Supporting Innovation through HR Policy - Alternative Minds

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Supporting Innovation through HR Policy: Evidence from the UK. by Searle, R. H. and Ball, K. S. Published in ‘Creativity & Innovation Management’, volume 12, issue 1, pp 50-62.

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CREATIVITY AND INNOVATION MANAGEMENT

Supporting Innovation through HR Policy: Evidence from the UK Rosalind H. Searle and Kirstie S. Ball This paper focuses on the relationship between the importance of innovation for organizations and their human resources policy. Drawing on survey findings, we examine the coherence of organizations’ utilization of HR recruitment, training and performance management policies to support and enhance firms’ innovation performance. Through a social–psychological perspective, we situate our findings in two diverse areas: the psychological literature, exploring the measurement of innovation, and second, with regard to the internal (with each other) and external (with broader organizational objectives) integration of distinct HR policy elements. Our surveyed organizations indicate that, whilst attaching importance to innovation, they fail to consistently translate this importance into coherent HR policies. Typically, HR policy rewarded non-managerial employees for innovation, whilst managerial staff were expected to do so as a matter of course. This inconsistency is one source of resistance which blocks the generation of new ideas, and their implementation, organization-wide.

Introduction

T

his paper addresses the question of whether organizations coherently use HR policy in promoting innovative behaviours to enhance competitive performance. Drawing on survey findings, we examine the extent to which organizations identify, utilize and support innovation in their recruitment, training and performance management processes. We find that our surveyed organizations, whilst attaching importance to innovation at a conceptual level, fail to consistently translate and support this in HR policy. Furthermore, we find that the application of HR policies to encourage innovative behaviour is targeted at specific groups of employees, typically at lower organziational levels. Thus, whilst organizations are encouraging their non-managerial employees to innovate, the lack of attention paid to middle and senior managers (perhaps with an implicit expectation that they should innovate anyway) will sustain an HR-policy approach fraught with resistance and misunderstanding about the implementation of new ideas. Whilst we are writing from a social–psychological perspective, we situate our findings in two diverse areas. First, in psychological literature, which addresses the development of

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an innovation–specific behavioural category, and the application of innovation assessment and development methods; and second, in recent developments of the ongoing debate surrounding the integration of different HR policy elements, both internally (with each other) and externally (with broader organizational objectives). Within the latter, innovation1 has been discussed from early strategic fit models of HR (Schuler & Jackson, 1987) and in more recent work which discusses the HR implications of the implementation of new work practices. Thus, our paper proceeds as follows. First, we outline the two literatures upon which we draw, and then present our survey findings. In the light of the findings, we then discuss the theoretical and practical implications of the development, identification and integration of an HR policy designed to support innovation in the organization at large. 1

We note that ‘innovation’, as a sub-discipline of management studies, is extremely heterogeneous in nature, with studies utilising perspectives from micro psychology to structuralist sociology and neo – classical economics. In this paper, and in the literature upon which we draw, we refer to micro conceptions of innovation as a social – psychological process.

© Blackwell Publishing Ltd, 2003. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA.

SUPPORTING INNOVATION THROUGH HR POLICY

Managing an Innovative Human Resource As academic and practitioner commentators continue to note that the ‘rapid’ change in business environments and ‘incessant’ technological development requires organizations to be constantly looking to revise, reflect and develop anew, the question of how innovative process might be managed from a human resources perspective is indeed a timely one. Innovation is important in two key ways for organizations, playing a role in both radical developments (Colewell, 1996) and in smaller continuous changes (Bessant, 1992). Findings suggest that the ongoing survival of existing firms is dependent upon their ability to innovate in terms of their products, processes and systems (Oldham & Cummings, 1996). Whilst the observation concerning an organization’s need to innovate is hardly new (Schumpeter, 1934), we see rapid changes in the speed with which organizations are required to develop novel services and products in order for them to maintain and enhance their position (Jackson, 1976). One way for organizations to become more innovative lies in their ability to foster, develop and utilize the talents, in particular the innovative potential, of their employees (Amabile, 1988; Oldham & Cummings, 1996; Wolf, 1994). As Axtell et al. (2000) have indicated, innovation is not confined to individual creativity per se but to the novel application and implementation of ideas by groups within the organization’s context. The issue for organizations who value innovation is, therefore, how to select, develop and motivate individuals capable of formulating ideas in the first place, and also to create the supportive environment in which groups can productively and swiftly implement them. These notions are reflected in recent social–psychological models of organizational innovation. Guzzo and Shea (1992) highlight the role of the wider organizational context in shaping such novelty. They demonstrate that recruitment and selection, training and development, feedback, reward and recognition of employees are vital inputs in this respect. Furthermore, Axtell et al.’s (2000) study of shopfloor workers provides some specific evidence concerning the role of some of these factors in creating innovation. They confirmed an important link between individual (predispositional and job) factors, and the generation of ideas, whilst organizational and team factors emerged as of more significance during their implementation. Thus, the need to select, develop and organize with these factors in mind is confirmed.

