Innovative HR

Innovation is in today’s economy the only possible way of constant and lasting success. This is true for any company, any business as it is true for any business function – also for HR. When talking about HR and innovation, there are mostly two lenses that are taken. Either it is discussed HR’s role in business innovation or HR innovations to drive business performance. Both is important without any doubt. Today, I want to focus on HR innovations.
HR as a function is long grown and today is comprised of a multitude of responsibilities and tasks. This has led to a very diverse function and overworked HR colleagues, not leaving much time or thinking space for innovation. In addition, legal or regulatory requirements and needs are holding HR innovation down. The level of regulatory requirements and the diversity of them (every country has its own set) is the highest for HR – much higher than for example in Finance – but to that aspect more in my next post.
Innovation for HR is a need, a requirement – not a nice to have. HR practices do make a big difference in core business metrics and aspects. Just looking at employee engagement or organisational commitment (both very strong drivers of employee performance and organisational effectiveness) puts innovative HR concepts and practices in the spotlight (see here). Still, you don’t see it very often. True innovation in HR is rare. HR is a conservative function in the companies that I have seen – and this also means that new things are first of all doubted before adopted once everyone has adopted them. Just thinking about the Ulrich Model and its adoption rate: Ulrich has published his first ideas about how HR needs to change in the mid 1990ies. Today we are almost in 2016 and still there are companies out there that have not yet transformed itself from a more traditional model.
But not only HR as a function is conservative – HR’s customers, at least the ones in the higher management, are still not understanding how an agile and modern HR organisation can transform their whole business and how organisational effectiveness drives business performance. Therefore, this main stakeholder group is not really interested in HR innovation – they are rather interested in HR cost cutting. Even when searching the web of science, not many (and especially new) articles on HR innovation can be found. It is an underdeveloped topic.
Making the case for HR innovation
Making the case for innovation in HR is not very difficult. Apart from core traditionalists, it is clearly understood which role HR should play in today’s business. Apart from payroll and personnel data administration (which are important, yes – and also, where you can innovate but it does not bring you much in ROI) there is a wide field of possible innovation areas: Performance Management, Succession Planning, Learning,  Compensation, Organisation Management, Change Management, etc. the value adding processes of HR. All of these value adding processes have a correlational relationship to employee satisfaction and/ or organization effectiveness. And these in turn to business success – first of all top-line. Just having a look at the resource-based view of the firm (link), which is still the basis of most of today’s strategies – especially in HR – shows the link to performance and lasting competitive advantage. So if you want top-line growth, invest in HR innovation – in innovation of the value adding processes of HR. How to do that and how not to do that will be the topic of my next post.