An Innovative Perspective on HRM for Firm’s Sustainable Growth

An Innovative Perspective on HRM for Firm’s Sustainable Growth

  

ABSTRACT

The aim of this paper is to contribute to the literature emerging in the space where innovation and human resource management both have an important linkage for the growth and development of organizations/firms. To this end, I tried to explore the extent to which innovation and HRM are interdependent; how effective human resource management can enhance innovation capabilities within the organization and how innovation culture may drive a need to resurgence HRM systems for the firm’s sustainable growth.

In this exploratory research, a questionnaire survey was undertaken to 110 HR/Personnel Managers of various firms in Rohilkhand Region of Uttar Pradesh. Here, I specifically put an emphasis to identify HRM practices that are basically connected to high levels of delegation of empowerment, performance management, extensive internal communication channels, and the use of reward systems. I discuss how individual ideas & actions influence performance, and how the clustering of specific ideas and actions matters for firm’s growth. West (2002) stated the matter quite explicitly: "Creativity is the development of ideas, while innovation is the application of ideas."This research also investigates the problems which firm’s surface in the implementation of innovative individual ideas.

In the data analysis, few tests and regression analysis was done to test the reliability of the questionnaire items. The results confirm the hypotheses that following factors are significantly related to firm innovation and its sustainable growth: flat organization structure, enriching of employees skills and talent, leadership support for innovation, organizational culture, human resource management practices, and firm performance.

Keywords: Innovation, HRM Practices, Individual Influence

INTRODUCTION

As it is obvious that the cut-throat competition going on in the world market and every organization wants to capture the largest market share of its domain, but the objective can be accomplished only when the human capital of the organization must be utilized in its best possible manner Human capital is a key, and by all accounts increasingly important, part of the resource-base of firms. Human resources have been called the “key ingredient to organizational success and failure” (Baron and Kreps, 1999), including success and failure in company innovation performance.  That’s why proper focus and importance is required on it to extract the core competencies for the sustainable growth of the organization. Every employee in an organization has its important like every drop of water is required to fill a glass.   Many of us have had great ideas or visions. But our dilemma is really: What do we do with them? In our HR management role, how do we get more ideas and visions from all employees? And how do we turn these into reality? Too often we think of innovation as the responsibility of a product team or a business unit. Innovation springs from the minds of creative individuals working in an environment that spawns and encourages innovation.

The diagram given below represents the role of Innovative HRM in Organizational Output

Individual employees, founders, or executives may directly give rise to superior innovation performance (Felin and Hesterly, 2007). HR professionals need to understand the critical importance of innovation today and how to contribute to your organization’s Innovation mandate by attracting and keeping the most innovative people, constantly improving their skills and creating a culture of innovation. This will enable your organization to differentiate itself. These are a part of the role of HR.

ELEMENTS OF INNOVATION

It is important to understand the exact meaning of Innovation here before we can understand how Innovation can facilitate our organizations for the sustainable growth. For many of us, innovation means the introduction of new technology and inventions—such as the internet, cell phone, etc. It is true that innovation led to the development of these new products but innovation is much more than that. Innovation goes beyond technology and requires collaboration from many areas to come together to achieve success. Innovation is a collaborative process; where people in many fields contribute to the implementation of new ideas.

David Neeleman, founder and CEO of JetBlue started a new airline at a time when the marketplace was flooded with airlines. He said; “Innovation is trying to figure out a way to do something better than it’s ever been done before.” To accomplish this his edge was innovation.

There are some key elements emphasized in this definition:

•The reference to novelty implies something that is new to the organization; it doesn’tnecessarily have to be new within the industry or commerce at large, simply that for this organization at this particular point in time, it is novel.

•The implication of novelty however doesn’t mean that the difference between the ‘old’ and the ‘new’ must be radical; we are not only referring to discontinuous innovation but also to incremental or continuous innovation; in other words, drawing on available talents and capabilities to do things better, or to do things differently (Francis&Bessant, 2005)

SIGNIFICANCE OF INNOVATION

Innovation is in need of a significant transformation on how it is designed, developed and executed in most organizations. Traditional approaches to managing this simply need ripping up and redesigning to allow innovation to become more the central core.In an era when knowledge is rapidly changing, and innovating is critical to business success and sustainability, the human capital of the organization is an issue of increasing importance. Over two decades ago, Kozlowski (1987) called for Human Resource Management (HRM) to be more distinctly embedded in organizational strategy in order to facilitate innovation. Roberts (1988) also argued that the four dimensions of staffing, structure, strategy and system support were central to successful innovation, and that ensuring the organization had the right kind of people who were effectively managed were critical staffing issues.

Human Resource Management (HRM) may be defined broadly in terms of all management activities impacting relationships between organization and employee (Beer et al., 1984) or more specifically as a system of operational functions such as staffing, selection, job design, training and (career) development, performance appraisal and compensation (e.g. Pfeffer, 1998). Further, there is an increasing tendency to also consider more strategic level functions such as human resource planning and forecasting (Koch and McGrath, 1996). Although there is considerable discussion regarding the relative importance of specific HRM practices and how they should be configured, there is general agreement concerning the importance of alignment between HRM practices and organizational strategy (e.g, Lengnick-Hall and Lengnick-Hall 1988).

RESEARCH OBJECTIVES

The paper aims tostudy the impact of innovative perspective on HRM for firm’s sustainable growth. The main objectives of this paper are as follow:

1.      To determine the novelty in HR functions which impact on the sustainable growth of the firm

2.      To examine the factors assist in fostering the innovation success.

RESEARCH METHODOLOGY

In this exploratory research study, the focus has been put on through informal discussions with management, and more formal through questionnaire from focus group to provide insight on the problem- innovative perspective of HRM for the sustainable growth of the firm.

