CREATIVITY & INNOVATION IN BUSINESS by Norhaniza Abdul Latiff LECTURE 7 FUNCTIONAL CREATIVITY: HUMAN RESOURCES, COMPANY CULTURE & UNUSUAL WORKSPACE ‘The Innovation Gap’ No = 25% Elaborated responses (30.5%) Yes = 44.5% Only 9.3% reported having a formal innovation strategy and allocated budget in place Managers’ Perceptions of Innovation - An Exploratory Study 3 (September 2003 – March 2004) Applied Innovation Centre, surveyed almost 100 managers in 46 organisations across 5 different industries Summary AIC Research Findings ‘THE INNOVATION GAP’ Concept of Innovation not always clearly understood. Most organisations don’t know how to cross the bridge between concept and implementing performance-based innovation strategies. Whilst 44.5% of organisations claimed their organisation to be innovative only three had a formal innovation strategy in place. Only one organisation offered their employees creativity/innovation related education and training. 4 Supporting factors and barriers Supporting factors Barriers Leadership and support from top management Resistance to change Culture, climate and identity Org culture and climate Rewards and recognition Corporate structure Competition and deregulation, need and diversity Workloads and Lack of skills 5 Desired Future Discrepancy Gap Need Innovation Champion Strategy on how to get there Current State • Lack of useful ideas • Lack of skills or support for creative and strategic breakthroughs • Perhaps, other challenges and problems 6 INNOVATION WITHIN THE ORGANIZATION DEPENDS UPON: Resources – everything the organization has available to aid in the area targeted for innovation, including time, funding, information and materials. Management Practices – allowing freedom and autonomy in the practice of work; providing challenge; specifying clear strategic goals and forming work teams comprised of individuals with diverse skills and perspectives. 7 Organizational Motivation – the basic orientation of the organization toward innovation; shared vision; providing rewards and recognition; lack of internal politics, and lack of overemphasis on the status quo. IMPACT OF THE WORK ENVIRONMENT Work Environment Management Practices Resources Innovation I Organizational Motivation Creativity Skills Expertise Individual/Team Creativity C Task Motivation Creativity 8 HR ISSUES Competition in the labour market Rivalry between competitors Demographics (customers) Age structure, lifelong employment? Staff from related industries Domestic-versus regional –global demand INDUSTRY COMPETITION; THE FIVE FORCES PRESSURE DETERMINE PRICES, COST, INVESTMENTS ,HR CAPITAL ETC. Threat of new Entrants Bargaining Power of Suppliers Rivalry among Existing Competititors Threat of Substitute Products Bargaining Power of Buyers NEW ENTRANTS-INCUMBENT Offer better salary-promotion- trend New technology-support (capacity building) High responsibility – deliver-promotion Competence gap Outsourcing of training-to whom The role of education systems GENERIC STRATEGIES AND IMPACT ON HR STRATEGIES Competitive Advantage Lower Cost Differentiation Broad Target Cost Leadership Differentiation Narrow Target Cost Focus Competitive Scope Focused Differentiation HUMAN RESOURCE PARADIGMS Old Thinking New Thinking People are part of the process People design and improve processes Process requires external control Workers who run the process control it Managers have to control what people do Managers must obtain commitment of workers 13 STATISTICS OF HR TRANSFORMATION 50% of organisations are in the middle of transforming their HR functions; 12% completed their HR transformations in the past year; Another 10% intend to begin the process in the next year. (Global HR Transformation Study, 2006, Mercer Human Resource Consulting) HR TRANSFORMATION Process of Recreating the HR function so as to enhance HR contribution to the business It involves a shift from the internal operations (transactional, inward) activities to a more market perspective related performance. Over the years role has been evolving, but within its HR (Personnel) box. Current transformation is breaking outside the box Now HR transformation deals with issues of Organisational Renewal, Change Management, Business Success, Business intellegence, Culture, Behavioral Change. TRANSFORMATION WAVE 5-10 years ago: focused on improving technology and service delivery, technology shift gives new aspects Competition, Time to market, Intranet, Restructuring/Rightsizing, Outsourcing