Human Resources has a vital role to play in encouraging innovation, because it sets the benchmarks by which employees are judged. There is one clear and simple thing each HR department can do to create a culture that encourages and supports innovation: make it clear to each and every employee that innovation is part of their job.
It is common in organisations is for people to talk a lot about the importance of innovation, but far less common for that message to be built into performance targets and appraisals.
The leaders of many organisations emphasise the importance of innovation, yet when an employee looks down the list of their KPI's, there's nothing about innovation on the list. What message does that send? That you should concentrate on meeting all your KPI's and then, after you've done that, if you have time and you're not too tired, try to do a bit of innovating.
The way to make an organisation more innovative is to encourage everyone in it to keep trying to come up with better ways of doing thing. And the way to do that is to make it crystal clear that it is part of their job. That is, to make innovation a KPI. That sends the message that innovation isn't something you do if you have time after you have finished your work. It is the work.
What does an innovation KPI look like? It can be as simple as this:
'Come up with new ideas to improve the business, and share them with your manager.'
If innovation is a KPI, it becomes perfectly legitimate to say at a performance appraisal; 'You've met all your targets, your clients are happy, you're reliable and hard-working, but you haven't come up with one suggestion to make this business better. And if we don't get better, sooner or later, we're going to be left behind. That needs to improve.'
How would you measure and assess an innovation KPI? The answer is gently and carefully. Successful innovation comes from the generation of many ideas. No one has good ideas all the time. When an idea is born, no one knows whether it is going to be a great idea or not. Every great idea started out sounding like a stupid idea. You get good ideas by having a lot of ideas, and then gradually weeding out the bad ones.
If you encourage a strong flow of ideas in your organisation, and build structures for growing them and trialling them, then the good ones will come. The thing to encourage is lots of ideas. Don't inhibit people by only asking for great ideas.
So in judging an innovation KPI, judge the effort. For example, if Barry come up with 20 ideas in a quarter, one of which ends up being good enough to implement, and Sally only comes up with one idea, but it, too, is good enough to implement, you could argue that they are both equally deserving of reward, given that each has created one good idea. No! Barry has done the better job. Because if he keeps coming up with 20 ideas a quarter, it is highly likely he will create more value for the organisation then someone who comes up with one a quarter. Barry's effort has been much greater than Sally's. Barry has developed a habit of trying to innovate. He comes up with a new idea to improve the business every few days, whereas Sally only came up with one in three months. Barry is a hero. Sally clearly has ability, but needs encouragement to increase her innovative effort.