© Blackwell Publishing Ltd, 2003

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In this respect some more wide-ranging personality measures, such as the Occupational Personality Questionnaire (Saville, 1973), have included a factor called innovation. Other researchers have chosen to produce personality tools specifically concerned with innovation. The most well-known attempt to measure individual innovation levels is Kirton’s (1976) Adaptation-Innovation inventory (KAI), which distinguishes two types: ‘adaptors’, who are ‘doing things better’ and ‘innovators’, who are ‘doing things differently’. Concurrent with this Jackson’s (1976) Personality Inventory (JPI) includes an innovation sub-scale (JI) which focuses on identifying both individual creativity and innovation. However, these measures treat innovation as a simple uni-dimensional construct and ignore any motivational or organizational component. The importance of personality factors and behaviour in context in securing innovative performance was empirically confirmed by Campbell, Gasser and Oswald (1996). Adopting a process–based view of innovation, they examined job performance and found a link between the incidence of innovation-specific behaviour and organizational performance. Thus, as organizations seek to become more innovative, so the behaviours of their employees’ would also have to change. It also follows that if organizations claim to have an ‘innovative’ strategy (Schuler & Jackson, 1987), and promote this as a strategic requirement, we would expect to find such behaviours in evidence, reinforced through various recruitment, training, reward and development activities. As we shall see, however, this logic is rarely in evidence. In the next section, we proceed to discuss the nature of the linkage between employee behaviours, HR policies and organizational performance more broadly.

Innovation, HR Policy and ‘Organizational Fit’ We begin with the question of how organizations might go about re-inforcing innovative behaviours through HR policy. Earlier fieldwork conducted by Forrester (1994) has revealed a number of different techniques deployed by organizations to either select or promote innovation amongst their workforces. Field studies of several large organizations indicated the application of ‘innovation’ as a competence for use in assessment centres either from individual or group exercises or criterion-based interviews, whilst others utilized scales in existing personality tools (e.g.

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SHL’s OPQ measure). In addition it was also found in the application of performance management techniques. These involved the application of either individual or group-based targets which included either specific action (e.g. to create ten new ideas) or more behavioural approaches (e.g. introducing ideas from outside the organization). It was also observed that many organizations used different intrinsic or extrinsic incentive systems (Amabile, 1988). These might include for example, financial rewards or prizes for ideas, whilst others had an implicit understanding that by selecting innovative people, they had to do nothing further other than wait for the ideas to emerge. Links between employee behaviour and organizational performance have not been so evident in broader studies of HR policy and organizational performance. Despite this, the idea that different elements of HR practice should be integrated with each other in a ‘bundle’ (internal fit) and that HR policy should dovetail with business objectives (external fit) has been intrinsic to the HRM ethos since its earliest models in the 1980s. To elaborate, ‘internal fit’ refers to the extent to which a set of HR policies, pertaining to recruitment, training, performance management and reward exhibit internal coherence and consistency. For example, that they all be based on a given competency framework, that performance data inform recruitment, training and reward decisions, and so on. ‘External fit’ refers to the extent to which a given set of HR policies cohere and integrate with overarching business objectives, and that HR decisions both inform and are informed by organizational performance, at both strategic and operational level. Whilst internal fit is a topic which has received minor attention (see Storey, 1992), external fit has been an area of continued debate between academics. From early models of HRM, such as that of Beer et al. (1984) and Guest (1987), external integration and fit has been constructed as a desirable objective for the competent HR department and the business enterprise which sees people as ‘the key to success’. Since these early models, research has attempted to posit the nature of this link. The linear integration of HR policy and strategy has been critiqued by writers such as Mueller (1996) who claims that the organization’s social fabric, or ‘social architecture’ is responsible for codified, yet disparate, HR practices throughout the organization. These evolve alongside strategic policy, and relate to it in a recursive way. Some writers claim that HR practices make a positive contribution (Boxall, 1996) to organizational performance, but in

