#7 Bridge the Divide and Boost Performance

ESG initiatives often spark debate in the boardroom, and usually this centres on the tradeoffs between positive impact and financial performance.

When leadership teams are divided on these priorities, it’s not just the initiatives that falter—overall business performance can suffer as well.

But what if there’s a way to build alignment, ensuring that ESG initiatives are implemented effectively and drive financial success as a result?

3 min read

Finance and HR are often to be found on opposite sides of the table in these debates.

HR knows that sustainability and social impact are increasingly important factors for attracting and retaining the best people.

And that a strong sense of purpose is also a powerful way of increasing employee engagement.

But the CFO may only see the cost of implementing these initiatives: there is no quantifiable benefit, nowhere that employee engagement features in their spreadsheets.

However, bridging this divide is not only possible but essential. The key lies in translating the intangible benefits like employee engagement into quantifiable financial metrics that resonate with the Finance team.

Engagement and Financial Performance

According to McKinsey, purpose-led companies experience 4x higher employee engagement.

The links between engagement and performance are obvious: those that care about their work and their company's mission are more motivated and perform at higher levels.

This of course translates to stronger financial performance:

A meta analysis by Gallup (totalling 3.3 million employees across 736 studies) found that companies in the top quartile for employee engagement are 23% more profitable than those in the bottom quartile.

These statistics make it clear: engaged employees perform better, which translates into better financial outcomes.

But how can HR make this case to Finance?

The key is to link engagement with metrics and KPIs that are already being used to track performance across the business.

Finding the Links

Let’s say HR proposes a new initiative aimed at increasing employee engagement—perhaps a volunteering program or a new wellness initiative.

While HR sees this as a way to boost morale and attract top talent, the CFO might see it as just another cost.

The solution is to demonstrate how higher engagement can lead to better performance, and to then quantify this in financial terms.

For example, consider a motivated, engaged salesperson versus a disengaged one. The engaged salesperson is likely to make more calls, book more meetings, and close more deals.

These activities directly impact revenue and can be tracked through existing KPIs.

By forecasting how a modest increase in engagement could lead to improved sales performance, HR can present a compelling case that aligns with the CFO’s focus on financial outcomes.

Creating Alignment

The next step is to set clear targets: in this case - by how much will engagement and sales performance increase, and over what timeframe?

This allows for detailed action plans to be developed: working back from the targets, what do we need to do to achieve them?

Clear responsibilities can then be assigned - ensuring everyone understands what is to be gained from the initiative, in terms of positive impact and performance.

This allows all departments to work together towards shared goals.

The benefits of this alignment go beyond immediate financial gains. A company with strong collaboration across functions is more resilient and more innovative.

Shifting the mindset from viewing purpose and profit as opposing forces to seeing them as complementary is crucial for long-term success.

Next steps

1. Identify Collaboration Opportunities: Consider where stronger bridges could be built between departments in your business to support ESG initiatives and overall business goals

2. Build Bridges with KPIs: Evaluate how performance metrics can be used to align seemingly conflicting priorities by translating intangible benefits into measurable financial outcomes

3. Quantify Engagement: Explore ways to quantify employee engagement across your company. What metrics could you use to demonstrate the impact of higher engagement on productivity, efficiency, or other KPIs?

If you'd like to discuss in further detail how your company can put these things into practice, I'd love to hear from you.

The journey towards a better way of doing business

We are on the cusp of a new paradigm of responsible business, and helping impactful companies pair purpose with profit will accelerate the shift.

I believe this holds the key to solving many of our greatest challenges and inspiring positive change throughout society.

If you can think of two or three others that would find this newsletter helpful, please invite them to join at this link.

Thanks for your support.