in nudging can also be used to make judgments based on disadvantage. In March 2020, during the coronavirus disease (COVID-19) pandemic, some UK patients with life-limiting conditions (such as heart disease, cystic fibrosis, terminal cancer and neurological conditions) received letters from their local doctors requesting them to complete “do not resuscitate” forms in case they contracted COVID-19 and their health deteriorated. They were also advised not to call emergency services if they had symptoms or contracted COVID-19 and were urged to leave scarce health resources such as ventilators and hospital services to care for younger and fitter patients who are more likely to survive. The National Health Service apologized after a viral reaction on social media called the letter cruel and criticized the idea that some lives are not worth saving. This is just one example of how sludging uses the same insights as nudging. In this case, local doctors facilitated certain behaviors in an attempt to establish a social norm that favored others’ interests over the individual’s self-interest. While nudging can be pro-society, it must primarily be pro-individual.
1.4. Challenges and final remarks
Nudging connects antagonistic principles such as freedom of choice and the improvement of decision-making by routing preferences and choices. Under the principle of “maintaining the freedom of choice”, nudging utilizes the power of influencing choices like never before.
Freedom has defined ethical limits. The nudging model departs from these limits – so-called “proper” behavior – and uses knowledge from social sciences to encourage ideal behavior. Even in the presence of transparent nudging, where people are aware that they are being nudged, nudging increases uniform behavior. In a nudged world, opposing the nudges requires assuming “irrelevant” costs and exerting constant effort. In an environment designed to influence subconscious decisions, a person must be continuously attentive to escape the framing design. It requires continued attention to escape default decisions, collect complete information while avoiding salience, frame and simplify the options set and develop critical thinking. Simply put, it would require that people stay permanently in the S2 way of thinking, which, by definition, is impossible.
Nudging also depends on whether people trust a system – governments, institutions and corporations – enough to accept their interventions. Intervention designers need to recognize that people care, are committed to, and need to be involved in accepting interventions. Nudging will require greater ethical examination as people become more aware of being nudged, and as digital nudges become increasingly complex, personalized and developed by artificial intelligence systems using personal information. People can oppose the widespread use of nudging if they believe it interferes with true choice and preference, or even harms an individual’s self-interest. Public scrutiny of the nature of nudging policies will be critical for acceptance and should increase as nudging interventions spread.
Analyzing how effective nudging interventions are over time requires a longer period of data collection to determine how permanent the effects of nudging are. Meanwhile, nudging will continue to develop rapidly as different sets of behavioral insights appear alongside new applications.
1.5. References
[BEH 11] BEHAVIOURAL INSIGHTS TEAM, Behavioural Insights Team annual update 2010–11, report, 2011.
[BEH 18] BEHAVIOURAL INSIGHTS TEAM, Behavioural Insights Team annual update 2017–18, report, 2018.
[BRU 18] BRUNS H., KANTOROWICZ-REZNICHENKO E., KLEMENT K. et al., “Can nudges be transparent and yet effective?”, Journal of Economic Psychology, vol. 65, pp. 41–59, 2018.
[EDW 68] EDWARDS W., “Conservatism in human information processing”, in KLEINMUNTZ B. (ed.), Formal Representation of Human Judgment, John Wiley & Sons, New York, 1968.
[GOL 99] GOLDBERG J., VONNITZSCH R., Behavioral Finance, John Wiley & Sons, Chichester, 1999.
[HIR 01] HIRSHLEIFER D., “Investor psychology and asset pricing”, Journal of Finance, vol. 56, no. 4, pp. 1533–1578, 2001.
[JOH 03] JOHNSON E., GOLDSTEIN D., “Do defaults save lives?”, Science, vol. 302, no. 5649, pp. 1338–1339, 2003.
[KAH 79] KAHNEMAN D., TVERSKY A., “Prospect theory: An analysis of decision under risk”, Econometrica, vol. 47, no. 2, pp. 263–292, 1979.
[KAH 11] KAHNEMAN D., Thinking, Fast and Slow, Macmillan, London, 2011.
[LOU 16] LOURENÇO J., CIRIOLO E., ALMEIDA S. et al., Behavioural insights applied to policy, report, European Union, Brussels, 2016.
[MCN 82] MCNEIL B., PAUKER S., SOX H. et al., “On the elicitation of preferences for alternative therapies”, New England Journal of Medicine, vol. 306, no. 21, pp. 1259–1262, 1982.
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[NEW 14] NEWELL R., SIIKAMÄKI J., “Nudging energy efficiency behavior: The role of information labels”, Journal of the Association of Environmental and Resource Economists, vol. 1, no. 4, pp. 555–598, 2014.
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[SUN 16] SUNSTEIN C., “Do people like nudges?”, Administrative Law Review, vol. 68, no. 2, pp. 177–232, 2016.