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order to sustain a competitive advantage, would have to be somehow idiosyncratic to the organization. Others argue that coherent HR practices only emerge when the organization is performing successfully (Paauwe & Richardson, 1997) whilst Guest and Hoque (1994) conclude that any level of fit is the exception rather than the norm. The extent to which we see any clear evidence that HR policy and strategy can be coherently integrated is thus limited. Furthermore, Hope-Hailey et al.’s (1997) review of the state of HRM in the 1990s suggests that the integrative models of the 1980s are not in evidence. They posit the importance of rich contextual variables of the type alluded to by Mueller (1996) in shaping HR practice, citing incidences of a ‘nuts and bolts’ approach to performance management, a focus on hard HRM, team-based discipline and self-management. Problems with external fit and devolution of people management practice to line management were also identified. The latter is something that is not altogether unanticipated, as Hall and Torrington (1998) reported difficulties experienced by line managers in adopting the responsibilities associated with HRM, such as welfare and counselling roles. Similarly Tyson (1999) concurs with HopeHailey et al.’s emphasis on the ‘nuts and bolts’ approach, arguing that greater weight was given to process knowledge (e.g. management of change) and diagnostic skills, relating to HR issues, rather than technical expertise, on the part of line managers. A ‘nuts and bolts’ response is also suggested in work examining grassroots innovative work practices. MacDuffie (1995) asserts that innovative work systems themselves produce skills requirements (for example, problem solving). This is similarly observed by Felstead and Ashton (2000) who, following empirical investigation, argue that these emergent operational process and diagnostic skills can then be articulated in HR policy and practice, from recruitment through to training and development, appraisal and reward (Felstead and Ashton, 2000). Furthermore, the latter observe that new skills development is not associated with training in that particular skill. However, when a pro innovation strategy is in evidence, companies carry out more training actions in product or process techniques for both managerial and non-managerial jobs (Sanz–Valle et al., 1999). From current evidence, it would seem that we can tenuously conclude that HR policy has a greater role to play in supporting and rewarding desired behaviours, which are at the locus of action between line managers and employees, than on any other, more grand, strategic scale,



although this level is not to be completely overlooked. Similarly, while there is little evidence as to the internal fit of HR policy to support innovation, current evidence suggests that any external fit of HR policy in terms of innovation is more likely to be at lower organizational levels. Based on recent evidence, the paper interrogates the following four propositions: 1. Innovation will be reported as important to the majority of organizations. 2. Human resource policies supporting innovation will be reported as applied at the locus of everyday organizational action 3. The external fit of HR policy that supports innovation will have an inverse relationship with the hierarchical level at which it is applied. 4. There will be little evidence that the different HR policy elements relating to innovation will show any degree of internal fit. Thus, this paper examines the above in a larger number of organizations, to explore the link between the importance assigned to innovation, the HR practices used to develop such activities and to assess what type and level of employee was being targeted in these policies. We shall now assess data from a survey of different types of organization regarding their HR practices and procedures, and their relationship to an innovative focus.

Method Data were collected via a survey of the top 300 organizations identified from the FTSE 500, employing over 100 people. In order to increase the response rate, the questionnaire was sent to named individuals and a selfaddressed stamped envelope included. The individual was the company’s most senior HR professional who would have the greatest knowledge of the company’s strategy and HR strategy, policies and practices. The survey concerned the importance of innovation in each organization and the HR policies and practices they utilized. The first section gathered demographic details of the organization: sector, size, location of head office and financial turnover. It also included a five-point Likert rating scale to indicate how important innovation was for the organization. This ranged from (one) not important at all, through to (five) critical. The survey then focused on the organizations’ practices in five aspects of human resource management. Drawing on Forrester (1994), these included external recruitment, internal selection, performance management,


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training and development, and ideas management schemes. For each of these practice areas, the respondent was asked to identify differences across six different staff levels: senior managers, middle managers, new graduate, clerical, skilled and semi-skilled. Although the survey drew from the techniques and tools mentioned in the literature, the inclusion of the open response box after every section enabled the potential capture of emergent policies and approaches. All of the responses were entered into SPSS. Where an open response had been used, common themes were identified in order that a new category could be recorded. The second section focused on selection and recruitment, with respondents identifying whether innovation was a criteria used for a range of practices employed. These practices included personality tests, interviews, individual and group exercises. The survey also distinguished between internal selection and the external recruitment processes. The third section considered training and development. Here, commonly utilized innovation training techniques had been identified from the literature. These included brainstorming, lateral thinking and problem solving. Respondents indicated training provision for the aforementioned six levels of staff. Performance management policies formed the fourth aspect in the survey. The literature has revealed two distinct approaches to performance management, in terms of ‘what’ or ‘how’ performance is achieved. Respondent were asked first to indicate the role of innovation in terms of ‘what’ staff achieved, by focusing on innovation in terms of a performance target. They then indicated whether innovation was an important feature of ‘how’ these targets were met. This was more concerned with innovation as a behavioural competency. The respondents indicated any differentiation between individual and team-based approaches to performance management. The final section focused on ideas management systems. Five most commonly used policies were identified from the literature; including expectations that innovation was part of the individual’s role, through to more formal organizational processes like the use of ideas champions, tangible reward systems (differentiating between financial rewards versus opportunities to win prizes), through to no formal policy. As with performance management systems, a distinction was made between individual and team-based applications. The data were analysed using one-way ANOVAs with importance of innovation as

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the dependent variable, and each of the different sections on HR policies entered as independent variables in order to examine how the organization’s attention to innovation was translated into HR policies and procedures.

