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Human resource innovations and organizational success
Upinder Dhar, Santosh Dhar
Innovation is understood as a dynamic capability. The literature has gradually evolved from
linear models of the innovation process (idea F 0A Edevelopment F 0A Enew products and/ or processes)
towards systemic models in which critical elements or dimensions are promoted that foster better performance. One of these critical elements is knowledge of the people and their behavior in the face of changes in routine and uncertainty. Some of the innovation models emphasize on the need to implement the specific policies and practices in human resource management in order to develop skills, knowledge and behavior oriented towards innovation.
Creating Appropriate Social Climate
Recent literature has explicitly pondered over the positive effects of the relationship between human resource management and innovation. In fact, innovativeness is considered to be a notion of openness to new ideas and an aspect of organizational culture. Two generic types of innovation are: technological innovation and non-technological innovation. Technological innovation is associated with the innovation resulting from the introduction of a new technique, particularly in products, components and production processes. A non-technological innovation is associated with the result of introducing changes in the system of commercialization, management methods, competitive strategies, or organization and management structures.
Teamwork is directly associated with the best performance in innovation. The practices associated with the teamwork and those related to promoting autonomous motivation in persons for the work they carry out are the ones that best fit the objective of improving performance through innovation. The organizations should opt for supporting problem-solving practices in work teams: for designing incentives linked to forming part of these teams; for using the methodologies, such as quality circles or the creation of virtual communities; for including teamwork competencies as a hiring criterion and supporting an organizational design in which participation and allotment of functions are based on teamwork.
At the same time, the organisations find paths for the accumulation of innovation capabilities if they consider people as a critical resource that should be motivated by fostering the sense of equity and belongingness, and also generate credible expectations of personal development that will lead to the real involvement of the employee in the decision-making process (Perdomo-Ortiz et al., 2009). Successful organizations create competitive advantages through creativity and innovation – employees contribute their creativity and organisations transform employees’ creativity into organisational innovation. Innovation represents an orientation that is different from traditional financial outcome of an organisation.
In the innovation process, an innovative climate and related professional knowledge are necessary to support innovative activities. Thus, there is a need to change organisational arrangement in order to facilitate innovation. More specifically, in analyzing the arrangement of different functions and systems in an organisation, human resource management studies suggest that highly innovative organisations invest more on employee education and training – not just on task-related skills, but also on the skills of information technology ability, communication skills, cultural sensitivity, and interpersonal adaptability.
All members in organisations are responsible for innovation generation because workers’ attitude and behaviour go a long way in accounting for organisation’s success. The human resource practices have impact on organizational effectiveness and innovativeness for several reasons. First, HR planning involves analyzing personnel demands and selecting qualified people in order to achieve organizational goals. To enhance innovativeness, HR recruits the right people with high creativity and establishes venture teams that develop and introduce new products effectively. Second, since the innovation process is often long and uncertain, effective appraising and rewarding system emphasize on risk taking and profits through innovation. Finally, career management in an innovative organisation creates a match between employees and organisational long-term goals. Career of all organisational members can be well managed by empowering them through continuing education and training programs. In innovation-oriented organisations, the human resource management practices must pursue innovation-enhancing HR policy that may differ from traditional human resource management practices. In the information era, the organisations are increasingly incorporating information technology into organisational functions and systems
Previous research considered the creativity of employees as an antecedent of organisational innovation. Most important innovation possesses influence more than one level of analysis and multilevel innovation research is necessary to describe these influences and processes. The creativity of employees is merely one factor critical to organisational innovation. In addition to creative employees, successful innovation demands coordination of numerous factors at the individual, group and organisational levels, and even factors outside organisations (Lin, 2011).
If innovation is understood as the end result of the process of creating, transferring and implementing knowledge, the organisation must develop an HRM that favours the correct context for individuals to feel motivated and committed to learning, articulating and sharing their knowledge with others, with the purpose of applying it to the creation of new products and processes (Nonaka and Takeuchi, 1995). The organisations must use high-commitment or high performance HR practices to create the appropriate social climate for individuals to be willing to share their knowledge in the interest of innovation.
Those practices include employee participation, concern for the training of employees and ease in the selection process, among other aspects. Unlike the more traditional practices that seek to control the workers so that they develop specifically defined behaviours, high commitment HR aims to improve the workers’ capability and increase their motivation (Saa-Perez and Diaz-Diaz, 2010). Innovation is the process of translating ideas into useful new products, processes and services. It is the successful exploitation of new ideas. It can take many forms, which can largely be reduced to four dimensions of change, namely; production innovation, process innovation, position innovation, and paradigm innovation.
