What is HR Innovation?

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At a time when firms strive for competitiveness, HR innovation can serve as a non-traditional, but vital source of competitive advantage”  (Amarakoon, Weerawardena & Verreynne)

As mentioned in a previous post, more and more attention starts being paid to HR innovation in organizations. However, very few definitions of what HR innovation is can still be found. The best definition I have read so far is proposed by the three Australian authors to which belongs the opening quote of today’s post. According to them, HR innovation can be defined as “an HR management activity/ practice/ programme/ system adopted by a firm that is new and value creating to the adopting firm”. These innovations can take place in one or more HR fields or practices, such as training, career management or compensation & benefits and the authors also highlight that “the degree of HR innovation differs based on the degree of newness, extent of change, number of employees affected, and nature of its outcomes” (see first reference at the end of the post).

HR innovation can be seen both as a process and as an outcome. These authors see HR innovation as an outcome and they mention two possible types of HR innovation outcomes: “proximal” outcomes (innovations in HR fields such as attraction, commitment, engagement and retention of employees) and “distal” outcomes (innovations in non-HR fields, such as productivity, market performance and financial gains). What is really interesting is that both types of outcomes are linked because “HR innovation results in proximal (HR) gains through which it influences distal (non HR) outcomes”. They mention several examples of companies which, thanks to HR innovations, improved employee turnover, absenteeism rates, commitment and engagement, what led to non-HR outcomes such as productivity improvement and product/service differentiation.

But HR innovation can also be seen as a process. In this case, we tend to focus on how the ideas emerge and how they are adopted and implemented in HR. There are several approaches and techniques which strongly contribute to this creative process, such as HR rapid prototyping or HR Hackathons. This is not today’s focus, but as I use some of these techniques in the HR innovation workshops I run, I will present some of them here in the future.

There are two types of HR innovations: radical and incremental. A radical HR innovation is for example the famous Google’s “20% Project”, in which the company proposed that staff worked on a company related project which interested each employee. This initiative has had very positive HR outcomes, such as improvement of employee motivation, performance and retention, as well as talent attraction. But this HR innovation has also business outcomes for the company, as the “20% Project” is the source of 50% of Google’s inventions, including Gmail, Google maps or Adsense. Many other disruptive HR innovations will be presented in this blog in the future, both in big organizations and in less known contexts, such as the American Major League Baseball (MLB).

Incremental HR innovations are improvements of existing HR practices that take place in organizations and, while they may be less spectacular that their radical counterparts, they also contribute to successful company transformation. Examples of incremental HR innovations can be, for companies not having these yet, the full digitalization of recruitment processes or the introduction of an internal confidential survey measuring employee engagement or employer branding. In all cases, according to research, both radical and incremental HR innovations can add value to organizations.

HR innovation can take place in one single HR field, such as recruitment or remuneration, but it can also happen in several HR fields at a time, therefore creating possible synergies among them. According to the abovementioned Australian authors, effective HR innovation implementation requires both an internal fit with other HR practices in the company and external fit with the organization’s strategic objectives. Speaking of strategy, how can HR innovation (further) constitute a source of competitive advantage for organizations? We will answer to this question in a future post soon!

References

Competitive Advantage Through HR Innovation (Amarakoon, Weerawardena & Verreynne, European Business Review, September 2013): http://www.europeanbusinessreview.com/?p=1079

HR innovations an opportunity for gaining competitive advantage: evidence from Australia (Amarakoon, Weerawardena & Verreynne, 11th International Conference on Business Management, 2014)