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Management of Productivity and Performance for sustainability of Triple Bottom Line

Introduction

This research has been conducted to analyze the challenges and opportunities of the management of productivity and performance of a firm to ensure sustainability of the TBL through a review of operations management (OM) and strategic human resource management (SHRM).

The management of processes that convert inputs into goods and services that add value for the customer is referred to as OM. (Jacobs, et al., 2004) Ehnert et al., (2015) define SHRM as the implementation of high-performance work systems (HPWS) that enable the achievement of financial, social, and environmental goals with an effect inside and outside of the organization.

Practicing sustainable OM and SHRM ensures integration with profit, the company's internal and external stakeholders, and the environmental impact, leading to competitive advantage. (Bettley and Burnley, 2008) It ensures the company is agile, adaptive, and aligns to balance the triple bottom line. (Kleindorfer, et al., 2009)  

Analysis

Operations Management and Productivity

OM is one of the essential components of a company's three strategic functions; it ensures its strategy is carried out to guarantee its long-term survival and success. (Jacobs, et al., 2004) Sustainability concepts within the operations systems need to be viewed and treated like agile manufacturing, lean production, etc. It not only helps an organization's financial performance and productivity but will also help it meet social, environmental, and economic objectives and regulations. (Modgil and Sharma, 2016)   

OM must adopt a continuous development way of life with measurable performance objectives across the entire supply chain to integrate productivity and sustainability into business operations to make the keys areas of OM effective . To make this a reality, OM should incorporate the following initiatives:

Total quality of product and process

Total Quality Management (TQM) is a management philosophy that focuses on the customer, seeks to integrate all organizational functions to meet customer needs.  It aims to improve and sustain product and process quality continuously, enabling the firms to meet customer expectations (Tseng et al., 2007; Bayazit and Karpak, 2006). TQM has also been viewed as a practice that maximizes its market share, higher productivity, and performance, leading to competitive advantage (Modgil and Sharma, 2016; Reed et al., 2000).  Increased profits of a firm are directly associated with the quality of processes and products due to reduced costs and better cost management. (Agus and Hassan, 2011). TQM also has some positive impacts on the social aspects of the TBL: increased job security, improved employee morale, improved customer focus and satisfaction, and enhanced shareholder and stakeholder value.  Antony and Banuelas, 2002 in their research, propose with the implementation of TQM, there is a positive effect on the environment as there is an elimination of waste, scrap, defects, and rework within the firm.

Despite the pros of TQM, there are some drawbacks; (Cândido and Santos, 2011)

• TQM practices can be very complicated and take time to be implemented and be effective.
• The leaders of firms do not understand the modern concept of quality and obligation to it.
• Lack of resources
• Inadequate control and monitoring systems

Environmental stewardship

Bennett et al. (2018) defines environmental stewardship is defined as a comprehensive understanding and effective management of major environmental risks and opportunities, such as climate change, emissions, waste management, resource consumption, water conservation, biodiversity protection, and ecosystem services.  There are challenges with implementing these practices as it requires fundamental changes to well-established procurement processes and supplier performance measurement systems to take some time.

However, despite the challenges, the initiative has good opportunities for the TBL: (Lopez, 2020)

• Profit - Lower operating cost due to the reduction of raw materials and utilities.  Reduce the energy needed to make, use, and maintain the product.
• People – Protect the health and safety of workers and the wider community.  Maximize sustainable use of renewable resources.
• Planet - Collectively, it reduces energy usage, protects natural resources, less pollution of the environment.

Total process health and safety

           Process Safety Management (PSM) is concerned with several interconnected approaches that work together to reduce the likelihood of unsafe events occurring (Theophilus et al., 2017). It is applying management principles and systems to the identification, understanding, and control of process hazards to protect employees, facility assets, and the environment. An effective PSM system ensures smooth operations, increases productivity and efficiency, and thus extracts more value from company assets. If PSM is not executed with strictness and discipline, it raises an organization's risk and reduces its productivity and efficiency. (Aziz et al., 2013)

PSM ensures administrative costs are reduced; there is the potential for reduced insurance and liability costs, reduced injuries and illnesses, and improved safety, which is usually a competitive advantage because of reduced prices.  Positive employee impacts and worker health protection enhance the company's image for employees, communists, customers, and stakeholders.  It also improves employee performance, better employee relations within the company as everyone is on the same page regarding safety, and improved regulatory compliance is all benefits from the people’s perspective.  A process safety program aims to lower the risk of catastrophic incidents and helps to prevent environmental damage.