Results Eighty-eight organizations responded to the survey, representing a response rate of 30 per cent. They came from a range of industrial sectors operating within the UK, as can be clearly seen in Table 1. Figure one indicates the level of importance assigned by the organization to innovation. Over 84 per cent of these organizations regarded innovation as either critical or important, regardless of their size (in terms of both staff number and turnover) or the sector they occupied. Furthermore, the results, show, first, that the organizations surveyed are using a range of different HR policies to support innovation at different levels, and second, that this varies further when we come to consider the relationship between the reported importance of innovation to the organization, and HR policies.

Recruiting for Innovation Different approaches to the application of innovation within external selection at the various grades of staff are evident (see Figure 2). Although the most commonly utilized tool to assess innovation is interviewing, it is used progressively less frequently at lower organizational levels. It is striking that at graduate level and above there is a wider range of tools

used to identify innovation. At clerical level and below, personality profiles and individual exercises are also used less frequently. One–way ANOVAs revealed that there is a differentiation between the use of external recruitment tools by those who regard innovation as critical and those for whom it was a lower priority. We found significant differences (p > 0.05) in the range and level of tools used by firms who regard innovation as important. Furthermore, whilst the recruitment practices for graduate, skilled and semiskilled staff did not alter according to the importance of innovation, this was not the case if senior managers, middle managers and clerical staff were being recruited. Different recruitment processes were deployed by

Table 1. Characteristics of the organizations Characteristics of the organizations Sector

Number of organizations

% of survey

Manufacturing Service Financial Utility Engineering (inc. building) Misc

30 17 14 10 5

34 19 16 11 6

12

14

Total

88

100

critical important one of a no. of initiatives marginal importance not significant to the firm

Figure 1. Importance of Innovation in the Organizations

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55

100 90

Frequency of use (%)

80 70 Personality tool

60

Interview

50

Individual exercises

40

Group exercises

30 20 10

ki

lle

ille

d

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i-s

le

Sk

ra

C

du

at

es

g. an a M

Se

G

Se

n.

M

an a

g.

0

Level & Tool preference

Figure 2. Preferred Selection Tools – External Recruitment Table 2. One-way ANOVA for external and internal selection approaches favoured by those who regard innovation as important Organization level

Senior management (external) Management (external) Clerical staff (external) Senior management (internal) Management (internal) Clerical staff (internal) Skilled staff (internal)

External Selection process

Degrees of freedom

F

Group exercise Individual group exercise Personality profile Group exercise Individual exercise Personality profile Personality profile

1.87 1.87 1.87 1.87 1.87 1.87 1.87

5.66 8.79 7.42 4.09 6.39 4.83 4.96

organizations that regarded innovation as important, in relation to these groups. For senior management positions, group exercises were preferred (F(1,87) = 5.65, p < 0.05), whilst for management grades, individual exercises were the differentiator (F(1,87) = 8.78, p < 0.01), and personality tools were deployed for clerical staff (F(1,87) = 7.42, p < 0.01). Of these approaches, the most common method was individual exercises at the management grade (78 per cent of those who used this approach regarded innovation as critical to their success), whilst at the clerical grade, clerical personality profiling was used in 73 per cent of firms who held innovation as important.


Significance

p p p p p p p

> 0.05 > 0.01 > 0.01 > 0.05 > 0.01 > 0.05 > 0.05

When making internal selection decisions, specific approaches emerged in relation to all grades except for non-skilled staff, which bore relation to the stated importance of innovation. For example, personality profiles are used in firms where innovation is important, for skilled staff. This was also revealed in the previous analysis, but not to a statistically significant level.

Training for Innovation In examining training and development methods, problem solving is the dominant technique in firms that rate innovation as

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important. Lateral thinking tools are utilized from graduate to senior levels, and brainstorming is common at all levels. Most striking is the difference between senior and other management, with senior staff receiving less development opportunities in these area compared to graduate and managerial staff. One-way ANOVAs revealed that a very narrow area of skills were being targeted. Problem solving and brainstorming opportunities were being offered to clerical staff (F(1,87) = 5.50, p < 0.05) and (F(1,87) = 5.62, p < 0.05, respectively) and was used by 56 per cent of firms, 81 per cent of which regarded innovation as at least important. Non-skilled staff were also being trained

in problem-solving techniques (F(1,87) = 4.58, p < 0.05).