Elements of research Methodology:

·         Research Design  : Exploratory

·         Data Collection : Primary & Secondary both

·         Primary Data Specification:

§  Sample Size: 110

§  Sample Unit: HR Managers

§  Sample Technique: Judgmental Sampling

§  Sample Location: Rohilkhand Region (UP)

The collected data (through informal discussion and questionnaire from focus group) has been analyzed and interpreted through various methods such as regression.

RQ1. Do you feel that Innovation in HRM is essential for organization success?

RQ2. Is there any role of HR planning in facilitating innovation success?

RQ3. Is there any role of Induction & Training in facilitating innovation success?

RQ4. How performance management is essential in innovation success?

RQ5. Do you feel that the result oriented reward system facilitate innovation?

RQ6. What is the role of delegation of empowerment in building the innovation capabilities of     employees?

RQ7. What is the impact of organizational culture & management philosophy on HRM practices and successful innovation within an organization?

RQ8. Do you feel that the flat organization & employee participation are crucial to bring innovation success?

Key HRM Functions for Sustainable Growth

There are certain key functions of HRM and if the implementation of these functions happens in novelty, it would lead to the sustainable organization growth. These functions are as: Human resource planning, Job descriptions, Induction & Training, Internal career opportunities,Delegation of responsibility, Results-oriented appraisals, Employees Participation.

A number of other researchers have also provided direction in terms of the most influential HRM functions for effective innovation and these are summarized in given Table:

Studies Relating to HRM Functions Linked to Innovation

Roberts (1988)

Ø  Recruitment

Ø  Job assignment

Ø  Personnel development and training

Ø  Performance measurement

Ø  Rewards

Gupta &Singhal (1993)

Ø  Human resource planning

Ø  Performance appraisal

Ø  Reward systems

Ø  Career management

Delery& Doty (1996)

Ø  Internal career opportunities

Ø  Training

Ø  Results-oriented appraisals

Ø  Employment security

Ø  Participation

Ø  Job descriptions

Ø  Profit sharing

Laursen (2002) and Laursen& Foss (2003)

‘New’ HRM practices:

Ø  Interdisciplinary work groups

Ø  Quality circles

Ø  Systems for employee proposals

Ø  Planned job rotations

Ø  Delegation of responsibility

Ø  Integration of functions

Ø  Performance-related pay

Scarborough (2003)

Ø  Selection methods

Ø  Compensation strategies

Ø  Career systems

Shipton et al (2005)

Ø  Sophisticated HR activities

Ø  Performance management

Ø  Recruitment and selection

Ø  Training

Ø  HR strategy

Ø  Learning climate

Ø  Appraisal linked to reward

Shipton et al (2006)

A.    Practices promoting exploratory learning:

Ø  Project work

Ø  Job rotation

Ø  Visits to external parties

B.     Practices to develop knowledge, skills and attitudes

Ø  Induction

Ø  Appraisal

Ø  Training

Ø  Contingent reward

Ø  Team working

C.     Synergy between A&B

In this study, it is well clear that there is much overlap in the HR functions seen as important to innovation. These include:

•HR planning (including job design, organizational structure and use of teams)

• Induction & Training

•Performance management

• Result oriented reward systems

• Employees participation

ANALAYSIS AND INTERPRETATION

The study reflects that the 98 percent said Innovation in HRM is essential for the sustainable growth of the organization, 78 percent said HR planning plays a significant or somewhat significant role in fostering innovation at their organizations.

Similarly, 70 percent said induction & training program is vital to extract the new ideas and help to make the employees comfortable to do the job at their own. Additionally, 55 percent don’t tie performance-management systems to driving innovation and 45 percent don’t even have a formalized suggestion system in place. 72 percent said result oriented reward is important to bring innovative change while 28 percent said it will impact negatively on the turnover rate of employees. 66 percent said delegation of empowerment will resulted in the performance efficiency while 34 said it is not good to delegate the power due to inability of taking the right decision in employees. 88 percent said the organization culture and management philosophy have a vital importance in fostering the innovation. Anyone looking to unleash innovation on a sustainable basis should start by asking themselves how much personal involvement the top team has in the sponsorship and coordination of the company’s innovation activities.78 percent said employees’ participation and flat organization structure is important for the innovation success.Creativity tends to occur when employees feel safe and positive. Yet research suggests that only 38percent of employees are allowed to take controlled risks and that only 62 percent report that their manager is good at listening to new ideas.

IMPLICATIONS & CONCLUSION

The substantive findings indicate that no single HRM approach may be sufficient to promote innovation but rather bundles of strategies and these bundles need to be studied empirically.The results confirm that following factors are significantly related to firm innovation and its sustainable growth: flat organization structure, enriching of employees skills and talent, leadership support for innovation, organizational culture, human resource management practices, and firm performance.The following determinants lead the innovative perspective for firm’s sustainable growth:

·         Fostering innovation requires that we identify people who can "think outside the box." Let's not assume that everyone is equally innovative, but instead let's recruit people for their innovation capabilities.

·         Consistently convey the correct signals about innovation expectations to every employee within the company.

·         Reinforce the importance of innovation activity and outcomes through the use of recognition schemes that encourage and inspire employees to share and develop ideas – even if the ideas might fail.

·         Ensure all employees understand the unique skills and behaviors required to successfully innovate in their organization.

·         Break down internal silos and promote idea sharing by building career development frameworks which encourage resource sharing. Identify which roles disproportionately drive innovation value, develop the people filling these roles and ensure full competence in innovation processes. Architect the organization (structures, processes, roles, capabilities, etc.) to support the innovation strategy, accelerating the idea lifecycle by minimizing boundaries and promoting collaboration.

·         Facilitate the implementation of new working practices that drive innovation.

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