HR Strategic Role in Growing Innovation 

December 23, 20209:00 am2705 views

Innovation as a practice and a component of culture is increasingly becoming a part of the strategic imperatives of HR professionals within organisations. Innovation does not apply just to technology, going beyond this and requiring multi-divisional collaboration to achieve success. 

Innovation is a collaborative process, with people from many disciplines contributing to the creation and implementation of new ideas. Lone inventor is a myth – Thomas Edison patented 1,093 inventions in his lifetime, with a technical team assisting him to prototype, test and produce them. David Neeleman, founder and CEO of JetBlue, started the airline when the airline sector was saturated. To put it in his words, “Innovation is trying to figure out a way to do something better than it’s ever been done before”.

HR’s impact on innovation

Dave Ulrich, a professor of business at the University of Michigan, believed that HR leaders should assume vital, strategic roles within their organisations, rather than being involved in the business processes like policies and payroll administration. Ulrich said that HR professionals should strive to build and strengthen the unique capabilities portfolio that grants organisations their competitive advantage.

IBM completed a survey of global HR leaders in 2011 and found driving creativity and innovation considered as the number one business challenge, but only 50 percent of the executives surveyed indicated they were engaged in dealing with the issue. Similarly,  70 percent maintained HR plays a significant role in fostering innovation at their organisations, but 71 percent did not use any screening tools to bring in creative and innovative candidates.

Additionally, 53 percent did not tie performance-management systems to drive innovation and 53 percent did not even have a formalised suggestion system in place. Susan Meisinger, former President and CEO of the Society for HR Management, explained, “The takeaway for me in all this is we all think these things matter, but most of us are not doing something about it. It is difficult; if it were easy, we’d all be doing it“.

The three things HR professionals need to do to foster innovation are:

  • Hiring for innovation
  • Creating a culture of innovation
  • Training and rewarding for innovation.

HR & Culture

The most powerful force in business is culture. Corporate culture is not necessarily the responsibility of HR. But hiring and selection of people, their training and development, and the cultural imperatives placed on the business are done via HR. Therefore, HR has a major impact on whether organisations are culturally attuned to innovation or not.

Multiple barriers to fostering an innovative culture exist. A lack of leadership support, lack of strategy, poor staff engagement and an overall aversion to risk are just some of them. Daniel Muzyka, Professor of Entrepreneurship and Dean of the Sauder School of Business at the University of British Columbia, adds an additional barrier to innovation: “A constant examination of quarter by quarter results (rather than) longer-term planning“.

This short-term focus creates an environment not supportive of innovation. Management faces challenges in building successful innovation processes within organisations due to these constant short-term, bottom-line oriented pressures. A shorter management term in which they can accomplish change also works against them.

The decreased lifespan of executive teams diminishes the focus on the long-term innovation processes, increasing focus on sustaining the status quo and existing product lines – a counterproductive strategy in volatile markets.

To transcend this, organisations need to reevaluate by what metrics that management performance is gauged. The extent to which adding new products and services is included, and how much management time is spent on innovation versus day-to-day business. Performance metrics must consider whether or not employees are given the time and resources to experiment, generate ideas, explore concepts and make presentations to management.

See also: Top 5 Priorities for HR Leaders in 2021: Survey

BMW: Focusing on Innovation

The right rewards system provides a powerful force for reinforcing commitment, directing employee professional growth, and shaping the corporate culture towards innovation. HR departments must review the reward mechanisms in place and ask if they are doing the right things to motivate and develop the employees and organisational culture.

This covers compensation strategies, performance management tools and other targeted recognition and reward programmes. Organisations often have programmes recognising long service and punctuality. Yet few organisations reward employees for exceptional contributions.

Performance reviews can also be a concern, as few organisations measure the appropriate metrics when promoting the development of innovation-minded employees. HR managers need to review the methods used in attempts to develop these critical assets. For example, BMW’s continued strategic focus on developing customer-friendly innovations is coupled with an approach to innovation management unique within the automotive industry.

A pillar of BMW’s strategy is a constant focus on the culture of innovation – making professional innovative processes a key strategic and cultural constituent of every area of the company. This focus on culture is a guiding principle within BMW. If a company knows what it stands for and its strengths, it can easily develop and implement a clear strategy.

BMW believes that being innovative requires giving up the idea that a company can perform everything equally well, with the likelihood being that a company trying to do everything equally well will be unable to deploy its strengths fully. BMW ensures that all departments are focussed on innovation. While some organisations focus only on manufacturing, BMW also focuses innovation on every department within the organisation, reflecting a uniquely German sensibility and practice.

This includes sales & marketing, HR and product development. It recognises that the results achieved by a company in the past are of limited importance. The innovation of a company always depends on future business development, in order to retain relevance.

Personnel working for the Bavarian automaker, across departments, divisions and hierarchies, is encouraged to speak out. Ideas bubble up freely, without a penalty for proposing new ways of doing things, no matter how unorthodox. BMW’s management structure is flat, flexible, entrepreneurial, agile and fast. This helps innovations to be developed quickly, to improve internal processes and for the marketplace.

The key here is that management should be asking employees, “What are you working on? What is the potential, the applications this might have in the future? What are your challenges? How can I help? How might people use it?”  This engages employees to become actively involved in innovation, rather than asking traditional questions which impose a time constraint.

As HR leaders, helping your organisation to achieve more innovation – to create the culture to support innovative thinking and to hire, train and reward for it is a major undertaking. It is daunting to know where to begin. However, the most important first step is just that – to take that first step. It is a large and exciting change process. Even a small initiative can help to demonstrate the possibilities of a more robust effort.

This article is adapted from “Innovation: A Strategic HR Imperative” by  Michael Stanleigh, President and CEO of Business Improvement Architects, a management consultancy specialising in organisational change. 

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