Managing Performance for Innovation In turning our attention towards recognition and reward of innovative behaviour an individualized approach both in terms of targets and behaviours is the favoured approach, regardless of organizational level. Team-level targets and behaviours emerge at management level, but are far less common at other levels (see Figure 4). This is the area where, perhaps unsurprisingly, we find the most variation between importance of innovation and HR–specific

100 90

Frequency of use (%)

80 70 60

Lateral thinking

50

Problem solving

40

Brain storming

30 20 10

d

d

ki

lle

ille Se

m

i-s

Sk

G ra du at e C le ric al

M an g.

Se n. M an g.

0

Level of employee

100 80 60 40 20 0

Specific targets - individual level

d se

m

i/

...

ille sk

ic er cl

a. an m

al

Specific targets - team level

..

Frequency (%)

Figure 3. Innovation Training and Development by Grade

Behaviour competencies individual level Behaviour competencies team level

Grade Figure 4. Performance Management Processes of Organization by Grade

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Table 3. One-way ANOVA for performance management approaches favoured by those who regard innovation as at least important Organizational level

Performance management approach

Degrees of freedom

F

Significance

Senior management

Individual performance targets Individual performance targets Individual performance targets Individual performance targets Team level behavioural competencies

1.87

7.62

p > 0.01

1.87

12.55

p > 0.01

1.87

6.34

p > 0.05

1.87

7.04

p > 0.01

1.87

4.17

p > 0.05

Clerical staff Skilled staff Non-skilled staff Non-skilled staff

Table 4. Ideas management schemes for organizations by grade Idea management tool/grade Expected as part of normal role – individual Financial reward – individual Points & Prizes – individual Idea champions – individual Suggestion scheme – individual No policy – individual Expected as part of normal role – team Financial reward – team Points & Prizes – team Idea champions – team Suggestion scheme – team No policy – team

approaches. One-way ANOVAs indicated that there was a significant difference between performance management practices for those organizations that regarded innovation as significant, and for those that regarded it as less so. The most commonly used technique was individually focused performance targets for senior managers, which were found in 77 per cent of the cases, with 61 per cent of these organizations rating innovation as important. Further down the organization, the deployment of this approach within firms who saw innovation as similarly important rose to 91 per cent for clerical, skilled and 92 per cent for non-skilled staff. Furthermore, the previously discussed action–based nature of innovation is clearly reflected in the deployment of individual performance targets at the four distinct grades, shown in Table 4. However, the only


Management

Clerical

Skilled

81.8 14.8 3.4 10.2 2.3 4.5 35.2 3.4 1.1 6.8 58.8 3.4

58 21.6 5.7 6.8 3.4 10.2 23.1 6.8 3.4 6.8 19.3 5.7

48.9 19.3 4.5 5.7 2.3 10.2 22.7 6.8 3.4 5.7 0 4.5

performance management approach to focus at the team, rather than the individual level, was for non-skilled employees.

Innovation and Idea Management Surprisingly, the application of specific ideas management schemes to support innovation is not common. It is noteworthy that it is expected of management grades that they innovate as part of their job. There is far more limited deployment of other encouragement schemes for this level in comparison with the others. In comparison, clerical staff are subject to significantly more team and individualbased idea management schemes. Similar to the approaches deployed for performance management, one-way ANOVAs revealed that the processes which were

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designed to actively reward new ideas were all applied at an individual level. Organizations in which innovation was at least important differed from the others through the use of two distinct approaches to ideas management for the clerical grades. These employees were more likely either to be expected to be innovative as part of their role (F(1,87) = 4.11, p < 0.05), or encouraged to be so through an ideas management scheme (F(1,87) = 5.33, p < 0.01).

Discussion: Policies in Practice and Levels of Fit In this section we use the findings to interrogate our earlier research propositions derived from the literature, and discuss the implications of our study for organizations. Our data show varying degrees of external and internal fit, between HR policy elements and espoused importance of innovation, an overall emphasis on recruiting for innovation over other elements of the HR process, a de-emphasis on training and development for innovation and ideas management, a performance management style which focuses on the individual, rather than team for developing innovative behaviour, and a de-emphasis on ideas management for sustaining the behaviour.