This was the role of HR as a Consultant. Role did not transform the HR function into a business partner Now HR is being called up to deliver TRANSFORMATION WAVE HR Business Partnering model often started off as a Cost Saving initiative, responding to a Business Directive. This was the Driving force of the model in the 90’s. Led to the introduction of IT Driven HR Services, Self- service forms processes etc. What started as a Cost Reduction/Competition Program ended up as a Revitalisation of the whole HR Activity Now HR is the driving the vision-strategy targets Closer follow up related to market changes HR ROLE/CONTRIBUTION CHANGING ROLE OF HR BUSINESS PARTNER CONSULTANT TRANSACTIONAL LOW VALUE HIGH VALUE CHANGING ROLE OF HR TRANSACTIONAL CONSULTANT Inform Advise Police Solutions Control Inward Reactive Reactive BUSINESS PARTNER Integrate Strategy Outward Proactive TRANSACTIONAL EXAMPLE OF HR Delivering a Service to a client or end user. Recruit an Engineer Investigate a discipline Case Book Training for the participants to Workshop Provide Consulting Plus all the other Record keeping Functions CONSULTANT Provide HR to a Business Unit in order to solve a specific problem. Define competence requirements Giving advice in dealing with specific issues eg.: How to stop a Competitor from poaching your staff; How to create a Customer Care Culture. PARTNER Working with the top Management Team as a partner in: Participating in defining Business Strategy. Actively live up to Vision and mission statement Influencing change in Strategy in view of the organizations Talent Base, or ability to build one in the short Term. Develop capacity building Implementing the HR component of the Business Strategy. STRATEGIST AND STEWARD Deloitte Report (2007) on the Evolving Role of the Chief Human Resources Officer (CHRO). Today’s CHRO is a leader who not only manages the HR function, but also collaborates with the CEO and Board of Directors on a range of Strategic issues. They play a role in building and shaping –not just staffing- enterprise Strategy. THE DELOITTE FRAMEWORK FOR THE ROLES OF THE CHRO 1. Workforce Strategist 2. Organisational and Performance Conductor 3. HR Service Delivery Owner 4. Compliance and Governance Regulator 1. WORKFORCE STRATEGIST Crafting workforce Strategies with an eye on global trends Conscious of the Challenge of Attraction and Nurturing Capacity building Next Generation Perspective including technology shift Understanding of the Needs of Today’s Workforce 2. ORGANISATIONAL AND PERFORMANCE CONDUCTOR Making choices among options of maximizing performance of workforce CHRO must be a Rewards Program Structuring the job design, a change Master 3. HR SERVICE DELIVERY OWNER Still Delivering HR Admin and operations in a Cost Effective way. A mix of Self Service operations, use of Vendors (outsource) and integrating these into one whole. 4. COMPLIANCE AND GOVERNANCE REGULATOR Work directly with the Board on HR Issues relating to Risk Mgt, Business intelligence, Ethics, Integrity Assist Board with Member Selection, Executive Compensation, Succession Planning, etc. Interpretation of regulatory issues STRATEGIST AND COACH Help CEO leverage global talent trends as viable opportunities (fast changes). They lead the change towards new working methods with more individual responsibility. They identify the kind of culture the company should have, then define that culture, and supports the environment that emerges. WHAT IS HR AS A BUSINESS PARTNER?? Must manage people (Talent Management) Identify skills required within people in the organisation (Competency Profiling) Develop and supply quality executives (Leadership Development) WHAT IS HR AS A BUSINESS PARTNER?? Motivate and retain key players (Human Capital) so that they perform at their best Maintaining and improving company’s image and being an attractive employer Exemplify Be involved at the sharp end of the business, (time to market etc) UNDERSTANDING THE BUSINESS Being concerned with the bottom line and impact of any decision on profitability. The business environment (SWOT, competitor moves, market share, etc.) Understanding customers, customer profiles (segments) and their needs. Why ? FOUR KEY ROLES OF HR AS A BUSINESS PARTNER HR as Capacity building force HR as Change Manager (OpportunitiesSteering) HR as Relationship Builder HR maintaining Human Capital HR AS CAPACITY BUILDER Participate in formulation of list