There are a few challenges to implementing PSM; there are costs to implement a sound safety management system. In training and on the administrative side, to determine which regulations and other requirements apply to your business, there may not be full management support. (Hanchey and Thompson, 2011)

Business Process Reengineering

Business process reengineering (BPR) is the redesign of processes, typically with the help of information technology (IT), to achieve significant improvements in critical areas of performance such as service, quality, cost, and speed. (Altinkemer et al., 2011) Many BPR implementations reported significant benefits, ranging from immediate financial gains to overall customer satisfaction and growth sustainability.  

BPR does come with its challenges (Irani et al., 2002); it does not meet every business need because it depends on the size and resource availability.  Large organizations usually benefit from it; however, in some cases, one department's efficiency is improved at the expense of the overall process. It may necessitate a significant investment in IT and careful planning, fantastic teamwork, and exceptional implementation. It can replace humans in getting the job done correctly, posing a real threat to jobs.

Human Resources and Performance

HPWS is defined as a collection of HRM practices such as selection, training, performance management, compensation, and information sharing intended to attract, retain, and motivate employees.  (Messersmith and Guthrie, 2010) HPWS brings together people, technology, and the organizational structure to achieve the organization's goals, where individual performance is aligned to the organizational goals. (Tang et al., 2017)

Performance management is used to leverage an organization's assets (people, money, and technology) to achieve short, medium, and long-term strategic goals. Using this strategy aimed at increasing value creation, it continuously identifies, measures, and develops the performance of individuals and teams and aligns performance with the organization's goals. Performance management strives to foster a high-performance culture in which individuals and groups take ownership of the ongoing improvement of production processes and their own abilities. (Frolick and Ariyachandra, 2006) HPWS and performance management lead to the enhancement of performance and the TBL.

HRM is obligated to consider the broader consequences of HR decisions, not only on employees but also on employee families, economies, and society in general.  Human Resource Management Practices (HRMPs) can significantly improve a company's social performance by increasing employee morale, well-being, loyalty, and productivity. HRMPs that adhere to environmental ideals assist firms in reducing system weaknesses and enhancing a firm's environmental business activities. HRMPs such as recruitment and selection, training and development, and performance management, according to researchers, have a positive impact on the ecological aspects of the business.

Various HRMPs positively impact the profit of the businesses, such as efficient and cost-effective recruitment, staff skill development, and employee performance management. They also provide an organizational structure that encourages employees to participate in corporate activities, resulting in continuous feedback. According to the literature on HRMPs and economic performance, a positive relationship can be observed due to cost savings and goal attainment, resulting in improved financial performance.

The implementation of HRMPs improves a firm's ability to achieve goals and provides it with a competitive advantage, which increases a firm's economic performance which enhances productivity.  

Conclusion

Both OM and SHRM play a crucial role once implemented and executed appropriately in the effective and efficient management of productivity and performance while ensuring the sustainability of the TBL. (Piwowar‐Sulej, 2021) TQM, PSM, Environmental Stewardship & Business Reengineering are crucial initiatives that can be implemented to ensure all areas of OM are effective and productive.  They also play a pivotal role in ensuring OM functions embrace sustainability management.  SHRM, which includes HPWS, focuses on providing all resources (people, technology, and organizational structure) that are pooled together well with each other for the smooth functioning of the organization to achieve high performance and TBL. It is crucial to measure performance to ensure everything is aligned with the firm’s strategic goals.

Recommendation

OM & SHRM are critical in effectively managing productivity and performance: these increases efficiency as they reduce costs, increases revenue through improved customer satisfaction, decrease the investments required to produce goods and services, and provides a solid foundation for innovation, particularly in the use of resources. (Heizer et al., 2017) Employee performance inextricably is linked to organizational performance; therefore, effective and efficient employee performance will positively impact organizational performance.

Firms can implement the following key strategies to effectively and efficiently manage performance and productivity; a well-planned and executed onboarding process will increase the chances of recruiting the right talent for a positive work experience. They can ensure ongoing performance support and management to deliver real-time guidance so that employees can accomplish their tasks quickly with fewer errors and wastage. Implement a new packaging design to use less material or materials that are easier to recycle, reduce transport costs, and reduce carbon emissions footprint.  Ensure the supply chain meets environmental regulations for sourcing, clean air, and emissions and uses technology, e.g., advances planning and scheduling to enable scenario data-driven decision making.