Proposition One: Innovation Will be Reported as Important to the Majority of Organizations The findings indicate that innovation was an important goal for 84 per cent of the organizations surveyed. This confirms Nadler and Tushman’s (1997, p. 135) observation on the imperative nature of innovation for businesses, as ‘there is no executive task more vital and demanding’.

Proposition Two: Human Resource Polices Supporting Innovation will be Reported as Applied at the Locus of Everyday Organizational Action Our findings challenge this proposition, largely because of the disparate and unconnected nature of the different HR policy areas. Furthermore, there is still some clarification required as to where the locus of everyday organizational action is: whether it is at the individual or team level. The proposition is first reflected in recruitment and performance management practices at senior levels of the organizational hierarchy. For senior and other managerial grades, the attention, through use of assessment centre, group or individual

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exercises, respectively, is on selecting someone who shows the right innovative behavioural competencies, using work sampling. On joining the firm these behaviours are concentrated through the use of individual performance targets. In terms of preferred recruitment methods at other levels of the organization, the picture is a little more inconsistent. Interviews and then personality tools are favoured across the different grades, with the exception of graduate recruitment. It is unclear why graduate recruitment should be something of an anomaly and may reflect the increasing application of assessment centre approaches (Anderson & Shackleton, 1993). In terms of other lower grades we see more differentiation between firms, based on their innovative focus and the HR tools they use. This may be linked to the greater proportion of staff at this level, or it may reflect the need to recognize and reinforce such behaviour far more consistently. In performance management, locus of action is clearly relevant, through the application of individual targets. This approach concentrates on extrinsic reward systems. However, there is some debate as towards which level of action efforts should be directed. Our data show a concentration of performance management at the individual level, which corroborates recent research findings. Armstrong (1996) laments the failure of organizations in the UK to use team-based reward systems as a means of encouraging and supporting innovation, indeed this survey showed that team-based approaches to idea reward and recognition were uncommon. This suggests a potential lack of coherence between the use of teams and the rewarding of such group endeavours. Axtell et al. (2000) claim that teams have an important role to play in enabling, particularly the implementation of, novel applications and ideas. This survey indicates that there is a similar paucity of integration in HR processes aimed at supporting ideas once they are generated. It seems that most regard ideas management as an integral part of an employee’s role and, therefore is not to be supported or rewarded in any particular way, as part of everyday performance management. Even those organizations for whom innovation is a priority do not recognize, outside of an appraisal, their staff’s endeavours. It is noteworthy that our observations concerning the lower relevance of training and ideas management to importance of innovation confirms the results of Felstead and Ashton (2000) and enriches from those of Sanz-Valle et al. (1999). The former argued that the fostering of new skills is not always associated with training, whilst the latter argued



that innovative organizations performed more product and process-based training actions. We see evidence of this in relation to the training of lower-grade staff in problem solving and brainstorming techniques, where innovation is stated as important.

Proposition Three: The External Fit of HR Policy Which Supports Innovation will have an Inverse Relationship with the Hierarchical Level at Which it is Applied Overall, this finding was confirmed, but, as with proposition two, the nature of the external fit referred to individual elements of HR policy rather than HR policy as a coherent, integrated unit. The proposition reflects the idea that HR policies supporting innovation when it is an articulated organizational strategy will be less common than HR policies which support innovation in the organization as a response to operational issues. This is reflected in the overwhelming focus on clerical staff who are the most likely recipients of training, and performance management in respect of innovation. Furthermore, cohesion or fit between HR policy and reported importance of innovation, although inconsistent, was noted at disparate points in the HR process, with selection and performance management, most frequently. Given recent research which addresses notions of integration, this is not altogether surprising. The inconsistent nature of these links between articulated innovation importance, HR policy and behaviour resonates strongly with Mueller’s (1996) argument that the organization’s social fabric, or ‘social architecture’ is responsible for differences in HR practices throughout the organization which evolve alongside strategic policy, relating to it recursively. It also strongly reflects HopeHailey et al.’s (1997) observation that HR practitioners are increasingly adopting a pragmatic ‘nuts and bolts’ approach to their organizational role. Furthermore, if we follow Campbell et al. (1996) who regard innovation as action, and invoke Felstead and Ashton’s (2000) arguments which hint at a time lag between the occurrence of innovative behaviour in the organization, and its subsequent codification and re-inforcement by HR departments, this patchy picture of coherent HR policy is not altogether unexpected. A further note should be made about the use of personality-based selection tools to promote the identification of innovation-related skills. Personality tools are found to be a differentiator between those who regard innovation as an important strategic endeavour and those who do not, and there is evidence, on closer


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examination, of a difficulty with this result. The organizations were asked to indicate which tools they used in their selection and recruitment programmes at each of the different levels. In analysing the tools deployed, most organizations use either the ‘16PF’ (Catell, Eber and Tatsuoka, 1970) or the ‘OPQ’ (Saville, 1973). Of these, only the latter purports to measure innovation potential, but only focuses on the quantity, rather than the quality of ideas. There is a wide range of tools available which identify the underlying motivational aspects (e.g. Kirton, 1976; Jackson, 1976; Patterson, 1999), crucial to the generation of radical ideas (Patterson, 1999), and none are mentioned in the sample. The survey suggests at best weak deployment, and at worst misapplication of personality tools for selection purposes.