of organisational and individual competencies linked to the corporate goals or strategies and support systems Develop access to information and has key role in information dissemination (analyze shifts in market and draw conclusions on HR need Identifying, nurturing, developing and untapping human talent. HR AS KNOWLEDGE FACILITATOR This assumes HR is involved in the formulation of the Organisation’s Vision, Mission and Business Strategy; Must be part of the Management to advise on what is possible given the stock of talent and capacities available in the oganisation; Propose Strategies that best attracts and retains the talent that will deliver on the Business Objectives. HR AS RELATIONSHIP BUILDER Both internal and external customers (follow market demand Supply Chain Management for maintenance of brand image and brand integrity… Branding ? is a powerful tool for promoting Culture. A growing school of thought is that Branding is as much an HR responsibility as it is a PR function because of its power to attract and retain employees. Managing diversity - Many organisations now operating in different cultural environments and markets and different owners requirements MANAGING WORKFORCE DIVERSITY Workforce diversity: Gender, race, national origin, age, disability Embracing diversity Changing demographics Workforce diversity can increase creativity and innovation in organizations as well as improve decision making by providing different perspective. HR AS HUMAN CAPACITY BUILDER Career Management Facilitate progression of staff based on their competencies, desires and contribution to organisational goals Capcity Building (job design) in anticipation of future needs 39 LEADING PRACTICES (1 OF 2) Integrate HR plans with overall strategic objectives and action plans Design work and jobs to promote organizational learning, innovation, and flexibility Develop effective performance management systems, compensation, and reward and recognition approaches Promote cooperation and collaboration through teamwork LEADING PRACTICES (2 OF 2) Empower 40 individuals and teams to make decisions that affect quality and customer satisfaction Make extensive investments in training and education Maintain a work environment conducive to the well-being and growth of all employees Monitor extent and effectiveness of HR practices and measure employee satisfaction STRATEGIC PERSPECTIVE HR plans should be linked to business strategy and aligned with business needs Key choices Planning Staffing Appraising Compensating Training and development 41 SO WHAT IS STRATEGIC HUMAN RESOURCES MANAGEMENT?? It is about getting the Human Resources FUNCTION INTEGRATED within the Business. It is about INVOLVEMENT in the Business Strategy Formulation Process. It is about being listened to and heard, because Human Capital is the only Sustainable source of Competitive Advantage at the Disposal of the Organisation. SO WHAT IS STRATEGIC HUMAN RESOURCES MANAGING?? But it is up to the HR Function to rise to this Challenge. In fact, it is up to the HR professionals to rise to the new challenge of the HR function. After all, this is what we have been asking for. THE STRATEGIC ROLE OF HRM: THE STRATEGIC APPROACH TO HRM HR must drive organizational performance; it’s the competitive edge Matching process Integrate strategy HR builds (organizational) culture The right people: To become more competitive on a global basis For improving quality, innovation, and customer service To retain during mergers and acquisitions To apply new information technology for e-business 44 STRATEGIC HRM BUILDING HUMAN CAPITAL TO DRIVE PERFORMANCE Strategic decisions are related to human decisions More companies rely on information, creativity, and knowledge Human Capital is the economic value of the combined knowledge, experience, skills, and capabilities of employees To build Human capital, HRM develops strategies for 1. Recruiting: Finding the best talent, 2. T & D: Enhancing their skills and knowledge with training programs and opportunities for personal and professional development, and 3. Providing compensation and benefits that support the sharing of knowledge and appropriately reward people for their contributions to the organization. THE CHANGING NATURE OF CAREERS: OLD SOCIAL CONTRACT In the old social contract, the employee contributed ability, education, loyalty, and commitment in return for the company providing wages and benefits, work, advancement, and training. THE