The role of innovation in the workplace has never been so crucial. As technological development changes the way we live and work, companies that foster a culture of creativity charge ahead, while those that fail to harness their people’s potential will struggle to survive. Simply incentivizing innovation may seem easy enough, but the key to sustained growth lies in fostering a dynamic environment, in which employees are given the space to create and where valuable ideas are leveraged. So how can employers hope to achieve this?
The importance of flexibility
The first point to note is that inflexibility is no longer an option. The giants of Silicon Valley have understood that the development of smart ideas requires space. Google’s much lauded “20% time” initiative, which encourages engineers to spend 20% of their time developing their own ideas, has led to the creation of hugely successful products such as AdSense and Gmail. LinkedIn’s InCubator scheme functions on a similar principle, giving developers the opportunity to pitch big ideas to executive staff, while Apple operates “Blue Sky”, which allows some staff to spend two weeks per year on personal projects.
A need for engagement
Perhaps unsurprisingly, staff are unlikely to innovate if they do not feel engaged in their organization. A study by Krueger & Killham (2007) published by the Gallup Management Journal found that 59% of engaged employees said that their job “brings out their most creative ideas”, while only 3% of employees who considered themselves disengaged said the same.
Creative rewards and recognition
When it comes to recognition, financial rewards are only part of the story, and many companies have successfully leveraged other effective motivation strategies. For example, 3M relies primarily on peer recognition to encourage innovation, through its “Technical Circle of Excellence award”. This offers a trip to the company retreat in Minnesota for outstanding innovators, selected by their coworkers. The World Bank has also successfully created a culture where innovation is prized, offering extrinsic incentives, to both staff and other organizations, for creative solutions to addressing poverty. In addition, it also holds “knowledge fairs” to encourage curiosity and collaboration.
For best-practice organizations such as NASA and Millennium Pharmaceuticals, timing is key; a project, whether it is space exploration or taking a drug to market, can occur over decades, so for these organizations, it is important to recognize their experts at the time of the accomplishment.
For L’Oréal USA, diversity and inclusion in the workforce are seen as necessary factors for fostering creativity, exemplified in their diversity management formula: Diversity + Inclusion = Innovation + Success. This ideology permeates many functions of the company, from recruitment and sales to community outreach.
Today, there is no one simple way to recognize and reward innovation. Instead, employers themselves must be creative, utilizing a range of incentives, while their HR offer must also produce an environment that facilitates innovation by creating space, encouraging engagement in the company and fostering diversity. This is not a tokenistic process, indeed, according to Dr. Gita Bajaj, Professor of HR & Communication at the Institute of Management Technology, Dubai, ongoing employee creativity can only be achieved if there is a top-down culture that encourages it.
Dr. Bajaj has co-written a book on the subject of innovations in people management. Here, she shares her expert insights.
Are companies suffering from a lack of innovation?
There’s never been a better time to innovate: we have technology that has completely changed everything in our life, we have access to information that was never available before. However, while companies such as Google and Amazon are ahead, there are large numbers of businesses that are failing to innovate. Many think that it won’t happen to them – they are engaged in short-term gain, maximizing their shareholder value through stock, which leads to a myopic situation where they don’t consider the long-term. There are plenty of examples of companies which have suffered huge losses because of not waking up to new realities, like Nokia or Xerox or Kodak. If they don’t, there is no question of innovation or creativity happening.
What are the biggest challenges holding back the potential for innovation at the moment?
On the surface, there is plenty of innovation and creativity happening, but it’s happening in pockets. There is need for large-scale broader thinking on creativity and innovation. There are more and more walls coming up – look at Brexit or what is happening in the US: we are saying on one hand that you can’t survive without innovation and creativity, and on the other hand we’re talking about more boundaries, a more closed view. There’s one macro change saying you can’t live without it, and there’s another macro change saying you can’t do it.
Furthermore, at the micro-level we are seeing symptoms which are indicative of lack of creativity and innovation: lay-offs, stress, pressure. You cannot have people that are stressed and have them do creative, innovative work.
What is the optimal work environment to foster innovation?
Some stress is always good but excessive stress is counter-productive. The innovative companies know that a company may have the best of other resources but unless the human resources are able to ideate and create, there is no way you can do anything new or different.
How can benefits and reward strategies help develop innovation?
Recognizing and fostering innovation is not something you can do piecemeal. Top management must believe in it – and make sure the company culture, rewards and recognition all encourage innovation.
In terms of culture, management must appreciate the needs and motivators of creative employees. Researchers and creatives may need more flexible working, more relaxed environments to ideate (Google Cafes for instance), wider discussion platforms (like Google moderator), longer result time-frames and evolving objectives. Company policies to provide research funding and career paths for researchers can also support innovation.
As for rewards, a key question is whether companies have policies to incentivize research outcomes, as they do for sales and marketing executives with sales targets. And are the incentives comparable to the gains achieved by these innovations? The answer is NO. Many companies boast of encouragement by giving $500 for a creative idea! Others link it to the employee’s base salary! Incentive plans must be rethought – with the rewards linked to the value generated by the idea.
Finally, recognition costs companies very little, but the results are tremendous – especially when combined with rewards. Some firms share royalties with inventors, others give handsome bonuses. The key point to understand is that creative employees who foster innovation are a different creed. Companies must stretch themselves to understand what motivates these people and then design benefits and reward schemes to encourage them.
 Jyotsna Bhatnagar, Gita Bajaj, Somnath Ghosh, Innovations In People Management: Cases in Organizational Behaviour, HR and Communication, Mac Millan Editions, 2013