And now for something completely different…

And now for something completely different…
Published: 
November 2013

Innovation isn’t just about technology - enterprising HR professionals are enhancing their firm’s performance by finding new ways to manage and motivate staff. Here are 7 ways to follow their example and be a HR innovator.

Interestingly, competitive advantage based on human resources cannot be easily imitated.

Innovation is key to gaining competitive advantage. However any discussion about innovation almost always focuses on the technical side – how to develop new products and processes – and the potential for innovation in people management is usually overlooked.

It’s a fact which surprises Upamali Amarakoon, a PhD student carrying out research on HR innovation. “Many firms, big and small, claim that their people are their biggest asset so it makes sense to find new ways to attract, engage, and retain them,” she says. “Interestingly, competitive advantage based on human resources cannot be easily imitated.”

“If you have developed a new product, it is relatively easy for a competitor to reverse engineer and discover how it works but if your success is due to HR innovation, it is not easy to identify the factors behind it or to replicate that success.”

HR innovation can refer to any new idea that a firm adopts in its HR practices and which adds value. “It can be as simple as moving from traditional press advertising to online recruitment advertising or as radical as moving from ‘flat pay’ to performance-based pay,” Upamali explains. “It doesn’t necessarily have to be an original idea – you can learn from others’ HR practices providing they are appropriate for achieving your business objectives.”

Upamali has studied manufacturing and service firms throughout Australia which have experimented with novel HR practices and has identified a breed of entrepreneurial HR professionals who go beyond their traditional role and respond to the firm’s strategic needs through HR innovation. In many cases, HR innovation has added value and enhanced the firm’s performance.

Here are some of the ways in which you can follow their lead:

1. Allow time for creativity

Google’s ‘20 per cent policy’ which allowed staff to spend a fifth of their time working on their own projects is perhaps the best known example of HR innovation and has led to the introduction of new products such as Gmail, Google News, Google Talk, and AdSense.

However, 20 per cent time is nothing new – the practice has been used by a range of technology companies and is believed to have been started by 3M over 60 years ago. “Google is in the business of innovation, 20 per cent time works fine for Google, but will not be appropriate for every firm,” says Upamali.

2. Differentiate yourself from rivals

In sectors such as financial services, where there are a range of providers offering similar products, businesses may find it hard to differentiate themselves from competitors. The HR team at one credit union saw an opportunity to grow market share on the basis of superior customer service. They gained feedback from customers on what they wanted and then put in place HR practices to enable their employees to deliver it.

Effectively it meant recruiting staff with the right attitude, a greater focus on training and development, and the introduction of a performance-based bonus scheme.  The company is delighted with the outcome and a survey has shown the positive impact it has had on customer satisfaction.

3. Streamline your HR systems

Where there is a group of companies engaged in different activities, HR policies may develop in isolation so often there is a range of schemes in operation alongside each other. In one such group, which contained insurance, banking and financial services businesses, staff were subject to different pay scales, evaluation systems and employee agreements.

The appointment of a new CEO was a catalyst for change. He wanted to get the whole group working towards common goals and set up project teams containing staff from the different companies within the group. As people in the same project team were subject to different rates and systems, project managers were spending a lot of time in administrative work. The HR team recognised the need to amalgamate systems.

The change took over two years to implement and involved negotiating with different employee groups to amend their terms and conditions, and communicate the benefits of having one single system. The new system has resulted in a major saving in administrative time, giving project managers more time to look at real value-adding services. An added bonus is that it has boosted employee engagement.

4. Use teambuilding to unite the workforce

When a major automobile manufacturer acquired a competitor, employees found themselves working alongside colleagues who had previously been rivals. Both sides had different cultures and values and there was little communication. The HR department organised a program of teambuilding activities to help bridge the gulf. It has eventually succeeded in overcoming resistance from staff though it took time to create an environment where both sides were willing to co-operate fully.

5. Pay above market rates

Raising salaries will not be a popular option for most companies but in some cases the additional expense may be more than justified. A mining company was struggling to recruit and retain highly trained staff to operate its state-of-the-art equipment. The HR department studied rates across the industry and recognised that its rates of pay were less competitive than others and decided to significantly improve them.

The new pay rates included an element of performance-based pay and allowances for working in remote areas. They have not only helped attract the right talent but also reduced staff turnover to zero – no-one has left in the eight months since the new rates were introduced.

6. Ask employees for their opinions

After taking on a new role at a mining services business, an HR manager discovered that the firm had a very high turnover rate. Before she could implement any changes, she wanted to understand the reasons and undertook a confidential survey with over 60 questions, asking employees about current working practices and what they thought could be improved.

She followed this up by discussions with employee groups.  The process revealed gaps in internal communication and dissatisfaction with compensation and reward practices. It also came to light that the HR department had a reputation for failing to deliver on its promises and needed to win the confidence of employees.

Not only does the HR department now have a good understanding of the issues faced by employees in the field, it has also gained a new-found respect amongst employees as they feel their opinions are valued. Canvassing opinions when developing new HR practices also makes staff more receptive to change and more likely to ‘take ownership’ of new measures put in place.

7. Empower your line managers

Not all changes achieve a 100 per cent success rate. In a multinational mining business with 10,000-plus employees, the HR department took steps to empower their line managers to make more decisions themselves. However along with greater responsibility and greater autonomy, they also took on some of the administrative work that had previously been done by the HR team.

Form filling proved a real burden on managers’ time – particularly as, unlike specialists in the HR department, line managers were not familiar with the subject and not able to complete such administrative tasks at the same speed. While the exercise to devolve decision making had been a partial success, it was decided to revert some of the admin work to HR specialists better equipped to deal with it.

“HR innovation can help companies become more competitive but there are always risks and new practices may not deliver the desired outcomes,” says Upamali. “Where HR innovation does not add value, the HR team should quickly learn from the failure and be ready to adapt.”