CHANGING NATURE OF CAREERS: NEW SOCIAL CONTRACT Employees: Downsizing, outsourcing, rightsizing, and restructuring have left little stability Subsidized benefits are decreasing Employees are expected to be self-motivated Employers: Organizations must be creative with training and development New performance appraisal processes are required 12.4 THE CHANGING SOCIAL CONTRACT INNOVATIONS IN HRM: (1) BECOMING AN EMPLOYER OF CHOICE Organizations that are highly attractive to potential employees because of HR practices that focus on: Tangible benefits such as pay and profit sharing: Starbucks – Benefits to P/T employees Intangibles (e.g., work/life balance, a trust-based work climate, a healthy corporate culture) and that embraces a long-term view to solving immediate problems INNOVATIONS IN HRM (CONTINUED): (2) USING CONTINGENT WORKERS Contingent workers (temporary/parttime employees) are not permanent, maintain flexibility, and keep costs low The temporary staffing industry doubled between 2002 and 2007 and is projected to grow into a $200 billion industry by 2010. People in these temporary jobs do everything from data entry to becoming the interim CEO. INNOVATIONS IN HRM (CONTINUED): (3) PROMOTING WORK-LIFE BALANCE Critical retention strategy Helping workers lead a balanced life Part-time work and telecommuting Flexible scheduling Gen Y/Millennials demand more work-life balance On-site gym, Childcare, Eldercare, etc. FINDING THE RIGHT PEOPLE: ATTRACTING AN EFFECTIVE WORKFORCE – 4 STEPS 1. 2. 3. 4. Planning, predicting the need for new employees based on the types of vacancies that exist Communicate with potential applicants Select those with the best potential Welcome the new employee to the organization FINDING RIGHT PEOPLE (CONTINUED): MATCHING MODEL [EXHIBIT 12.5] HUMAN RESOURCE PLANNING What new technologies are emerging? What is the volume of the business likely to be in the next 5 to 10 years? What is the turnover rate? What types of engineers will we need? How many administrative personnel will we need to support additional engineers? Can we use temporary, part-time, or virtual workers? RECRUITING (TALENT ACQUISITION) Internal Recruiting: less Assessing Organizational Needs: costly, generates higher employee commitment, and offers career advancement Job Analysis: a systematic process of gathering and interpreting information about the essential duties, tasks, responsibilities, and context of a job Job Description: clear & concise summary of tasks, duties, responsibilities Job Specification: knowledge, skills, education, physical abilities, etc. Realistic Job Previews (RJP) – provide pertinent information; positive and negative about the job & organization Legal Considerations – recruiting practices must be legal Innovations in Recruiting: eRecruiting; Twitter, LinkedIn, and other social media Getting referrals from current employees (cash rewards, etc.) ROLES AND RESPONSIBILITIES FOR RECRUITING AND RETAINING EMPLOYEES Line Managers HR Professionals Employees • With HR, develop objectives, plans • Develop objectives, plans • Openly discuss objectives • Understand HR linkages • Design recruitment and retention activities • Consider all aspects of HR in career decisions • Disseminate info to internal candidates • Know labor market trends • Abide by laws • Facilitate retention • Evaluate recruitment outcomes • Provide training in recruitment • Use exit interviews, surveys • Participate in recruitment efforts • Assist in diversity efforts • Seek info on company openings HIGH PERFORMANCE WORK SYSTEMS Work and Job Design Flexibility Innovation Health and safety Suggestion systems Knowledge and skill sharing Organizational alignment Customer focus Training and Education Compensation and recognition Rapid response Teamwork and Cooperation Empowerment Employee Involvement 58 Companies using social media to recruit: Sources: 1) http://www.mdgadvertising.com/blog/wpcontent/uploads/2011/08/the_roi_of_social_media_mdg_advertising_infographic.p ng 50% of job seekers still spend most their time searching on traditional job boards 29% of job seekers use social media as their primary tool for job searching Sources: 1) http://www.tweetmyjobs.com/blog/2012/01/is-social-recruiting-real-video/ 2) http://mashable.com/2011/07/10/digital-resume/ 3) http://www.businessinsider.com/7-cool-resumes-we-found-on-pinterest-2012-2 57% of job seekers expect a company to interact with fans & followers Both active & passive job seekers say they use a company’s social media page to apply to jobs posted, ask and get answers questions and get information –not the company’s website 59% of job seekers agree that what is said by others about a company is more important in how they form their opinion about a company than what a company says about itself 70% agree that positive posts from fans or followers on a company’s social media site would make them more likely to apply for a job at that company Sources: 1) http://www.scribd.com/doc/34282554/Social-Media-Infographic-Job-Seeker-Perceptions-and-Expectations Twitter – Engaging and informing candidates Have an account to engage candidates, share your stories and interact with current employees Facebook – Pages and engaging candidates New and creative approaches Sources: Facebook Apps BeKnown (networking tool) BranchOut (networking tool) Inside Job (networking tool, add jobs to page) LinkUp (add jobs to your page) Work With Us by Jobvite (add jobs to your page) Mobile Apps Jobs by Careerbuilder (search) Indeed.com (search) Jibber Jobber (management tool) SnapDat (digital biz card exchange) LinkedIn Mobile (mobile version of site) In The Door (networking tool) SnagAJob.com (for hourly employers and job seekers) CareerAMP- now Who Do You Know (networking tool) LinkUp (search) 1) http://jobsearch.about.com/od/jobsearchtools/a/facebookapps.htm 2) http://moneywatch.bnet.com/career-advice/blog/on-job/9-best-mobile-apps-for-finding-a-job/504/ YouTube career channel Share culture Employee network groups Promoting intern initiatives Day in the life How to videos Sources: 1) http://www.youtube.com/advertise/watching.html HR (CONCLUSION) As Human Capital Related Issues Continue to Challenge on Organisations overall Strategy, The Human Resources manager must become a familiar face in the Management Team and a potent force in the boardroom. HR (CONCLUSION – CONT.) Findings however reveal a troubling gulf between the needs of the business and the ability of HR to respond. This is forcing companies to rethink their approach to the recruitment, training and development of HR FOSTERING CREATIVITY & INNOVATION Human resource practices Structure Culture ORGANIZATIONAL CULTURE A cognitive framework consisting of assumptions and values shared by organization members Subcultures: Cultures existing within parts of organizations rather than entirely throughout them Dominant Culture: The distinctive, overarching “personality” of an organization , which reflects its core values Toxic Organizational Cultures: Organizational cultures in which people feel that they are not valued Healthy Organizational Cultures: Organizational cultures in which people feel they are valued CULTURE IN ORGANIZATIONS 70 © Copyrig ht Prentice -Hall 2004 THE COMPETING VALUES FRAMEWORK 71 © Copyrig ht Prentice -Hall 2004 CULTURE FORMATION AND MAINTENANCE Factors contributing to the creation of an organization’s culture include Company founders Experience with the environment Contact with others Tools used to transmit an organization’s culture include Symbols Stories Jargon Ceremonies Statements of principle EFFECTS OF CULTURE 73 To influence performance, organizational culture must be strong: There is widespread agreement on values among organizational members Approval is expressed to individuals who act in ways that are consistent with the culture Disapproval is expressed to individuals who act in ways that are inconsistent with the culture Organizations should focus on attracting individuals whose values match their own (to ensure person-culture fit); otherwise, employees will experience value conflict, which will reduce their satisfaction and commitment HOW CULTURE CHANGES Composition of the workforce Mergers and acquisitions Planned organizational change Responding to the Internet 74 Risk Conflict Ambiguity External Controls FOM 13.75 Impractical Characteristics of an Innovative Culture Ends/Means Open Systems WHY IS CULTURE IMPORTANT? • Numerous studies show that organizations with performance-driven cultures have better: Revenue growth o Employment growth o Stock Price growth o Net Income growth • Bottom line: Companies that live their culture are high performing and better places to work o THE NIKE STORY 77 © Copyrig ht Prentice -Hall 2004 HR’S ROLE IN SHAPING CULTURE Recruiting & Staffing Compensation & Benefits Training & Development Talent Management Performance Management • Hire people • Create • Instill