Proposition Four: There will be Little Evidence that the Different HR Policy Elements will Show any Degree of Internal Fit It is clear from the previous discussion that there is little internal fit between different HR policy areas, and this is further complicated by different clusters of connected policy areas at different hierarchical levels. The greatest degree of fit is evident at the clerical level of innovation–conscious organizations. Here, most attention was paid to innovation in terms of selection, training and performance management. For managerial grades, attention is far more focused on selection and performance management, and there is a marked difference in the HR processes that are deployed. At senior-management level, only recruitment stands out as the most significant reflector of an innovation–focused HR policy.

Organizational Implications In response to the survey there are three main implications for organizations. First, the research reveals a hierarchical stratification of HR policy support for innovation. Innovation is important for most organizations surveyed, but it is revealed that attention tends to be focused mainly at the lower levels. In order to remove barriers to potential radical ideas, and to gain a more supportive climate for innovation, this stratification of policy needs to be removed so that all levels are involved in both the creation and the implementation of new ideas. Second, and related to the hierarchical nature of HR policy, we must question the potential role of innovation policy as a means of empowering employees. The survey indi-

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cated that training and performance management are focused at the clerical level. Potentially this might enhance the generation of new ideas. However, without awareness training for those higher in the organization innovation is likely to fail. Firms where innovation is important need to ensure all staff understand the techniques and tools which support innovation processes in order that employees may be supported and assisted in their efforts. This requires the integration of innovation policy across the organization so that responsibility being imparted to one group of employees, does not result in its abdication higher up. Related to this, HR professionals should examine how far the policies designed to enhance innovation are integrated and not merely focused at just one group in the organization. Finally, both this research and others (for example Axtell et al., 2000) reveal that innovation requires teamwork in order at the very least to implement ideas. The survey revealed an over-reliance on individually focused procedures, which at best, do not enhance group working, and at worst, substantially undermine it. Individuals maybe best placed to generate new ideas, but it requires the support of others to have these ideas adopted and accommodated in any organization. Through implementing an integrated HR policy which creates understanding, acceptance and active support at all levels within an organization, a climate of sufficient trust and support will be fostered which ensures the emergence of a range of ideas-incorporating incremental to radical changes. Without these conditions, organizations will produce, at best, moderate improvements which will enable the status quo to be maintained. If organizations are really only seeking to maintain a stable state, then perhaps this is the reason why such a paucity of evidence exists which supports the deployment of integrated, non-hierarchical, team-based HR practices designed to promote innovation. Given our findings and their implications, our study has a limitation, which concerns the extent to which the survey instrument can seek to measure with any degree of accuracy the firms’ most senior HR professionals’ conceptions of innovation importance in the organization. Whilst an extensive discussion of the pros and cons of survey-based research is inappropriate here, the meaning systems proper to HR management and the extent to which HR managers over-report their involvement in organizational matters has been referred to in other work. In particular, work which specifically examines the rhetoric of HRM, the realities that this creates for HR

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practitioners, and the congruity, or otherwise, of these realities with other organizational worlds, is of particular relevance. Examples of such work to date include inter alia an examination of performance management (Bowles and Coates, 1993), the psychological contract (Grant, 1999), and involvement in strategic decision-making (see Legge, 1995). It is also quite possible that the meanings attached by HR practitioners to innovation will vary – indeed we noted the differing organizational roles for innovation at the beginning of the paper – and this may have been reflected in our findings too. Whilst these debates are of clear importance in formulating research strategies for studying HR practitioners, we argue that in this instance, in order to get a broad sample of HR policy in respect of innovation, a survey-based approach was the most appropriate. Similarly, in terms of HR policy, we acknowledge that, in most cases, HR managers have final dictum over the formulation and implementation thereof, and as such would be the most appropriate organizational members to systematically interrogate as regards the characteristics of the whole range of HR policies and practices. Furthermore, if we reflect on (much debated) models which link, in however a piecemeal fashion, HR policy to strategy, HR managers are the lynchpin of policy formulation in terms of translating an espoused innovation strategy into policy objectives for the HR department. It may well be that our survey participants’ focus upon innovation measurement and development at the clerical level and lower were responding to organizational requests for low cost, systematic investment in this area, as opposed to the comparatively expensive development needs of middle and senior managers. More generally, our research shows that piecemeal translations and implementations of this kind are certainly in evidence, and that this is also hierarchically stratified. This is problematic in terms of the success of innovation, as Bouwen, de Visch and Steyaert (1992) found that part of the reason innovations fail to be implemented in organizations is through a lack of integration of understanding across different levels, so by concentrating efforts at one level of hierarchy, organizations create potential barriers at others. In terms of further research, we suggest that there is a need for survey work to be conducted in conjunction with in-depth case studies to establish meanings attributed to ‘innovation’ by HR practitioners, and the translation over time of this through policy and action. Such case studies would be multi level, examining strategic-level policy and