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[TVE 73] TVERSKY A., KAHNEMAN D., “Availability: A heuristic for judgment frequency and probability”, Cognitive Psychology, vol. 5, no. 2, pp. 207–232, 1973.
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Chapter written by Cristiana Cerqueira LEAL and Benilde OLIVEIRA.
1
Figures collected from the US Government Information on Organ Donation and Transplantation. Available at:
https://www.organdonor.gov/statistics-stories/statistics.html
, accessed June 2020.
2
https://u.ae/en/about-the-uae/the-uae-government/government-of-future/happiness
.
3
The experiment is originally from McNeil
et al
. [MCN 82].
2Embedding Corporate Sustainability in Human Resource Management Practice
There is a growing trend for corporations to act in ways that are socially responsible and that acknowledge the interests and concerns of the society in which they are positioned and within which they operate. In the organization, the human resource management function has the potential to develop procedures, policies and practices that encourage and support the organization’s attempts to embrace social responsibility and corporate sustainability. This chapter explores three significant areas of current academic and professional literature: the meaning, scope and implications of corporate responsibility and corporate sustainability; the nature and function of human resource management; and the nexus of corporate social responsibility possibilities and human resource management engagement. The chapter reviews these areas of interest in order to suggest a means by which the end goals of corporate social responsibility can be reached, or at least become more attainable, through thoughtful and socially responsive human resource management practice.
2.1. Introduction
As the title suggests, this chapter explores the ways in which the functionality of human resource management (HRM) – that is what the HRM department does through its policies, procedures and practices – can shape and reinforce the organization’s position on, and commitment to, corporate social responsibility (CSR) and corporate sustainability (CS). A central theme of this chapter is the exploration of concepts and possibilities. Sizeable bodies of literature and research already exist which focus separately on the roles of HRM and the aspirations of CSR and CS. A smaller but growing body of literature has also developed around the nexus of HRM practice and CSR goals. This chapter does not attempt to deliver a succinct synopsis of this material – such an attempt would undoubtedly fail to capture the richness of the literature or include its diversity. Rather, the chapter explores themes that seem to be of greatest interest and significance to the practitioner when HRM and CS are brought together.
However, the exploration is not simply a pragmatic solution for an abundance of richness in the field – it is undertaken for a specific purpose. Identifying CSR and CS principles and embedding them in HRM practice is an ongoing challenge for all organizations. The field is dynamic and changing, the social and environmental context is shifting and evolving, and the task of clarifying CSR demanding. There is also a constant challenge for HR practitioners to appreciate the role of CSR and CS in their organization and to align their practice and outcomes with corporate goals. It is hoped that this chapter – as an informed exploration of possibility, rather than an ideological prescription – might be useful for managers and HR practitioners faced with aligning and coordinating efforts to make HRM reflect and support CSR visions.
At the outset, it might be prudent to appreciate that “corporate social responsibility”, “sustainability” and “human resource management” all have multiple and contested meanings. Each is understood differently within individual organizational contexts. Each is approached and defined differently within the scholarly literature that discusses it. In particular, the notion of corporate sustainability – and of the related and overarching construct CSR – has evolved in a fragmented manner. It has been described in a multitude of significantly different ways and defined in just as many variant forms [CAR 99, DAH 08]. After decades of consideration, these constructs still remain tantalizingly ambiguous. Currently, what can be agreed upon with certainty is that there is no single or all-encompassing definition that is generally accepted and which precisely pinpoints the nature, scope, and anticipated outcomes of CSR or sustainability [AGU 12, CAR 99, DAH 08].
Arguably, the conceptual trajectory of HRM has been smoother and less erratic; nevertheless, the meanings, intents and organizational practices associated with HRM have shifted considerably over the last 40 years and continue to evolve [KAU 14, KEE 90]. Faced with such a diversity of meaning, any attempt to link sustainability with HRM – or even to suggest that such a linkage is possible – hinges upon the specific and contextual ways in which we choose to define and understand these constructs. This chapter presents the multiple meanings that have been attributed to HRM, CSR and sustainability and suggests definitions that may be useful in understanding how they might be linked and interdependent.
The chapter is structured as follows. The first section reviews the various meanings and definitions that have emerged regarding CSR and CS, in order to understand their scope and implications for contemporary corporations and the society within which they operate. The section following this similarly explores the shifting and evolving meanings, roles and functions that are ascribed to HRM. In turn, this is followed by a section that considers the coming together, or nexus, of HRM and CSR, in an attempt to understand how HRM presence and practice can complement, support and further organizational efforts in moving towards a goal of sustainability. The penultimate section considers how selected HRM functions and practices can advance a pervasive and coordinated ethos of sustainability within the organization and its workforce. The final section briefly reviews some of the main issues, concerns and strategies that have been presented in the chapter.
