How Sustainability, Purpose, and AI Are Changing HR Management

August 29, 2022

People and culture management as new trend in HRM

At the moment, no stone is left unturned in the business world: new technologies such as artificial intelligence (AI), Internet of Things (IoT), and robotics, society’s heightened sense of urgency regarding sustainability and corporate responsibility, and the increased expectations of employees have multiplied the pressure companies experience. These developments come with great challenges for human resource management (HRM), which is forced to deal with whole new topics.

How can HR best meet such demands? And what are the fields enterprises will be well advised to pay particular attention to? On the occasion of the kick-off of the new People & Culture Management program this fall, HR experts Martina Ernst and Paul Baldassari discuss the future of modern HRM, which is sure to be one thing: smart.

One hand held over a tablet on which many representations of figures are projected
HRM, like many other business areas, is subject to constant change - new technologies and sustainability are two big issues. Photo © shutterstock – PopTika

People First

While HRM used to focus on process management and the team as a whole in the past, this focus has recently shifted to the individual employee, says Martina Ernst, a graduate of the Global Executive MBA and the founder of SalaryNegotiations. Today, much attention is paid to the fact that there is great diversity among people. Against this backdrop, HR managers need a new mix of skills and competences. Particularly empathy and the willingness to engage with the expectations and individual life realities of employees but also being able to expertly handle digital HR tools will be key qualities; it’s all about creating an even more honest, more open dialog, in the office as well as in online settings. “Only when they meet every person where he or she is will companies be able to optimally use the valuable resource that humans are,” she emphasizes.

HRM as a Strategic Sparring Partner in a Company

This also means that, as opposed to the past, HR no longer has a purely supervisory function but has become a sparring partner for corporate leaders and managers. This is not limited to but especially the case when it comes to corporate culture. Also the WU Executive Academy’s new People & Culture Management program deals with such central topics as agility, employee experience, digital transformation, and Green HRM. The first round will kick off in October 2022 and count, among others, Martina Ernst among its lecturers. A tailor-made further education course of this kind can greatly contribute to a company’s capacity to proactively drive the needed change. This will be a considerable advantage not only in light of employee retention and employer attractiveness.

Martina Ernst Portrait

Martina Ernst

  • Global Executive MBA alumna and HR expert

Today’s applicants are much more sensitive about a company’s culture than those in the past and want to find out from future colleagues what the organization is really about. Fancy marketing slogans will no longer do here.

Smart HRM Will Save the Day

But the enormous transformation HRM is currently undergoing is also an effect of digitalization and the availability of tools such as AI, machine and deep learning, and big data.

Paul Baldassari serves as the Executive Vice President of the listed global manufacturing services provider Flex and will also be one of the lecturers of the People & Culture Management program. Based in the company’s US headquarters in San José in California, the Austrian manager is responsible for, among other things, the group’s technological innovations. “Digitalization is a wonderful foundation for modern, smart HRM,” he says, specifying that “in the HR context, smart means being able to solve complex problems. For example, it helps you decide for a candidate because he or she is most likely to succeed in the job, and it identifies which employees will collaborate most effectively and benefit the most from each other in a team. Particularly the efficiency of teams and driving innovation through diversity are two fields that can benefit from innovative HR approaches, such as analyses to identify a team’s key player or main information carrier and top performer.

A group of young people from each ethnicity working together
A goal of smart HRM would be to build the ideal team in terms of diversity, team efficiency and key positions. Photo © CC0 Licence

These are things you can determine in an analog way as well, however not as efficiently and intelligently, in other words: in a less smart way.” Considering these facts, there is no doubt for Baldassari that personal meetings will remain essential and that HR management must fill a dual role today: “On the one hand, HRM should offer services and information on topics such as corporate culture and strategic orientation, on the other hand, it should work to strengthen personal communication both internally and externally.” He emphasizes that it is important to feed AI with the right data and to keep questioning algorithms. If, for instance, patterns from the past were applied in recruiting, an automated selection could go completely awry. “This would be a step in the wrong direction. You would have to pause and reconsider whether application processes are effectively designed in a way to consider candidates who would fail in standardized – and often outdated – selection processes.”

Why Sustainability, Purpose, and Identification Are Key

As HRM is developing into Green HRM, sustainability increasingly takes center stage. More and more companies are eager to actively contribute to making economic cycles more sustainable and providing fair, equal, and healthy workplaces. This is not least due to the ESG reporting duties that will take effect from 2024 and apply to companies with more than 250 employees and a minimum balance sheet total of €20 million. “Many companies have to adapt their HR processes to make them more sustainable and meet CSR requirements, and they have to make sure this becomes visible in every step of the HR value chain,” Ernst explains. This leads to the following question: how can HR support a company to serve not only itself but also the environment and society at large?

Paul Baldassari Portrait

Paul Baldassari

  • HR expert and Executive Vice President of Worldwide Operations at Flex

We’re looking at a profound change of culture in companies. HRM with a focus on sustainability can go a long way here.

There are many ways to implement changes: from remote work, idea competitions for green improvements to bonus payments and incentives for reaching sustainability goals through to funding environmentally friendly modes of transport and cooperating with NGOs – all of these things can be realized within a framework provided by HRM that enables employees to experience sustainability in practice at their workplace. Ernst points out that sustainability also means “not stopping at remuneration schemes but making fairness and equal treatment pillars in all fields of the company. All employees should be equally supported: instead of the squeaky wheel getting the grease, also introverted and reserved staff members that quietly do an outstanding job should be promoted.”

An important component of redefining the fields of people and culture in a company is about enabling employees to identify with their organization, which will directly impact their motivation and performance. “Fewer and fewer young people want to work in large organizations,” Ernst points out. Catchy slogans no longer attract good workers. “Companies must foster a climate of inclusion and provide a cause staff members can get behind. Every single employee must be able to feel part of the organization and able to make a significant contribution.” Identification revolves around pillars such as transparent processes, open and respectful communication, and opportunities to voice one’s opinion and be heard and make active contributions.

Many people put their hands together on a point in the middle between them
The work climate, inclusion and meaningfulness of a position are important aspects of realignment for a company's people & culture management. Photo © shutterstock - REDPIXEL.PL

Paul Baldassari has no doubts that there are many people who no longer want to work for a company that is not sensitive to the topics of sustainability and identification, as these have become two of the most essential factors these days. And that’s also relevant considering that talent is increasingly hard to get.


People and culture management is a great opportunity for guiding a company in challenging times. “To survive, companies must be able to reconcile very diverse demands and requirements: local versus global, sustainable and social versus profitable, digital versus analog – all things the right smart HRM tools will be able to help you with,” Martina Ernst stresses.

Get more information about the program People & Culture Management.

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