Strategic ESG-Driven Human Resource Practices: Transforming Employee Management for Sustainable Organizational Growth

TL;DR

This study investigates how ESG practices in private higher education institutions in Bandung influence employee performance and well-being, highlighting the mediating role of governance and the importance of sustainability integration.

Contribution

It uniquely examines ESG's impact on employee outcomes in private higher education, emphasizing governance as a mediator, which is less explored in prior research.

Findings

Environmental practices positively affect employee performance and well-being.

Social practices also contribute to employee outcomes.

Governance practices mediate and amplify the effects of ESG practices.

Abstract

Purpose: This research explores the impact of Environmental, Social, and Governance (ESG) practices on employee performance and well-being in private higher education institutions in Bandung, West Java. It seeks to provide insights into how effective ESG integration can enhance organizational performance and employee satisfaction. Methodology: A quantitative approach employing Partial Least Squares Structural Equation Modeling (PLS-SEM) analyzed the relationships among constructs: environmental practices, social practices, governance practices, and the dependent variable, employee performance and well-being. Data were collected from 270 respondents through stratified random sampling across various administrative roles in 138 private higher education institutions. Findings: The results showed that environmental practices positively impact employee performance and well-being, with social practices also contributing. Governance practices mediate and amplify these effects. These findings emphasize the importance of integrating sustainable practices into organizational strategies to improve employee outcomes and overall institutional performance. Originality: This study explores the impact of ESG practices on employee performance in private higher education institutions, focusing on sustainability to enhance engagement and productivity. Unlike previous research, which focused primarily on corporate sectors or public universities, it emphasizes the unique challenges of private institutions, particularly in Bandung, offering new insights into governance practices as mediators.