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Opinions of Monday, 11 February 2008

Columnist: Oppong, Seth

Making the HR practices produce innovative workforce

In today’s business, what gets the business world going round is innovation. And what Ghanaian corporations also don’t do well at is innovating. Lack of innovation may be implicated in the demise and ailing financial status of a number of firms in Ghana. Firm innovativeness is what distinguishes effective and market leaders from others. Being the first to come to the market with a product or to come up with a smart way of selling a product will offer the firm a competitive advantage over its competitors. What is innovation? Why is it important to corporate Ghana? I will attempt to demonstrate to reading public and management what they can do to create an innovative workforce. I want the readers to understand that whatever I say is based on understandings in Industrial and Organizational Psychology.

Innovation may be defined in different ways depending on the index or indicator of innovativeness one uses. For convenience sake, I will define it as adopting ideas either new to the company’s industry or merely new to the company to enhance the profitability or the market leadership of the firm. This means innovation as defined here will include finding new ways to do the old things better or introducing ideas that never existed in the company’s industry. This way finding a new way of selling an old product to customers is innovation. Creating a new market for an old product is surely innovative. Why is this important? Let’s show why it is important by thinking of its possible role at the various phases of organizational or product life cycle. These phases are introduction, growth, maturation and decline or stagnation. Introduction is the phase during which an entrepreneur sets up a new business to sell a new idea while growth phase is when the idea is gaining market and the largest revenue ever can be made out of it. Growth phase is a time that management may not see a need to innovate because their sales or revenue realized from a business idea or product is high. I believe that being innovative at this stage can pay off as well; the company can even quadruple the sales or revenue by being innovative. Innovation is particularly important at introduction, maturation and decline or stagnation phases.

At introduction, the entrepreneur has to find a creative way to sell his or her idea to the consuming public. He or she has to give the consumers reasons to buy the product he or she is trying to sell to them. What will make an ocean of difference is being able to tell consumers why they should buy their product when competing products already exists on the market. What will make a difference is being able to find a creative way of packaging, selling and even creating new market for a bar of soap that can compete effectively with key soap, a key product of Unilever Ghana. This means that to introduce a new product that will result in maximum sales requires innovativeness. That is thinking of an “unthinkable” way of selling it in terms of the four P’s (product, place, promotion and price) will mean a lot in terms of volume of sales and profits to be realized. At maturation, management has probably made the best they can out of the sale of the product during growth stage and may have possibly reached a break-even point. This means that the product is probably less profitable than during the growth phase and/or the market is shrinking. This phase therefore presents a challenge to management to get more out of a mature market or phase it out and introduce a new product. If nothing gets done by management then the product or the company declines in sales and eventually dies off. But management can do something about this by being innovative. The ongoing discussion indicates that innovation is very important for the sustainability of an enterprise. What is therefore left for management is knowing how to create an innovative workforce which can turn around a dying product or company.

At this time, management may be wondering just how they can create innovative workforce and be able to get creative ideas from their employees. I will provide some practical recommendations based on key human capital management practices. In this respect, we will consider personnel selection, training, team-working, company rules and policies, performance management, job redesign, innovation-based reward systems, to mention a few. How does personnel selection ensure that a company has a creative workforce? As a graduate student in Industrial and Organizational Psychology*, my response will be simply that there are individual differences in our ability to be innovative or creative and as a result, we should select job applicants who have the greatest potential to innovate to begin with. In other words, selective hiring is a requirement. An organization that has a large proportion of its employees having a natural tendency to be creative is likely to be innovative, ceterus paribus. Again given my professional training, I will not leave it hanging. What should management assess as they collect personnel data on job applicants for selection decisions? The answer is very simple; they should include a measure of creativity in the selection battery. Management can assess creativity with proximal and distal predictors. Thinking along the line that creativity is an individual difference, management can measure this individual difference. Any trained psychologist can assist management in assessing that but those with most knowledge in this domain will be the Industrial and Organizational (I/O) Psychologist. Research in I/O psychology suggests that one personality factor known to us as “openness to ideas” which forms part of what we psychologists call the “Big Five” captures the individual difference of creativity. In addition to personality testing, other psychometric approaches which I refer to as idea-generation tests can be used to assess creativity as individual difference. The caution is that only those trained in psychology or I/O psychology in particular can do this properly because there are issues of validity (whether what is being used really assesses creativity and not something else; it’s similar to accuracy) and reliability (whether the tool produces consistent measurements and is similar to precision) of the assessment tool. Since creating largely homogenously creative workforce may not be the best, perhaps, management may benefit by hiring a group of highly creative people to generate saleable ideas in the company. This is because group homogeneity can sometimes lead to a dysfunctional group outcome known as groupthink, the tendency for group members to conform to a group decision even if when they know that it is wrong. This may also be the result of the fact that they see the phenomenon from the same perspective.

Training is the next thing to do. Training is needed whether or not the core function of the employee’s job is to generate ideas. This should focus on facilitating the acquisition of the necessary skills and principles of the business. When armed with this, employees will do a better job of modeling their ideas based on the company’s industry. This way it will be easier for them to identify saleable from non-saleable ideas. The training should also help the employees acquire skills in brainstorming and working in teams. This leads us to the next important thing management can do to be innovative, team-working.

Management can form cross-functional teams of knowledgeable employees whose objective will simply be something like “Find 10 new ways that we can sell product SETH by next two weeks” or “Identify 5 new ways we can regain our market for product SETH from our competitors”. These simple instructions backed by true management support could have saved some corporations in Ghana. Ghana Airways? In other words, constituting a team is not enough. It requires that the team be filled with knowledgeable people of diverse functional backgrounds, if the problem to be solved is company-wide. Even when it is a local problem limited to a unit or department, my best guess is to make the team a little cross-functional because from the systems perspective that unit is a subsystem whose activities and for that matter any change effected within it will affect the other units or departments. Cross-functional teams combined with setting learning goals can ignite the creativity of the workforce. In subsequent article, the discussion about the innovation-producing management/HR practices will be continued. For now reflect on the applicability of those presented to your particular situation as an employer, consultant, an employee, or simply as someone advising a friend/relative engaged one form of business or another.

Seth Oppong * Industrial/Organizational (I/O) Psychology is one-third mathematics, one-third business and one-third psychology. In fact, I/O psychology is all about applying psychology to the workplace.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.