The purpose of this report is use the HRM study learning to analyse and discuss the importance of innovation and changes use in internal and external environments of an organization. All of the report is written around the key point - 'Today's organisations must keep themselves open to continuous innovation only to prosper but merely to survive in a world of disruptive change and increasingly stiff competition' (Daft 2010, p 412).
The paper draws attention to the function that innovation and changes work in organization both in the internal and external environment. In additional, the report focuses on how important the two function in HRM at today.
The third section indicates the importance of organizational learning and learning organizations in today's business world. This part has clearly discussed and analysed the key plans and policies of innovation changes that will affect HRM in several areas. And gather the recommendations for organizational learning and learning organizations are the best ways to control changes and improve the effect of new innovations.
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The paper also discuss the key issues that make an organization understand and under innovation and changes within the strategic HRM plans and policies. For this part, the report has generally discussed four points: communication, leadership, strategy and resources.
To conclude whole report, the paper has provided some recommendations to the HR manager. The HR innovation is an important function in organizations, and every HR manager and employees should care about it. Bad performance on new innovation changes in HR will negative influence all departments. In another way, the best HR innovation change will push the business machine drive faster and faster to achieve the goals.
Table of Contents
Table of Contents 4
3.2 Learning Organizations 5
The aim of the report is to develop strategic human resource management (HRM) plans and policies for an organization that is undergoing change or innovation. The first section will define innovation and changes, and discuss the importance of innovation and changes in HRM. The second section will provide strategic recommendation on key HRM plans and policies that would help the organization best facilitate the change and innovation process. The last section will outline the key issues an organization needs to address if it was undergoing changes and innovation.
What is innovation and change?
The organizational innovation is commonly about updating new goods, procedures and services to enhance competitive advantage and meet customers' changing needs.
Innovation and changes
Innovation is not limited to the view of high technology but it also includes new services. Innovation in its sense includes both organizational and economic changes (Afuah 1998). It normally entails trade with knowledge, such as collecting information and turning it into new goods or services on time to the market and thus keeping the organization's market share and profits. Innovation therefore refers to the use of new technological and market knowledge to offer a new product or service to customers. The innovation can be in terms of lower cost, enhanced or new products attributes or merely new product. The two factors that determine a firm's capacity to offer lesser cost or differentiated products are the company's competencies and its assets (Afuah 1998).
The organization's core competencies or skills are its ability to achieve the activities that motivate the offering of low-cost or differentiated products or services to customers. It will attribute other skills, such as brand, patents, geographic location, customer relations, and suppliers, which permit a firm to influence its competencies and get more out of them (Gupta & Singhal 1993).
The difference has been made involving technical and managerial innovation. Technical innovation is about improved products, services, or processes or completely new ones. This is in comparison to administrative innovation, which belongs to organizational structure and managerial processes and may or may not affect technical innovation. Therefore, there are two types of innovation: production and process innovation. Product innovations are new products or services introduced to meet an external and market need, though process innovations are new elements introduced into an organization's production or service operations (Afuah 1998).
Considering the level of innovation, it can be said that there are two main levels. Innovation based on technological breakthroughs is carried out under the management of the greatest firms in their relevant fields, and innovation based on the integration of technologies is made possible through the cooperation of firms in related fields (Ito 1995).
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Based on the literature research, the result showed innovation and diffusion processes sets forward the necessary characteristics of innovation processes that need to be considered and managed in all strategies for continuous innovation. Successful company and government innovation practices closely reflect the way model studies have suggested that innovation, knowledge, and technology tend to develop over long periods of time. This certainly has an implication for employment practices for a firm in order to recover from its investment in training for its employees (Gupta & Singhal 1993).
Change is the way that organisations must run fast to keep up and takes place all around them. Large organization must find ways to act like small, flexible organisations. Manufacturing firms need to reach out for new, flexible manufacturing technology and service firms for new information technology, not only to grow but simply to survive in a world of disruptive change and increasingly stiff competition (Daft 2010).
There are strategic types of change, such as technology changes, product and service changes, strategy and structure changes, and culture changes. Daft (2010) indicated that, there are also some elements for successful change as listed below:
Ideas: no company can remain competitive without new ideas; changes are the outward expression of those ideas.
Need: ideas are generally not seriously considered unless there is perceived need for change.
Adoption: adoption occurs when decision makers choose to go ahead with a proposed idea.
Implementation: implementation occurs when organization members actually use a new idea, technique, or behaviour.
Resources: human energy and activity are required to bring about change.
Managers and employees can think of creative ways to improve the organization's technology, creative ideas for new products and services, fresh approaches to strategies and structures, or ideas for development adaptive cultural values, but until the ideas are put into action, they are worthless to the organisation (Daft 2010).
2.3 Innovation in HRM
In every organization, HRM can play an important role through its processes which refer to functions. These turn into the routines by which a firm attracts, socializes trains, motivates, evaluates, and compensates its human resources in such a way that the firm will achieve its organizational goals through their competencies.
