Why Innovation In HR Is Slow And How To Fix It

One of the most common problems across companies is a lack of support in the executive level for HR innovation. Many executives view the Human Resource Department as simply existing for compliance and benefits and not being critical to the core of their revenue. Human Resources is in fact the ultimate revenue generation department.  It’s after all HR that finds and nurtures the very talent that drives the success of the company. With the current view by many executives of HR budgets remain minuscule in comparison to sales, marketing and operations. Many HR managers and directors find their authority to make decisions within their own realm hampered by requiring constant C-level suite buy-ins for decisions.

Most companies will invest tons of time and effort into creating new products that have a slight difference from existing ones, all in an effort to squeeze out a couple points of profit from a saturated market. The research shows that focusing some of that time and budget on Human Resources can greatly improve profit, lower employee turnover and increase customer satisfaction. Just take a look at these figures:

Companies with level 4 talent programs generate 26% greater revenue per employee than their peers and have a 40% reduction in voluntary turnover (Deloitte)

Increasing employee engagement investments by 10% can increase profits by $2,400 per employee, per year. (Source: Workplace Research Foundation)

A study of 64 organizations revealed that organizations with highly engaged employees achieve twice the annual net income of organizations whose employees lag behind on engagement. (Source: The Impact of Employee Engagement. Kenexa)

So how can a Human Resource Director innovate in today’s climate? The case needs to be made to make HR a major priority at the company and a department with the authority and budget that it deserves. Several companies have realized how important HR is and their bottom line reflects that. These include Google, FedEx, Eastman Chemical and Bain & Company. These organizations believe HR is a major part of their business and devote significant resources to it. They encourage change, they measure performance and they focus on it as if it were a product. Driving innovation really means driving change where opportunity exists to streamline efficiency (cheaper/faster), increase employee engagement (happier work environment) and increase employee performance (performance management).

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When making this case to your executives let the data speak for itself. It’s key that HR is properly staffed otherwise it’s impossible to make any changes as everyone can barely keep up with what they are currently doing. During our last yearly HR survey we found many issues with executives not allowing HR managers to exercise enough control to modernize outdated payroll, time tracking and performance management systems. In industries that are more tightly regulated just being able to keep up with labor and safety law changes was a major issue for some. Others expressed frustration with upper management in not following through in accountability, consistency for employment law, proper documentation, performance reviews and just getting any executive buy-in.

It’s increasingly challenging to recruit good talent and to retain them. More than ever Human Resources departments need to be properly staffed, given well funded budgets and be allowed to exercise control over their own department. This remains the hardest issue as changes within HR tend to be micro-managed and this type of management is anathema to innovation. When people are micro-managed they will tend to avoid opportunities all together and instead carry out only what they are instructed.

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Be an HR Leader

Be the visionary that can see the possibilities and bring those plans to action. Reward those who move things forward. Advocate for change when you see opportunities to increase employee engagement. Demand a seat at the table and support that demand with real research. Monitor employee performance levels, turnover rates and job satisfaction rates to show real progress by investing in new methods.

Areas ripe for innovation are:

  • Antiquated payroll systems can now be automated
  • Performance reviews can be automated and expanded to better more motivating methods
  • Feedback can be given in real-time to help build a culture of candor
  • HRIS systems can help make HR more efficient and increase employee experience
  • Awards can be given to employees digitally
  • Compliance tracking can now be done online
  • Goals can be tracked online
  • Applicant and talent tracking systems increase quality hire rates
  • Strengths mapping
  • Career development
  • Corporate e-learning (Study shows that just a $525 yearly increase in developmental training per employee led to: 57% higher sales per employee 37% higher gross profit per employee American Society for Training and Development)
  • Scheduling & time-tracking
  • Cultural innovation (Nearly 80% of Millennials look for people and culture fit with employers, followed by career potential. (Collegefeed, March 2014)

The first step to pushing positive change at your company is making Human Resources a priority and to do that you should remind your executives just how critical HR is to the success of the company. You find the talent that drives the company, you nurture that talent to keep them engaged and productive as well as from leaving. Hiring, onboarding, performance management and benefits are crucial. 84% of organizations anticipate a shortfall in the minimum number of qualified leaders over the next five years. (State of Leadership Development 2015, Brandon Hall, August 2015). It will take creative methods to find, attract and retain such talent and those companies with the most innovative HR teams will not only thrive but will drive the growth that companies keep looking for from sales and product development.