meaning formulation, observing HR policy in action, employee behaviours, their development and wider intrinsic and extrinsic reward systems (Amabile, 1988). Each stage of the research would have a focus upon the meaning attached to innovation and its translation through the organization. This research would be particularly reflexive upon the way in which individual and team approaches to innovation differed (as highlighted by Axtell et al., 2000). It would similarly have theoretical objectives as to how ‘integration’ of strategy, policy and practice might be addressed, taking account of the espoused need to show links between individual and organizational performance, but also the complexities of organizations’ social architectures, as highlighted by Mueller (1996). A further strand of future research would address the development and application of an innovation-specific competency. Its constitution, context-specificity, components and assessment all need to be examined.

Conclusion In this paper, using survey methodology, we have considered whether organisations coherently use HR policy to promote innovation. Our findings have established that organizations use a limited range of HR tools to identify and support innovation, through recruitment, training and performance management. We have found that our surveyed organizations, whilst attaching importance to innovation, fail to consistently translate and apply this in HR policy. This was particularly apparent in the hierarchically stratified application of the aforementioned tools at lower organizational levels. Thus, whilst organizations are encouraging their non-managerial employees to innovate, the lack of attention paid to middle and senior managers, (perhaps with an implicit expectation that they should innovate anyway) will sustain an HR policy approach fraught with resistance and misunderstanding about the implementation of new ideas.

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in the ‘90s. Human Resource Management Journal, 7(3), 5–18. Jackson, M.J. (1976) Jackson personality inventory manual. Research Psychologist Press, Goshen NY. Kirton, M.J. (1967). Some notes on the dynamics of resistance to change. The defender role. In Watson, G. (ed.), Concepts for Social Change. National Training Laboratories, Washington DC. Legge, K. (1995) Human Resource Management: Rhetoric and Realities. Macmillan, Basingstoke. MacDuffie, J.P. (1995) Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry. Industrial & Labor Relations Review, 48(2), 197. Mueller, F. (1996) Human Resources as Strategic Assets: An Evolutionary Resource – Based View. Journal of Management Studies, 33(6). Nadler, D.A. & Tushman, M.L. (1997) Implementing new designs: Managing organisational change. In Anderson, P. (ed.), Managing strategic innovation and change: A collection of readings. Open University Press, London. Oldham, G.R. & Cummings, A. (1996) Employee Creativity: Personal And Contextual Factors At Work. Academy Of Management Journal, 39, 607–634. Patterson, F.C. (1999) The Team potential Indicator Manual. Oxford Psychologist Press, Oxford. Paauwe, J. & Richardson, R. (1997) Introduction: special issue: Strategic human resource management and performance. The International Journal of Human Resource Management, 8(3), 257–262.

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Sanz-Valle, R., Sabater-Sánchez, R. & AragónSánchez, A. (1999) Human resource management and business strategy links: an empirical study. The International Journal of Human Resource Management, 10(4), 655–671. Saville, P. (1973) Occupational Personality Questionnaire. SHL, London. Schuler, R.S. & Jackson, S.E. (1987) Linking competition strategies with human resource management practices, Academy of Management Executive, 1, 207–219. Schumpeter, J. (1934) The theory of economic development Harvard University Press, Boston. Storey, J. (1992) Developments in the management of human resources. Blackwell, Oxford. Tyson, S. (1999) How HR knowledge contributes to organizational performance. Human Resource Management Journal, 9(3), 42–52. Wolf, R.A. (1994) Organisational innovation: Review, critique and suggested research directions. Journal of Management Studies, 31(3), 405–431.

Rosalind H. Searle is in the Department of Psychology, Open University, Milton Keynes, UK. e-mail: [email protected] Kirstie S. Ball is at the Department of Commerce, Birmingham Business School, University of Birmingham, Birmingham, B15 2TT, UK.