Amit and Belcourt (1999) pointed out a new perspective on the contribution of HRM to a firm's financial performance. The 'process' perspective of HRM which is described in both the resource-based view of the firm and in institutional theory, links the human-capital and best-practices paradigms. It focuses on the unique ways in which organizations draw on earlier period experiences, current culture and social norms to collect its human resources to execute market strategies (Amit & Belcourt 1999). Moreover, it builds on the organizational capital perspective, which views systems as ways to capture and set out human-capital.
In order for a company to remain competitive, innovation must become a way of life. Continued innovation requires both stability and change. The stability allows scale economies and incremental learning, whereas change and experimentation produce changes in products, processes, and technologies. In a practical study, Ito (1995) found that the development of a specific new product or service is often a result of the practice to form teams at the initial stages and staff them with personnel selected from a range of departments. In another study by Gupta and Singhal (1993), it has been found that effective human resource management can make an organization become innovative and creative.
Many researchers have asserted that the key to organizational success lies in developing scholar capital and acquiring a new set of thinking: developing creativity to yield an idea and innovation to transform the idea into a fresh effect, developing human resources to develop intelligence, knowledge and creative potential at the organization level, and developing managers to understand how technology can change both the structure of organizations and the nature and lifecycles of their products (Morgan 1991). Organizations without proper employee competencies cannot take competitive advantage by using organic behaviour management (Amabile 1997).
Therefore, management for creativity and innovation include the ability to constitute effective work groups that represent a diversity of skills, and are made up of individuals who trust and communicate well with each other, challenge each other's ideas in constructive ways, are mutually supportive, and are devoted to the work they are doing (Amabile 1997).
Recommendations for strategic HRM plans and policies
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The above section include a definition about innovation and information about how an organization need to change when the new innovation operate. In this part, the report will focus on recommendations for innovation change within HRM plans and policies. By the limited word count, this report will be only discussed organizational learning and learning organizations.
3.1 Organizational Learning
As mentioned above, it is clear that innovation is truly relevant to gain a new point of view on a merchandise or service by knowledge and experience and the application of them (Daft 2010). Additionally, organizations that operate in fast-changing, competitive environments are pressurized to learn in order to keep surviving the threats of hostile competitors and difficult environments (O'Keeffe 2002). The author also pointed out that a company's capability to learn quicker than its rivals is the only way to keep sustainable competitive advantage.
Foil and Lyles (1985, cited in Vakola & Rezgui 2000) pointed out that the organizational learning is a procedure that could enhance actions by collective knowledge and better understanding.
Organizational learning is the function to engage HRM plans and policies. It not only acts as the information for managers, but it also clearly sets out for all employees the different types of education, learning, knowledge, skills that are required; it can develop activities that employees can undertake to help develop their own skills and knowledge, and therefore, it complements career development activities (Tseng & McLean 2008). In addition, the organizational change would benefit from the organizational learning that is instilled by SHRM practices (Tseng & McLean 2008). Likewise, employees could be encouraged to create innovation by implementing the SHRM (Currie & Kerrin 2003).
3.2 Learning Organizations
The learning organizations can be defined as through harnessing of people, procedure and skills to build, share, validate and utilize both clear and implied forms of knowledge at the individual, group, organizational and community level (Thite 2004). Additionally, Daft (2010) suggests that the learning organization may encourage each one in the organization to identify and resolve problems in order to develop better communication and coordination. Accordingly, the organization could constantly experiment, and promotes its capacity.
The important issues to support a learning organization include 'strategy, structure, culture, systems and tasks' (Daft 2010, p. 33). Successful learning organizations are able to attract and keep best talent by entering into an emotional contract with their employees that motivate them to create and share knowledge in return for nurturing and nourishing their professional skills. The appropriate HR systems identify, assess, reward and develop competencies that form the core of organizational success (Thite 2004). Moreover, the learning organizations could create such certainly valuable outcomes as innovation and competitive advantage (Currie & Kerrin 2003).
A number of successful learning organizations reveal that focusing on strategic HRM could provide the best way in their knowledge workers (Thite 2004). In addition, HR plays a critical role in the learning organizations focusing on creating and sharing knowledge (Currie & kerrin 2003). HRM has become the key competitive advantage by senior management and taken seriously in strategic decision making today (Thite 2004, p. 43). The major function to the success of learning organization could be the role of HRM in harnessing employees' knowledge (Soliman & Spooner 2000).
Key issues that organization needs to address when undergoing changes and innovation
There are many key issues that organizations have to address when undergoing changes and innovation. These will be discussed in more detail in below.
Possibilities for idea generation and opportunity exploration also seem to be enhanced by directly stimulating and probing employees to generate ideas (intellectual stimulation), supporting open and transparent communication processes, creating avenues for knowledge sharing and diffusion, and assigning challenging tasks to employees. When employees have frequent external contacts (with customers or suppliers) this also seems to spark ideas. As soon as the decision to implement a promising idea has been made, additional risks may be involved. It takes time and money to implement beneficial novelty, but returns are never guaranteed. Also, when suggestions are never implemented people become de-motivated. Resources such as organized feedback are needed to enhance employees' motivation and ability to reach successful implementation. Occasionally, it may also help to provide financial rewards to encourage the desired behaviour (Jong & Hartong 2007).
