Innovation has long been recognized as a source of competitive advantage. However, most interpret innovation in technical terms only, like technical product and process innovation, technological revolution, business model re-engineering, etc., with little attention paid to non-technical innovation. We all know that technology and finance are no longer the privileged domain of the few who can afford. Real differentiators are the people, who are the heart of an organization. For any organizational transformation to succeed, it has to start from the center and work its way out. Accordingly, there is a growing realization in businesses that human resource innovation should be focused disproportionately as the competitive advantage built through them is not easily imitable, and therefore vital to the sustainability of firm growth and competitiveness.
HR innovation is nothing but an HR activity or practice or program or system adopted by an organization that is new and creates value for the adopting organization. The degree of HR innovation differs based on the degree of newness, extent of change, number of employees affected, and nature of its outcomes.
Questions that naturally come in the mind are- If HR’s role is primarily compliances and following rules and processes, how can it innovate? Is it possible for HR to innovate? What should HR professionals do to bring an innovation culture in HR? What are the behavioral and mind-set changes required to accomplish it? How does HR innovation enable firms to compete better?
Dave Ulrich, professor of Business at the University of Michigan, has long argued that HR leaders should assume a more vital, strategic role inside their companies, rather than merely keeping busy with everyday stuff like: policies, payroll, and picnics. Ulrich says that HR leaders should strive to build and strengthen the unique set of organizational capabilities that give an organization its competitive advantage. In essence, this means developing a particular mix of resources, processes and values that makes it hard for rivals to match what your organization does.
Following are ten simple ways to inculcate an innovation mind-set and culture within HR function, which in turns acts as a catalyst for bring about innovation culture within the larger organization:
1. Hire for Innovation
Hiring for innovation requires that we hire people in HR who can “think outside the box”, have high learning agility, have experimented in the past and have demonstrated innovation capabilities. Are they inquisitive? Do they have fixed mind-set or comfortable with diversity of ideas and concepts? Do they have a positive outlook and attitude towards life and career? These questions have a lot to do with how HR professionals should be recruited and how their skills can be improved to welcome innovation.
2. Encourage HR professionals to regularly acquire new knowledge, both from external and internal sources.
External knowledge may include learning from competitors, industry networks, customers, and previous work experience, etc. Internal knowledge often includes trial and error learning and learning from line managers and operational employees. For example, Google’s 20% Project which supported the development of around 50 per cent of Google’s current service offerings including Gmail, Google News, and Google Ad Sense, and also resulted in improved employee motivation, productivity, and retention, did not come from thin air. HP had similar program and obtained many positive outcomes. Similarly, 3M introduced a ‘work on your own project’ program in early 1970s.
3. Challenge the status quo regularly:
Create a culture of transparency and accountability. Nothing is a holy cow? Nobody’s word is the final unless it is the most logical and ethical decision. Objectivity, rather than subjectivity, should govern HR decisions. Give credits to people who save precious cost and effort by timely challenging the status quo. Each HR Manager and COE leader should be held accountable for making their departments and verticals as role models for innovation, creativity and continuous improvement. They should behave like “owners” and “intrapreneurs”.
In one of the Company’s I worked for, employees didn’t have a group mediclaim scheme to handle medical emergencies for self and family members. It required huge investment to begin with and company was not in a position for a long time to shell out that much money, although it was treated as one of the most desirable things to do. With this background, HR department looked at the entire benefits basket and how much those were being availed and valued. It was found that our leave benefits were way above the statutory norms and market practice, and employees were also not being able to avail most of them optimally due to work and family commitments. This thought was taken forward to re-balance the benefit portfolio and introduce a cost-neutral employee mediclaim scheme in the organization, which in turn improved employee attraction, retention, satisfaction and loyalty. A win-win proposition for all stakeholders without adding any cost for the organization!
4. Introduce collaborative way for continuous improvement:
Make a cross-functional team responsible for regular review of company policies, practices, processes and culture. For example Infosys set up a ‘SWAT team,’ with members from different functions and practices, whose job was to look at ways to improve processes and policy on staffers. Since the team came into place, the company is believed to have already implemented more than 150 changes, based on its feedback. Two of them included allowing employees to wear casual dress on all working days in a week and use of social media in office.
5. Drive HR less through rigid processes and policies and more through common sense, and by treating people like adults.
This was at the heart of Netflix’s breakthrough HR policy. An example, they had a fairly standard vacation policy: 10 vacation days, 10 holidays, and a handful of sick days per person. Rather than formally tracking these days, they opted for an honor system, with employees tracking their own off days and informing their managers when appropriate. When Netflix went public in 2002, their auditors thought that Sarbanes–Oxley Act, the accounting reform legislation, required time off to be carefully accounted for. It was then that their founder Reed Hastings came up with an intriguing question: “Are companies required to give time off? If not, can’t we just handle it informally and skip the accounting rigmarole?” McCord’s realization: “No California law said you had to institute vacation time”! So instead of shifting to a formal system, they went in the opposite direction, McCord says. “Salaried employees were told to take whatever time they felt was appropriate. Bosses and employees were asked to work it out with one another. Bottom-line, don’t make your policies and processes just for compliance sake. See what make sense for the business and its people.
