Reinventing HR to empower innovation in the company

By Octavio Ballesta

Business innovation is regarded as the key driver for competitive differentiation in the new market and business areas of the knowledge economy.

As managers, leaders and entrepreneurs, we face markedly different realities from the circumstances that gave life to the predictable, stable and mellow settings of the industrial age.

The transition to new practices and approaches, which a modern competitive company must manage, is still underestimated by managers and leaders. Convinced that supporting the development of transformation projects isn’t worth it, they still take refuge in their zones of comfort, control and power.

This attitude endangers business health, profitability and viability in companies. These managers and leaders dismiss any decision-making opportunities in the implementation of an action plan enabling the necessary and urgent transformation of the company through strategic alignment and a vision of the future.

Immersed in the knowledge economy, past the heyday of the industrial revolution

Converging different technology approaches to enable the creation of new business models, solid and sustained recovery of the global economy, the advent of emerging Talent Management and Organizational Development practices, and merging different generations of professionals with many perspective and interests—all help to shape a business environment. Fast tracking the transformation of this environment renders it even more complex, uncertain, volatile and ambiguous.

The business ecosystem is engulfed by the pace of change which is faster than ever and sometimes disruptive. This trend will affect any company, regardless of size, sector of economic activity and geographic location.

Gone are the days when it was possible to shape the company’s management, appealing to the pragmatic and systematic implementation of strategic plans for three to five years down the line.

Many talented professionals in the past had an overarching desire for life-long growth and development within a large and prestigious company. This is already part of bygone history.

Leadership styles based on command dynamics, control and blind obedience, will barely manage to attract, motivate and retain the best talent in the market. Nor will these styles assign talent to strategic business innovation projects, with the promise of being able to stay on.

Innovation as a paradox for managing people

For a company to successfully to compete in the new market scenarios and in the knowledge economy business, its ability to access and retain the best talent in the market is essential alongside its clear intention to challenge management practices and approaches to adapt them dynamically to increasingly more complex and unpredictable business realities.

The dynamics of fast-paced transformation couples the company’s evolution to constant market transformation. So it makes sense to involve the HR function which must transcend the traditional legacy based on administrative and transactional practices and also swiftly reinvent itself, if you want to keep up with the new challenges for the people management field.

Although we know that innovation is the art of creating new and/or improved products, services and processes, each organization depending on its culture and management style will interpret and adopt it one way or another.

It is nonsense to say that a company is able to innovate, only because it makes a vague reference to this notion within its mission and vision statements.

By investing in the implementation of an R&D department is not how a company will shake markets and lure customers with new products and services.

By creating an “innovation month” type event is not how an organization sets itself apart from the rest and begins to renew its portfolio of products and services to improve their competitiveness.

Instead let’s talk about the relevance of creating and developing a culture of innovation. The strategic mandate for achieving sustainable competitive differentiation in the Knowledge Age is innovation.

Business innovation is built by talented and motivated people, who come together around an inspiring business vision to generate products and services that captivate the people who are your target market.

Let’s then describe some initiatives to reinvent the HR function of a traditional company to nurture the development of a culture of innovation which serves as a definitive and sustainable competitive differentiator.

1. Develop the ability to attract and retain the best talent in the market

 It is not enough for HR to do their utmost to attract the best talent in the market. If toxic working conditions, authoritarian management styles, poor business vision, and weak alignment with the business strategy, all conspire against the real possibilities of forming, developing and motivating talent, who under favourable circumstances would make a positive difference to the company’s financial performance and market position.

Hence it is important to support the development of processes for talent attraction, recruitment and development. The interests, values and principles which make people unique must be aligned well to the values, beliefs and strategic goals inherently within the company’s culture and management style.

Management initiatives for the corporate brand as an excellent employer and a good place to work must transcend the company’s physical boundaries, using different social technologies to formulate an assertive communication strategy that captivates and appeals to the talent that the company needs to capture to achieve their business goals.

Satisfied employees, motivated by what they do, are engaged with their company, identifying with its mission, vision and values. These employees may refer their professional friends who wish to contribute their time and talent to the company.

We need people passionate about what they do. We require leaders who believe in the business values and take ownership of the company’s strategic goals translating them into effective action. There is a need for managers to become more aware of the value that people bring in to develop the business strategy as well as add value and wellbeing.

2. Attract, train, motivate and retain leaders the organization needs

If we talk about generating corporate innovation processes that add solid business value, we need input from engaged transformational leaders. These are able to inspire their multidisciplinary teams to put in their best efforts into building a meaningful vision for the company that offers substantial market value.

We need leaders who consider their company as if it were their own and who manage their teams with enthusiasm, excitement and a sense of purpose in neat alignment with the business strategy.

We speak of a transformational and decentralized leadership style targeted to developing others, and which has willingness to offer their best talent certain opportunities for expanding their spheres of learning, decision and influence.

Competency models adapted to the attitudes and skills profile for the leaders which the organization needs; talent maps for the development and retention of key profiles; succession programmes for leadership roles are essential to the company’s success—all of these are valid resources to make sure there are leaders needed for developing a culture of innovation are in place.