New products, processes, markets and forms of organisation are seen to promote growth. Organisational creativity often refers to the generation of novel and useful ideas, whereas organisational innovation describes the realization of these ideas. From this position, organisational innovation is defined as the process by which a new element (originating as a creative idea) becomes available within the marketplace or is introduced into an organisation with the intention of changing or challenging the status quo. Creativity is a starting point for innovation; the first is a necessary but not sufficient condition for the second. From this
perspective, creativity comes first and provides the impetus and content for many forms of innovation.
Innovations range from fairly small scale changes to the more radical groundbreaking phenomena associated with developments in steam, electricity, transportation and the ubiquitous computer. Numerous gradations can make along this continuum and therefore, for simplicity, small, medium and large scale innovations could be listed. Incremental innovations refer to small changes that are generally based on established knowledge and existing organisational capabilities. Requirements and modifications to existing products, such as improvements in television picture quality or the sound performance of existing hi-fi music system, are the examples of incremental innovations.
Modular Innovations refer to middle range innovations that are more significant than simple product improvements. For example, the transition from black-and-white to color television sets is a modular innovation in a well-developed product line. Other similar innovations have been the digital sound system associated with home entertainment system. Radical innovations typically occur when current knowledge and capabilities become obsolete and new knowledge is required to exploit uncharted opportunities. For example, the introduction of DVD players remitted in substantial internal changes in the organisation and control of work (i.e., in the manufacturing, marketing and sales functions). In practice, there is often considerable overlap between various types of innovation over time (Tushman and O’Reilly, 2002; Andriopoulas and Dawson, 2009).
Multinationals are seen as important disseminators of human resource practices and innovations in work organisation, under the premise of the institutional background or ‘national business environment’ of the host country (Quintanilla, 2000). Given the importance of the HR function to organisational competitiveness, successful HR innovations are important determinants of organisational success. The earlier studies had reported that greater the number of innovative practices, the more people-oriented the management philosophy and more effective the organisation. It has been observed that there is a relationship between progressive and sophisticated HR practices and various measures of organisational performance.
Outsourcing as innovation – Outsourcing is historically well-established practice (Kakabadse and Kakabadse, 2002) and HRM outsourcing, too, is a quite traditional practice. Outsourcing of a company’s training function, for example, a seminar has been a common management practice for decades, which is only reasonable, given that many companies are not able to employ specialized trainers on a full-time basis. However, recent HRM literature and research has shown a considerable increase in the use of HRM outsourcing, especially in the areas of HRM consulting and the design of HRM tools (Banham, 2003). The strategic involvement of HR management is positively related to the decision to outsource HR. A positive significant relationship exists between cost reduction and the decision to outsource HR for non- core HR activities. For core HR activities, demand uncertainty relates positively to the decision to outsource HR, and the lack of HRexpertise moderates the process of HR outsourcing (HRO) ( Nguyen and Chang,2017).
Alternatively, the development of the HRM services market goes hand-in-hand with the development of the HRM practice in general (Galanaki and Papalexandris, 2005). More outsourcing of HRM services in a market means that: The HRM function and language is adequately standardized for HRM managers and HRM vendors to be able to communicate effectively and manage common projects in collaboration. The HRM profession has developed enough for competent and experienced HR professionals to be out there, offering their services externally. The companies are willing to pay for specialized external HRM services, having already managed to procure basic services in-house, or, alternatively, opting to focus on their core sources of competitive advantage by outsourcing administrative tasks (Quinn and Hilmer, 1995).
Therefore, outsourcing of HRM services is a manifestation of development of the HRM practice, in general. Consequently, HRM outsourcing will be more common in economies where the HRM practice in general is more developed and sophisticated. Innovative organisations actively promote the training and development of their members so that their knowledge remains current. They offer their employees high job security to reduce the fear of getting fired for making mistakes, and encourage individuals to become champions of change. Once a new idea is developed, champions of change actively and enthusiastically promote the idea, build support, overcome resistance, and ensure that the innovation is implemented.
The champions have common personality characteristics: extremely high self-confidence, persistence, energy, and a tendency to take risks. The champions also display the characteristics, which are associated with dynamic leadership. They inspire and energize other with their vision of the potential of an innovation and through their strong personal conviction about their mission. They are also good at gaining the commitment of others to support their mission. In addition, champions have jobs that provide considerable decision making discretion. This autonomy helps them introduce and implement innovations (Robbins et al, 2009).
Lee lacocca, former CEO of Chrysler observed, “Leadership is all about managing change – Whether you are leading a Company or a Country. Things change and you get creative.” The faster things change, many experts say, the stronger your creative thinking and problem solving skills need to be. To successfully compete in the twenty first century, leaders are calling for increased training in creative problem solving everywhere from board rooms to elementary classrooms. This is why so many organisations emphasize on innovation – new products, new services, new business models, new markets, new forms of operations, and so on. Look at your own organisation’s vision, or values statement. If it is like most, innovation will be mentioned prominently.