6. Utilize the Data at hand smartly and focus on outcomes:
a. Winston Churchill once famously said: “However beautiful the strategy, you should occasionally look at the results.” Although HR deals with people, who have their own motivations, egos, feelings and emotions, however, it is very much possible to measure and analyze employee experience at the workplace at all stages and do something to make it better continuously. If we don’t measure, then we can’t manage, we can’t change and we can’t improve.
b. HR has to be focused, not on outputs but on outcomes, which are “something that follow as a result or consequence of some action(s)’. Outcomes create meaning, relationships and differences- “the WHY” of an activity. Data and Analytics play a very strong role here. HR department has to check if the piles of employee data collected by it, is being fully utilized? They need to think outside the box to analyze and leverage Analytics in innovative ways.
c. For example, “Project Oxygen” undertaken by Google, was designed to identify what successful Google managers do. The Project Oxygen team spent one year data-mining performance appraisals, employee surveys, nominations for top manager awards, employee complaints. The result was more than 10,000 observations of manager behaviors. The research team complemented the quantitative data with qualitative information from interviews. Later that year, the “people analytics” teams at the company produced the Eight Habits of Highly Effective Google Managers. The interviews produced more than 400 pages of notes, which were coded using standard behavioral science methodologies. The final result was eight behaviors — things great managers do that make them great. Their startling findings: Technical expertise, i.e. the ability, say, to write computer code in your sleep — ranked dead last among Google’s big eight.
7. Train and Reward for Innovation
HR performance should not be measured through regular transactional assignments. Rather it should be on how we have improved from the past, which new strategies are being put in place, is there a need for new tools to be developed, or any targeted programs customized to meet business needs, or how HR has collaborated to bring down attrition, or how are we promoting the culture of innovation in the company, or, what is the state of readiness of the successors being groomed for leadership positions and how we can fast track it?
8. Make research and innovation a formal agenda item at the HR meetings.
This signals to HR team members the value the Company and HR Leader attaches to innovation in HR. Encourage team members to adopt a research mind-set and regularly bring up new thoughts and ideas on the table, which are brainstormed and taken forward appropriately. HR team needs to know what is the next big thing in the field? Learn what the pioneers in HR are doing? We may not be able to implement everything tomorrow, but would be able to see it coming and prepare for it, giving a competitive edge as compared to other companies.
9. Prepare HR Managers to ask the right questions:
Instead of asking how many training programs, or how many metrics being managed, or whether attrition and headcount report has gone on time or not, or, how many performance reviews are pending, the questions need to undergo a paradigm change. For example, what is the impact of training? How have the current set of metrics changed or improved managerial actions and results? How is our performance review system contributing towards improvement of workplace productivity? Are we measuring the right things in our employee performance appraisal system? Which activities are our big time wasters and how can we work more smartly in future? Are there certain things we can stop doing without impacting the business? What are your challenges? How can I help? How might people use it?” Such questions will engage employees to become actively involved in innovation rather than asking the traditional questions which impose a time constraint.
10. Leverage the emerging Technologies and get comfortable with them:
a. There is ubiquity of Technology in our lives and speed of change is paving the way for disruption (SMACed). Infact, if we see the market trends, there is a plethora of technologies being used to collaborate and learn, including Enterprise social networks, Talent Communities, gamifications, e-Learning, MOOCS, blogs, intranets and social media
b. HR has to continuously look at the technology already available. Think whether it is making the most of it? Can technology, electronic communications or social tools be utilized in new ways? Twenty years ago, mobile phones used to cover 3% of the population, which now easily engulfs 2/3rd of population. Similarly, number of apps developed post iphone launch were 1.5 lakh in 2009, which in 2014 it became 1.2 million. India now has 3rd largest presence in the world start-up ecosystem, who are breaking the existing business models through technology. The accessibility and connectedness of professionals online, through Linkedin, Twitter and Facebook, has made talent more accessible than ever. Facebook now has more than 1.3 billion users. Mobile Apps are the life blood for young people entering workforce. With the rise of mobile device usage, candidates now research and prefer to apply for work in a mobile-optimized format. HR has to go where talent is, do what the talent appreciates and provide an environment which will make them thrive and succeed. If it misses the bus, it will lose talent to the competitors and soon become irrelevant.
There could be many more ways, but I think the above 10 represent the critical ones. If HR professionals adopt these ways and approaches, they can demonstrate their value to the business, stay relevant and in demand, and keep their organizations on the growth path.