Research from Weiss (1997), his model suggested that cosmopolitanism, or the participation of police executives in policy communities, would have two effects. First, it was suggested that it would lead directly to the adoption of innovation, because managers would have a stake in new programs and because they would be exposed to information about the innovations. Second, it was suggested that cosmopolitanism would lead to increased peer emulation, because these organizations would engage in more communication with other departments (Weiss 1997). The analysis provided strong support for both of these hypotheses.
Morgan (1991) indicated that leadership at all levels will be needed to generate innovation and change in the organization. The European Commission and the UK government state that in nine out of ten "winning" UK companies studied, one of the characteristics of innovation best practice include leadership by vision and the unlocking of the potential of people by good communications, team work and training, destruction the organizational pyramid and creating a customer focused culture (Morgan 1991).
In learning undertaken by Quinn, Baruch and Zien (1997), it was initiated that the most critical single factor in motivating innovation is top management leadership. Only top managers can set up the tangible visions, focused strategies, and challenging, rewarding, support environments that most encourage innovation. In their entire sample was mostly innovative companies, top managers clearly expect, appreciate, and actively support innovation. They personally stimulate and champion with many essentials including the following (Quinn, Baruch & Zien 1997):
A truly exciting corporate vision built around challenging strategic goals.
A set of figure-of-merit performance targets that crisply define what winning competitively means in each critical arena.
Highly disaggregated, self-directed, non-bureaucratic organizational structures that both leverage interactive innovation and maintain strategic focus.
High-profile risk-taking and entrepreneurial incentives to reward those who take on the struggles and ambiguity of innovation.
An innovation strategy has to linkage within a company's vision and overall business strategy, and based on comprehensive and relevant information - both from inside the company and from the market and the environment. Communication Planning are the "backbone" of the strategy and planning process for innovation management. Innovation and continuous improvement are based on the company's ability to be creative and learn (Martensen & Dahlgaard 1999).
The analysis of innovation strategy includes exploratory forecasting and normative forecasting. The former evaluates technical development on the basis of historical and present information. In contrast, the latter examines the present situation and anticipates the future technical development on the basis of future demands (Li et al 2005). To analyze the impact of technical innovation diffusion on the social economy, exploratory forecasting could observe the social, economic and market pulse trend, life cycle transformation, technical diffusion and development, market penetration degree and the timing of technical innovation by integrating systematic thinking and scientific research based on historical development (Chang 2010).
According to Damanpour and Gopalakrishnan (1998HYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0160260404.html#idb10", p. 43) innovation implies the definition of an "idea or behavior which is new for the organization". Regardless of the kind of innovation the firm develops, it needs some conditions for its successful development. Among others, the literature highlights strategy, organizational design, management style and HRM as the determining factors in the firm's innovative behavior (Morris HYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0050350402.html#idb47"&HYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0050350402.html#idb47" Sexton 1996).
Hunt HYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0050350402.html#idb38"and Morgan (1996) used Resource-Advantage Theory to explain how capabilities can be exploited. Capabilities in the form of proactive innovations can contribute to efficiency and/or effectiveness in developing market offerings in such a way that result in marketplace positions of competitive advantage and superior financial performance. Innovation, the seeking of creative, unusual, or novel solutions to problems or needs (Morris HYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0050350402.html#idb47"&HYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0050350402.html#idb47" SextoHYPERLINK "http://www.emeraldinsight.com.ezproxy.cqu.edu.au/Insight/ViewContentServlet?contentType=Article&Filename=Published/EmeraldFullTextArticle/Articles/0050350402.html#idb47"n 1996), is especially important for reverse logistics because standard distribution systems typically will not "stretch" to cover retrieval of products adequately. Different, ideally innovative, approaches are needed for returns handling. Innovative approaches are recommended in order to gain an edge over competitors and improve reverse logistics service efficiency (Richey, Genchev & Daugherty 2005).
In conclusion, the report has provided discussion and analysis about the importance of innovation and change in the HRM field. Innovation and change will affect the organization both in the internal and external environment, and the HR manager should be very careful to use the correct HR planning and policies performance the innovation and change. The key issues in the report have discussed communication, leadership, strategy and resources in HR; these are not all functions, but they are the major function to innovate. In HRM, innovation is very important because it will influence other departments within the organization and also affects some external environment factors.
Based on the findings, several recommendations can be made. Innovation changes are important as discussed in section 4.0 where key issues that organizations need to address when undergoing changes and innovation has been presented. The report suggests that, HR managers have to think about every internal organizational department function and related them to the new innovation, the carefully update every changes. The changes must think about the conflict from the internal environment, cannot be limited the daily performance.
In addition, as the recommendations for strategic HR plans and policies stated in section 3.0, organizational learning and learning organizations are the two best abilities to improve the innovation changes in the organization. HR managers have to learn about them and remember to use them in the workplace.