Encouraging Innovation in HR

HR is historically seen as risk averse and is usually late to the party when it comes to emerging trends. As a few examples: Engineering took up Agile methodology long before some HR departments (many are still hesitant to fully understand it); Operations, logistics, marketing, and finance took advantage of data analytics, HR is just now starting to understand and use it. Sales and marketing took up AI and Augmented Reality before Training and Development saw the benefits. So yes, HR is not always you most innovative departments when it comes to how they do things.

When the speed of your innovation can be the determining factor between success or failure and the talent market is as tight as it currently is (overall unemployment is 3.8% with experienced corporate unemployment closer to 1.5% in some major cities) the fact that your HR department isn’t on the forefront of change could be distressing. Fixing this innovation lag within HR is tough for a couple reasons, some we can change, some will be tough. But it can and needs to be done if you are to compete in the 21st Century.

So why is HR an innovation laggard most of the time? To me, there are two reasons - historical origins, and unequal treatment.

History of Risk

HR as a function arose from payroll, it was primarily an accounting function, full of manual tasks of paying people in growing industrial environments. In the 1920s and 30s, the passage of the 16th Amendment, the Fair Labor and Standards Act (FLSA), and the National Labor Relations Act (NLRA) required more legal compliance in how companies paid and treated people. Regulations continued to expand through the decades that followed…and Payroll became, Labor Relations, then Personnel, and then finally in the 80’s the term Human Resources became responsible for policies, laws, and transactional compliance. Risk and detail focus is engrained with what the core HR functions are accountable for. And while this historical focus is hard to change, it’s not insurmountable.

Unequal Treatment

The other reason HR bends towards risk aversion is about an environment where fear of failure is reinforced. Executive leaders often regard taking chances unequally across departments. If a marketing initiative goes poorly, it is more often the case they will get more money to fix it. If operational projects go over budget and over timelines, there is criticism but often not a budget cut. With HR the complexity of organizational impact is higher as any changes they make effects EVERYONE, and the consequences of an HR initiative not working out often mean the department has completely lost credibility. In other words, HR needs to justify its proposals far more than many other departments when it comes to change or budget expenditure. Even when there is a demonstrable cost savings or revenue increase over the long term (supported by decades of research) the proposal is often met with skepticism.

As a result, most HR projects are underfunded without an adjustment to the expectations. When the project does not produce the returns as quickly as expected, the budget is often cut, never to return.

A Tale of Two Departments

Two ways your company grows is via marketing and via people. Oddly though, HR and Marketing are the most budget volatile departments in business. When budget gets tight, they are the first budgets to get cut. The challenge is, public awareness and memory is far shorter than employee awareness and memory.

As an example, Cadillac produced a commercial that aired during the 2014 SuperBowl to promote the new ELR (their luxury hybrid coupe) that lauded the American work ethic and supported what were widely considered unhealthy workaholic behaviors. See the commercial here - https://www.youtube.com/watch?v=xNzXze5Yza8 Almost immediately it was panned and wildly skewered as a bad move for Cadillac. Sales of the ELR didn’t do a whole lot as a result so the marketing department changed the goal of the ad. Rather than saying they where trying to boost sales of the ELR, they were trying to raise brand discussion, so if more people were talking about Cadillac, that was still a good thing. Cadillac didn’t suffer much because public opinion waned.

HR doesn’t get to lean on the principle of “there is no such thing as bad press.” When things go wrong in HR, people get fired and people quit. This, in turn, makes HR folks less likely to take risks or try new things. This is why HR typically runs to “best practices”, proven conventional approaches approaches they know AREN’T as effective simply because they can’t risk doing something unknown.

“Being wrong is not the same as being creative, what we do know is if you are not prepared to be wrong, you will never come up with anything original.” -Sir Ken Robinson

Hamlet Was Right

The undiscovered country … puzzles the will, and makes us bare the ills we have, than fly to others we know not of. Thus conscience does make cowards of us all.
— from Hamlet, William Shakespeare

So therein lies the crux. HR is afraid to be wrong when it comes to improving culture. And to some degree, we are a prisoner of our own imagination. The fear of the unknown is often greater than the danger of what we are suffering. This might partially explain why employee engagement still hovers between 28-32% for companies. Rather than undertaking a remodel of things we know don’t work, we move a vase, paint a wall, or change a piece of furniture…but the flow of work and people stay the same because we never affected the foundation or who was building it.


Changing the Environment

To be innovative in HR means to take risks. To do things that are contrary to popular wisdom and “best practices.” “Best Practices” are what got us here…they will not get us “there.” Sometimes it will work out, sometimes it may not, but we have to be willing to try. It will take Executive support, ownership, and behavioral alignment.

Organizational change is rarely (if ever) organizational before it is individual. People will model what they see at the top. If you want psychological safety (the ability to voice concern, act when necessary, and suggest new approaches without fear of reprisal or judgement) then you have to start focusing on the potential reward instead of the potential risk in HR. As a leader you have to be focused on the learning rather than the mistakes that happens with an experiment.


I get it. Change is hard. The fear of the unknown is hard. But we can’t keep complaining about retention, engagement, diversity, equity, and organizational performance and health without changing something. We obviously don’t know the solution to these problems since the outcomes have not changed. Maybe it’s time we start changing our attitudes towards potential solutions instead of continuing to beat them with the same tool in a new wrapper. But it will take courage. You have to be willing to be wrong and you need the support of your executives to learn, adapt, and keep moving.

If you want to be more innovative, be risk aware, not risk averse.

Dave NeedhamComment