Everyone strives to be innovative but few succeed. Why? The reality is that organisations have a hard time being truly innovative without awareness of how they use their creative resources. If creativity and innovation are important to the success of your organisation, how skillful you are in utilizing the most of the natural creative talent of your teams? The creative process is universal. All people with normally functioning brains engage in creative thinking. We apply our creative thinking to everyday problems, such as when an ingredient to a recipe is missing or component of a machinery is broken, and to larger societal problems, such as keeping the economy moving forward, reducing crime, or improving education.
The creative process has four predictable steps: clarify the situation, generate ideas, develop situations, and implement plans. We are not equally creative; but we can improve our creativity. Many researchers agree that individuals can be taught to be more effective creative thinkers. More than just a professional skill, creative thinking is also a life skill. One may face challenges
CEOs and managers prize “team players” because they know that in today’s collaborative world economy, an organisation’s success and even survival, hangs on its ability to tap team potential. When you have a team of people working together, you may assume that all the preferences are represented well. After all, you have eight people on your team – someone must be a clarifier, right? Not necessarily. Unless you are working with a cross-functional team, it is actually more likely that you share similar preferences. This might be due to the fact that people often naturally gravitate toward careers in which they can frequently use their preferences.
By developing awareness of the process for innovative thinking, and applying tools as you need them, you can cultivate a team in which the collective capacity to innovate is greater than the sum of even the most impressive individual talents and skills. Organisations that actively reflect on their own process: tend to be more open to novelty because they are striving for innovation, not only end results and deadlines; deal with conflict effectively because they see problems as they come up rather than being blindsides later on; may have less conflict between employees because they appreciate the diversity and strength each person brings to the table.
Although many organisations say they want to create a culture of innovation; few are prepared for the consequences. They will have to balance bringing good ideas to fruition while rejecting those ideas that won’t work in a way that still encourages more creativity. Leadership will have to remain open to novelty despite high pressured environments that are often geared more toward “making it through the day” and “deliverables” than producing well developed and novel products, improvements, or new directions. Leadership must be committed to supporting and developing new ideas and enabling positive change. That means devoting time for teams to reflect on their work and how they work together and time designated for playing with new possibilities. Organisational^ changes^ have^ a^ positive^ disruptive^ effect^ on firm innovation outcomes. However, there is an organisational change hierarchy - where some HRM practices are more important than others. HRM practices that involve engaging with external partners, via collaboration and outsourcing, have the largest effect on innovation outcomes(Bourke& Crowley, 2016). People must be aware of how they react to novel ideas. Teach and practice when new ideas are introduced. Thorough exploration and discussion of new ideas should be encouraged while addressing interpersonal conflict in a timely manner. People must be allowed the freedom and
independence to pursue their interests and seek out innovation. They should be given time and space to experiment, test assumptions, and fail occasionally as part of the innovation process. There needs to be a clear level of acceptance by everyone on the team of the risk taking needed for chasing that novel idea. Cultivate an environment in which it is understood that everyone is expected to pursue innovation but that no idea will be perfect. Trust each other’s skills and avoid quick judgments.
If these conditions can be created by weaving these principles into work plans, leadership development systems and functional teams, the path to innovative success is likely to be paved. All it takes is devotion to making innovation come alive and commitment to doing the work to get there. All of us are creative, but knowing how we are creative is key to being able to apply ourselves effectively to any given challenge. Armed with self-knowledge, we can create conditions for ourselves and others to enable innovative results. By becoming more consciously and deliberately creative, we can enjoy our days with more satisfaction, enable others to do the same, and together produce results that no one has yet dreamed of (Grivas and Puccio, 2012). The instability of new work roles, the contribution of key actors to their development and the interaction between workplace, organization and system-level processes help in emergence and acceptanceof the new work roles(Kessler et al., 2017).
Training in the Pursuit of Innovation Even though the need for creativity and innovation has been greatly emphasized in the past, several dilemmas still remain concerning stimulating creativity and innovation in organisations. Many people including organisational leaders show reluctance in being creative because of their belief that they lack creative ability. In addition, the general assumption that creative thinking requires an atmosphere of frivolity also poses a dilemma which results in reluctance on the part of the managers and leaders facing several organisational issues in incorporating creative ideas for the fear of making fool of themselves. Furthermore, the ignorance of most people about variety of tools they can use to generate creative ideas is also a barrier.
Though one might understand the need of creative thinking, but knowing how to do it on demand is a different matter. It is here that the role of training is of utmost importance. It is acknowledged that while all individuals have the ability to think, the human minds are optimized
which may be associated with a new idea. The question is that who will provide such assurance against a new idea? The fact is that there is absolutely no way to know, whether an idea is going to work or not until it is tried. And this is exactly where trainer’s role is important as far as organisational virtues are concerned.
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