[PDF] Organizational Structure for Sustainability



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Organizational Structure for Sustainability

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Organizational Structure for Sustainability

Hayley Jean FarrEDF Climate Corps Fellow - Blue Cross Blue Shield of Massachusetts

The Johnson School, Cornell University '12

July 14, 2011

2Blue Cross Blue Shield of Massachusetts

FrameworkStrategy Internal Structure Reporting Structure Decision Rights Incentives Organizational structure is based on a firm's unique sustainability strategy, goals, and priorities

Sustainability Vision & Strategy

Sustainability Goals & Priorities

Internal Structure

Reporting

Structure

Align

Incentives

Decision

Rights

External

Structure

External

Accountability

3Blue Cross Blue Shield of Massachusetts

SUSTAINABILITY STRATEGY

4Blue Cross Blue Shield of Massachusetts

Framework StrategyInternal Structure Reporting Structure Decision Rights Incentives Sustainability strategy must align with structure, competencies, and culture of firm

Sustainability

Strategy

Core

Competencies

Organizational

Structure

Culture

Overall vision broadly communicated

by executive sponsor

Clear accountability and responsibility

for program

Transparent goals with metrics

Reported results

Mitigate Risks:

External Market

Demands

Consumer Pressure

Strategic:

Internal Pressure

Vision

Commitments

5Blue Cross Blue Shield of Massachusetts

Framework StrategyInternal Structure Reporting Structure Decision Rights Incentives Proposed vision ties to core services and "Healthy

Environments" focus

As a health insurance company, BCBSMA recognizes the relationship between healthy environments and healthy people. We are committed to improving the health of the communities where we live and work and to reducing our environmental footprint through corporate policies, green business practices, and employee initiatives. Communication of this vision from a high level will increase awareness, buy- in, and participation towards a common goal.

6Blue Cross Blue Shield of Massachusetts

Framework StrategyInternal Structure Reporting Structure Decision Rights Incentives

Common commitments unite all business units and

functions GHG/

Climate

Change

Waste

Resource

Consumption

Procurement

Education

Community

Engagement

Nutrition

Sustainability

Strategy

Corporate Commitments

7Blue Cross Blue Shield of Massachusetts

INTERNAL STRUCTURE

8Blue Cross Blue Shield of Massachusetts

Framework Strategy Internal StructureReporting Structure Decision Rights Incentives Four important considerations for internal structure Level of employee and business unit engagement is accelerated when the CEO drives the sustainability vision.

Sustainability Program "Home"

The most recognized sustainability programs are based in divisions with decision-making power or close ties to stakeholders (i.e., legal, corporate, or public affairs).

Reporting Relationship with CEO and

Board

Interaction with Business Units and

Employees

Three distinct structures (stand-alone, integrated, embedded) provide different levels of interaction

with employees and business value.

Executive Sponsorship

Elevated position improves the ability to reach and engage high-level managers, and signals importance of program to employees and stakeholders.

9Blue Cross Blue Shield of Massachusetts

Framework Strategy Internal Structure Reporting StructureDecision Rights Incentives Sustainability program often treated as a separate function CEO COO

Business

Units CFO CSO

Director(s)Stand-alone Structure

Stand-alone structure makes sense for firms new to sustainability; high level of "CSO" is important to engaging business units.

Specialized skill set in

role.

Sole focus and

responsibility to implement initiatives and activities.

Lack of organization-wide

integration.

Limited buy-in from

employees.

Funding challenges - focus

on cost cutting, not business development.

10Blue Cross Blue Shield of Massachusetts

Framework Strategy Internal Structure Reporting StructureDecision Rights Incentives Program can be integrated through reporting relationship with business units CEO COO

Business

Units CFO CSO

Director(s)Integrated Structure

Integrated structure grants authority necessary for organization-wide integration; makes sense for programs focused on cost-cutting/efficiency.

Enables organization-wide

integration.

Direct tie supports action

at the business unit-level.

Encourages employee

buy-in.

Responsibility and

accountability is dispersed.

11Blue Cross Blue Shield of Massachusetts

Framework Strategy Internal Structure Reporting StructureDecision Rights Incentives Program can be embedded through dedicated role in each business unit/function CEO COO

Business

Units/Functions

Sustainability

Director(s)

CFO

CSOEmbedded Structure

Embedded structure brings sustainability to core business; makes sense for "mature" organizations seeking revenue-generating opportunities.

Sustainability program

able to drive business value.

Encourages significant

buy-in from all employees.

Coordination is a challenge.

Efforts may be duplicated.

12Blue Cross Blue Shield of Massachusetts

Framework Strategy Internal Structure Reporting Structure Decision RightsIncentives Decision rights framework can help firms execute and communicate initiatives

Understand

types of decisions Form groups to make decisions

Identify

manager to execute decisions

Decision Rights

Framework

Sustainability initiatives often challenge well-established decision rights within an organization.

13Blue Cross Blue Shield of Massachusetts

Framework Strategy Internal Structure Reporting Structure Decision Rights Incentives

Sustainability performance must be integrated into day to day management and compensation Responsibilities, performance reviews, and compensation models (for all employees) must align with sustainability objectives to encourage and reward innovation.

Responsibilities or

contribution to executing goals

Performance

reviews

Compensation

models

Education about

opportunity

Form green teams

Support employee

efforts at home

Sustainability

strategy, goals, and priorities

Basic awareness

Actions to increase

innovation and improve competitive position Hayley Jean FarrEDF Climate Corps Fellow - Blue Cross Blue Shield of Massachusetts The Johnson School, Cornell University '12hayleyjean.farr@bcbsma.comQuestions?

15Blue Cross Blue Shield of Massachusetts

Resources

Energizing Employees with Green Strategy, Andrew Winston. Organizing for corporate responsibility and sustainability, Deloitte Consulting. Should the C-Suite Have a "Green" Seat?, Eric McNulty and Rupert Davis. The Sustainability Imperative, David Lubin and Daniel Esty. Where Sustainability Lives: A Path to Integration and Innovation, Kathee

Rebernak.

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