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Part 3: Jump-shifting HR's impact on business performance

Part 3: Jump-shifting HR's impact on business performance

Part 3 of 3: Integrating HR and CEO priorities in a coherent framework

Previously, we examined how HR has a pivot-point opportunity to transform how it meets the most critical CEO priorities. We saw how that opportunity could be realized through a laser-like focus on being innovative as the fundamental competency to address these priorities.

The nitty-gritty, down-to-earth, practical question now rises up: How might HR achieve this potential, and jump-shift its impact as a strategic business partner? Here’s our recommendation, as a starting point for dialogue…

Start with the top HR priority: Develop Leaders. Commit to a comprehensive focus on Leadership for Innovation. With this focus, leaders at all levels can learn and practice what it takes to implement the other 3 components of an HR innovation strategy:

  • Engage employees to work innovatively as part of their day-to-day job
  • Transform the culture to sustain innovation at all levels
  • Redesign the organization as a network of innovative teams

All four HR strategic priorities are addressed within this coherent framework. Starting with Leadership for Innovation, HR can develop large-scale change programs for building innovation competencies and practices at different levels and in different parts of the organization. People can apply their innovative skills to the CEO list of essential, transformational needs: business growth, human capital, customer centricity, operational excellence, sustainability, disruptive technologies., and marketing and branding.

Within this Leadership for Innovation focus, there are four key roles for leaders to play:

  1. Practitioners and Role Models for being innovative themselves
  2. Facilitators and Coaches for others to be innovative
  3. Sponsors for the climate & culture for innovation
  4. Executives attentive to the “return on innovation investment” as part of business performance

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Strengthen leaders at all levels (from entry supervisor to CEO) in the innovation competencies for the first 2 key roles: Practitioner & Role Model; and Facilitator & Coach. By practicing these roles, leaders not only augment their own job performance but also earn the credibility they need to effectively guide and motivate their peers and subordinates.

Strengthen senior leaders with the innovation competencies for the other 2 key roles: Sponsor and Executive. In these roles, senior leaders can effectively communicate and “institutionalize” the norms, values, policies, and systems needed to drive and sustain business transformation.

However… Caution… Big challenges ahead!

When taking on this pivot point opportunity, be conscious that for any transformative change to take root, 3 positive mindsets are essential to address in large scale change for innovation. Let’s call them the top-down, bottom-up, and middle-out mindsets. Without these mindsets, all this becomes a “program du jour” that will underachieve its potential – and won’t be transformative. Shaping and supporting these positive mindsets is one of HR’s first innovative tests for transformative change!

For the top-down mindset, the C-suite needs to see the same critical importance for innovation as the CEOs in the KPMG, PWC, BCG, Conference Board, and other reports. Being innovative is the fundamental driver for achieving CEO strategic priorities. And when HR focuses on building innovation expertise and stamina across the organization, it forges a dual-commitment with the C-suite for business success. Without this level of commitment, it may be possible to shift micro-cultures within an organization, but not the overall culture.

Interestingly, the level of a CEO’s support for innovation may depend on how many years he or she has been in that position. The KPMG report reveals that CEOs who have been on the job for 5 or more years may be more likely to say it’s important to have a culture for innovation than CEOs with less than 5 years, 78% vs. 63%. While both levels of support are positive, the momentum for transformational change will ride on the commitment of the C-suite as a strategic driver of the culture.

For the bottom-up mindset, individual contributors and teams need to see that being innovative is a natural, integral part of their current jobs, not an “add-on” to their regular duties. When HR defines being innovative as simply “doing something in a new, better, or different way,” that’s something every employee can relate to: who doesn’t have the need to do some aspect of their job in a new, better or different way? Then it’s HR’s job to ensure they have the confidence, skills, and opportunities to succeed in their performance of this aspect of daily work.

For the middle-out mindset, work to have mid-level leaders and HR leaders both see the complementary roles and skills they each bring to enabling innovation. Mid-level leaders have likely been the primary agents for innovative results within their areas of responsibility, and may be skeptical of HR’s role in building innovation competencies.  When HR focuses its expertise on developing a coherent framework, and collaborates with functional units to design and deliver the full complement of innovation competencies, that partnership will prove to be invaluable.

To guide the growth of these mindsets, and the positive practices they will spawn, its critically important to have the right analytics by which to measure progress. According to the McLean report, “metrics and analytics was the least effective HR area regardless of organization size.” Deloitte adds that 77% of executives now rate people analytics as a key priority.

For example, 44% of companies are now using workforce data to predict business performance, up from 29% in 2015. From an innovation perspective, such analytics could trace how well the organization is:

  • Establishing a common language for innovation
  • Aligning expectations and opportunities for being innovative
  • Promoting stretch goals and risk-taking
  • Fostering a healthy innovation process
  • Practicing versatile, innovative thinking
  • Engaging people across boundaries to co-create innovative solutions
  • Empowering different types of innovation

One more thing to be conscious of… Forging positive mindsets may be easier in companies that are already top performers in their industry. KPMG defines top performers as those who had an average revenue growth of 10% or more for the previous 3 years. Compared with other companies, top performing companies are more likely to have innovation already embedded in the business, 44% vs. 24%

On the other hand, the urgency decreed by CEOs, plus their confidence of success, can rule the day over any history of entrenched mindsets. According to KPMG’s report, as well as Imaginatik’s 2015 report on the State of Global Innovation, over 85% of the global CEO’s are confident in their company’s 3-year growth potential, as well as confident about the economic conditions over that period (80%). They’re confident that they and their companies can take the leap and land safely.

In closing, two viewpoints comprise the through-line of this conversation:

  • HR has a pivot-point opportunity to jump-shift its impact as a strategic and innovative business partner
  • HR can transform its value to the business using innovation as a laser-like focal point

Viewpoints have power and consequences. From our decades of experience consulting with multinational corporations, we strongly believe that these points of view have a “fit” with the times, and a vitality to empower the consummate potential for HR to lead, engage, and transform organizations… and thereby make a quantum leap in its innovative impact on business success.

Read Part 1: HR’s pivot-point opportunity to sharpen its focus

Read Part 2: A laser-like focal point for transforming HR’s value to the business

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William Miller's picture
About the author

William C. Miller, co-founder of Values Centered Innovation, is passionate about integrating emotional intelligence, human values, and mental discipline with our innate capabilities to be innovative.