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Holly Ferraro, Rubina Mahsud

Strategically sustainable: Linking strategic leadership and HRM to human thriving

The literature on strategic leadership describes the influence of top executives on organizational processes that determine the financial performance of a company. The literature on human resource management (HRM) describes practices and programs used to improve employee skills and commitment. The two literatures have developed separately without much attention to points of convergence. Particularly, how top executives influence human sustainability, and how HRM programs influence the ability of employees to thrive has largely been overlooked. Studies in strategic leadership and human resource management assume spillover effects such that employees, communities and society at large thrive when stellar financial performance is achieved. The purpose of this article is to examine related aspects of the two literatures that can be brought to bear on our understanding of human sustainability and societal thriving. Over the past few decades, most of the business leadership literature has been influenced by shareholder theory mandating that the key responsibility of business leadership is to guard the interests of shareholders and investors of the company. In order to achieve such organizational goals leadership had to focus on ruthless productivity obtained from the workforce with rigid controls, compliance, and conformance. It worked until financial capital was the driving force behind this management thinking – a corporate force to appropriate value from. Today however, in knowledge economy, it is recognized that companies cannot survive ignoring the interests, motivation, and energy of the workforce(Yukl, 2013; Pfeffer, 2018). Similarly, recent strategic HR research has shown that creating a more humane and caring workplace ultimately leads to improved customer service, better health outcomes and all-around satisfaction. A more humane workplace is one that promotes people’s strengths and capabilities, leading to the high levels of engagement, productivity and retention businesses need. A 2012 global study of 32,000 employees by consulting firm Towers Watson found that traditional engagement—defined as an emotional connection to an organization and willingness of employees to voluntarily expend extra effort—does not fuel the highest levels of performance. Instead, the study identified sustainable engagement as willingness to go “above and beyond” at work and to maintain that energy over time. In the Towers Watson study, organizations with high traditional engagement scores had an operating margin of 14 percent. In contrast, organizations with the highest number of sustainably engaged employees had an operating margin of 27 percent. What is the difference between strategies employed to develop traditional versus sustainable engagement? According to the study, the chief drivers of sustainable engagement are cultural, encompassing the nature, style and quality of organizational life —in other words, the components of a humane workplace (SHRM Study, Creating Thriving Work Place; Forbes, 2017). Together, the strategic leadership and strategic HR literatures provide opportunities for new questions and insights on the creation of workplaces that allow for human sustainability and thriving. In the full paper, we build a conceptual model of how organizational leadership can influence human resource policies and practices to create more humane and just organizations.