corporate •Attract the best • Create a who will “fit in” with the current culture. compensation and benefit packages that help reinforce and drive the company culture. values and desired behaviors/skills that will help promote the current culture. •Measure culture and identify potential derailers. of the best •Retain top talent. •Repel the ones that just don’t fit culture where employees know what is expected of them and hold them accountable. • Hire for fit/aptitude, not skills EXECUTIVES AGREE THAT CULTURE CAN BE A SIGNIFICANT ADVANTAGE “We do a lot of things right but all those things can be copied by a competitor tomorrow. The only thing they can’t copy is our culture. Culture provides us a competitive advantage.” Colleen Barrett, President – Southwest Airlines “We have had firms study our processes and benchmark us for years, but they are hard-pressed to duplicate our success. When it comes to a sustainable competitive advantage, our GE culture is one of the most difficult things for others to copy.” Jeff Immelt, CEO – General Electric “We have no patent on anything we do, and anything we do can be copied by anyone else. But you can't copy the heart and the soul and culture of our company and that distinguishes us from everyone else.” Howard Schultz, Founder – Starbucks “We have a culture dedicated to creating a place where talented people want to work. This gives us a tremendous advantage when it comes to attracting, developing, exciting and retaining exceptional people.” Ian Davis, Managing Director – McKinsey & Company Today’s Employees Want Transparency • Employees are looking for a meaningful, authentic and congruent work experience • It is deeply rooted in U.S. culture to talk about our “jobs” • Cultural fit is paramount in finding a job you love (how long did you stay at a job that you didn’t fit) • Potential employees are twittering about their job interviews, the people who are interviewing them and how they are being treated. Potential PR nightmare or outstanding exposure opportunity. WHAT IS ATTRACT, RETAIN, REPEL AS IT RELATES TO CULTURE? The ability to understand who you are from a cultural perspective. Being crystal clear on what your culture is as you create an employment brand Employees will be either attracted to your organization or be repelled by this brand Employees who do come to work for you and enjoy an authentic and congruent work experience will stick around – retain – and talk to other people about how pleased they are CREATING THE “RIGHT” ENVIRONMENT FOR INNOVATION Cultural Variables Accept ambiguity Tolerate the impractical Have low external controls Tolerate risk taking Tolerate conflict Focus on ends rather than means Develop an open-system focus Provide positive feedback 13–82 PROMOTING CREATIVITY Training People to be Creative Encourage openness to new ideas Take the time to understand the problem Develop divergent thinking 83 Morphology: An approach to analyzing problems in which basic elements are combined in systematically different ways Developing Creative Work Environments © Copyrig ht Prentice -Hall 2004 DEVELOPING CREATIVE ENVIRONMENTS 84 Ensure autonomy Provide exposure to other creative people Allow ideas to cross-pollinate Make jobs intrinsically interesting Set your own creative goals Support creativity at high organizational levels © Copyrig ht Prentice -Hall 2004 STIMULANTS TO WORK CREATIVITY* 1) FREEDOM in deciding work to do or how to do it 2) CHALLENGE to work hard on important projects 3) RESOURCES needed to do the work 4) ENCOURAGEMENT from a supervisor who is a good work model, sets appropriate goals, supports and has confidence in the work group 5) WORK GROUP SUPPORTS such as diverse skills, people who communicate well, are open to new ideas, constructively challenge one another’s work, trust and help each other, and feel committed to their work 6) ORGANIZATIONAL ENCOURAGEMENT in a culture that supports creativity and communicates a shared vision of organization OBSTACLES TO WORK CREATIVITY 1) ORGANIZATIONAL IMPEDIMENTS such as internal political problems, harsh criticism of new ideas, destructive internal competition, avoidance of risk and overemphasis on the status quo 2) WORKLOAD PRESSURES such as extreme time pressure, unrealistic expectations, or distractions CREATIVITY: RESEARCH FINDINGS © Copyrig ht Prentice -Hall 2004 BOOSTING CREATIVITY 88 © Copyrig ht Prentice -Hall 2004 “Bringing together ideas that were previously unrelated”