This is about building a company’s ability to take advantage of any crisis and the new business opportunities arising because it understands market needs and takes on the necessary risks for developing and offering products and services which their customers, in fact, need and crave.

3. Rethinking and reinventing traditional performance review

As the traditional performance review is based on statistical ranking criteria, it introduces deep imbalances which significantly affect employees of greater talent and potential.

In most organizations, performance review is usually associated with training and development goals, achieving job targets and compensation adjustments which are usually set using criteria based on rigid bands. These salary policies discriminate exceptional talent, whose productivity and inventive potential are usually much higher than the average collaborator in the market.

The typical semi-annual or annual nature of this instrument does little to raise motivation and enthusiasm among talent who must be fully involved and engaged on high performance teams. It is crucial to ensure the retention of talent whose achievements, initiative and creativity are both important and sufficient to overtake competition in markets often exposed to disruptive transformations.

In high performance teams, a talented collaborator may report to several leaders or supervisors in successive projects. In turn, he or she can interact with other leaders, internal customers, providers and team members.

The feedback an employee receives from the leader, peers or internal customers should not to be limited to a semi-annual or annual event, which is usually executed hastily and with derision by the authorities in charge of the implementation, not to mention the poor motivational value this brings

Agile organizations—focused on innovation and committed to recurring customer satisfaction—promote rich conversations between team members, leaders and internal customers with the purposes of improving productivity, encouraging engagement and achieving the alignment needed between the project implementation and business strategy.

4. State-of-the-art technologies to position the HR function as a key agent of business transformation

The new emerging technological approaches based on social networks, mobile devices, big data, and cloud applications offer great opportunities for those in charge of managing people. These will be able to promote the transformative potential of their practices and methods for the benefit of organizations claiming to be market leaders.

Social technologies can be used by a new HR function to promote the importance of corporate branding as a major employer and a great place to work.

Social networks are unbeatable for holding relevant conversations between recruitment and hire analysts and potential candidates, including passive ones as well as those showing visible interest in working for the company.

By taking advantage of mobility and cloud access facilities that new information and communications technologies offer, HR have excellent opportunities to improve emotional salary, through implementing programmes that promote flexible working hours and work-life balance.

An HR function taking on a key role in building and developing a culture of innovation must take on the implementation and management of projects based on social technologies. These have an enormous, potential impact on shaping innovation ecosystems and on the implementation of collaborative work processes.

5. Strengthening HR skills in culture management and corporate communication

New social technologies offer an HR function with sufficient strategic influence and a strong management profile, the dream opportunity to influence parts of the culture important for developing a long-term innovation strategy.

Defying the limitations of imposed policies and rules defining control over implementing business projects, and doing away with functional silos that impede effective and efficient work of multidisciplinary teams, allows companies to establish the basis for facilitating free discussion of ideas from many functional and analytical perspectives.

Interesting initiatives can only surface this way. Through the development of innovative projects, these initiatives enable the creation of differential value, strengthen the company’s competitive position, stir highly fluctuating markets, and appeal to very demanding and sceptical customers.

6. Committed to best practices in talent management

The most innovative organizations usually generate higher returns and are leaders in their respective market segments. Such organizations are also where the most talented people want to work, remain and develop professionally.

We need motivated people who are engaged in their roles. These people should feel as if the company was their own and identify with leaders whose empathy, strategic vision and sense of purpose are crucial for setting higher operational, market and business targets than the average company could ever reach.

Good talent management practices must be consistently applied, so that talented workers are motivated to give of their best, feel and see that they have a future full of opportunities for development and growth in the company. These workers must also completely identify with the company. Likewise they must sense that their leaders trust them thanks to their talent and personality, and also feel happy to belong to the company.

Thoughts to share

The competitive company in the knowledge economy is able to develop skills and competencies to facilitate adaptive and evolving business environments subjected to relentless and merciless change, at times disruptive.

Financial engineering activities, operational excellence and developing expensive marketing campaigns are not how a company develops its competitive muscle demonstrating its ability to innovate at a similar or faster pace than the drive for transformation in a business environment now exposed to highly disruptive events taking place.

This requires engaged leaders and managers who are committed to developing and retaining top talent in order to put them at the service of business innovation.

These principles invariably apply, independently of the sector of business activity in which the company operates.

In the knowledge economy, the company must be able to question its practices and reinvent itself with agility, flexibility and a sense of purpose. This is the key success factor for constantly adapting to a market and business environment that is increasingly volatile, ambiguous, complex and uncertain.

HR must transcend a rich legacy of transactional and administrative practices, by promoting the reinvention of people management practices that were important for the function thought of traditionally as back office and operational support.

We need an HR function with more strategic influence and a strong management profile. HR must evolve from being a simple personnel administration unit to a function that brings value to the business for its ability to operate as a strategic business partner and a key agent for business transformation.

New and exciting times await the HR function that recognizes the much needed reinvention as the main strategic challenge in the knowledge economy.