Flexibility Leads to Innovation, HR Chiefs Say

News Updates

SAN DIEGO—A panel of high-profile senior HR executives shared their insights at the June 29, 2010 general session of the Society for Human Resource Management (SHRM) Annual Conference held here, discussing their challenges, victories and strategies as they craft the role HR plays within their organizations and industries.

“You can either be buffeted by change or lead the change,” said panel moderator Angelia Herrin, research editor and executive director of business development at Harvard Business Review. Research on the last three global recessions shows that 21 percent of companies tend not to survive a severe recession, but 9 percent actually do better than before the recession. “Those companies spotted opportunities and had the right people in place at the right time to grab those opportunities,” Herrin said.

In the ensuing panel discussion, preparing for challenges by promoting a flexible and agile workforce was a recurring theme.

One very public challenge—surviving the financial crisis—was faced by Conrad Venter, head of global HR for Deutsche Bank. With 82,000 employees in 72 countries, Deutsche Bank has been called one of the relative winners to survive the crisis. “Don’t look at people in a commoditized way. See people as creators of value,” Venter urged. Flexibility is key. Get the best people in and let them deliver.”

Revenue is linked closely to reward in financial services, Venter noted. So when Deutsche Bank promoted agility and movement within the company, some employees were concerned about what would happen to their bonuses if they moved from a high-revenue area to a lower-revenue area. In developing compensation structures, HR needs to find solutions that address those issues and promote organizational flexibility, Venter said.

Bottom-Up Innovation

“Our goal is to help employees to drive change,” said Shannon Deegan, director of people operations, central staffing and business development at Google. The firm’s 20,000 employees are continually polled to create “feedback loops” providing employees and management with information. “We build trust by feeding back information to employees, then creating bottom-up ‘fix it’ committees,” he said. For example, an internal poll that showed employees wanted more focus on career development opportunities resulted in the creation of on-site classes.

Google sets time aside to allow employees to work on whatever project interests them, apart from their regular responsibilities. Using technology, Google employees share new ideas and evaluate others’ ideas. Google also promotes face-to-face sharing via social events, “with food,” every Friday at corporate headquarters. “We believe in driving people to have conversations,” he noted, whether that’s through technology or by sharing a table.

In addition, Google encourages risk taking while recognizing that many risks will end in failure. “We celebrate employees’ success, but we celebrate their failures, too,” Deegan said, because without failures there would be no successes. (For a related SHRM Online article, see How Google Searches for Success.)

Leading Change

“Innovation isn’t just technology; innovation comes in different forms,” said Michele Toth, vice president of human resources and administration for Northrop Grumman’s Information Systems sector. She discussed how HR at the $32 billion defense contractor, with 120,000 employees, helped streamline the business to perform at a higher level. Eventually, the realignment eliminated $200 million in spending after HR successfully initiated and led the change.

To encourage innovation, Toth also stressed the importance of promoting a flexible and agile workforce. She agreed on the importance of providing “creative time when people need to stop and think” and of publicly acknowledging “the courage to think differently.”

“We need to realize that allowing innovation from employees releases a tremendous amount of energy,” said Paul Records, senior vice president and chief human resources officer for the Kaiser Foundation Health Plan and Kaiser Foundation Hospitals, with 170,000 employees.

Workers from the Millennial generation, in particular, don’t want to be told how to do their jobs, he noted. “They want to be able to develop their own best practices. Don’t squelch innovation; encourage it.”

Records called diversity “absolutely critical to us as a core value” and noted that without a diverse workforce, Kaiser would not be able to provide “culturally competent care reflecting the populations we serve.”

Turning to health care, Records said HR professionals “need to address the drivers of cost” by focusing on promoting the use of service-provider metrics that reveal quality-of-care outcomes, and then rewarding those outcomes. “As HR professionals, we should demand greater transparency from providers,” he said.

Business Savvy

“We’re HR, we love people. But we also should love business,” Toth emphasized. “It’s important we understand financials. We should know who our competition is, who is competing for our talent. And we should understand the language of the business in which we’re working.”

Added Venter, “If HR stays on the transaction side, we’ll be out of business in 10 years. If you work in business, you have to be a businessperson first with a specialty in HR. You need to speak the lingo of your business.”

“Do not stay in an HR silo,” Records agreed. “Reach out across the organization. We need to deliver—and deliver well.”

“Business strategy and HR strategy need to be the same thing,” Deegan added.

Concurred Venter, “It’s not about a strategy for HR; it's about a people strategy for the entire business.”

Stephen Miller is an online editor/manager for SHRM.