Ignite Innovation: Engage your Employees

Posted to HR.com by David Tighe, partner, Bovo-Tighe

I read two articles recently that confirmed what human-resource professionals have long known: Innovation comes from people who have had their creative drive nurtured and encouraged, and does not require massive investments in technology to achieve.

The first article that caught my eye was by banking-industry blogger Chris Skinner.

“It intrigues me how often we have a conversation about innovation,” Skinner wrote, “and everyone starts talking about new technology…Apart from the fact that innovation is no longer the hot topic it was in banking—the credit crisis saw to that—innovation has nothing to do with technology. Innovation has to do with people.”

You can singlehandedly be the champion of this person-based innovation mindset in your own organization.

The second article that grabbed me, from McKinsey & Company, had this headline:

“Five s CFOs can make cost cuts stick.”

Here are the five s McKinsey recommends companies make cost-cutting initiatives stick:

• Assign accountability at the right level.

• Focus on how to cut, not just how much.

• Don’t let P&L accounting data get in the of cost reduction.

• Clearly articulate the link between cost management and strategy.

• Treat cost management as an ongoing exercise.

As HR leaders, we can play a big role in establishing a cost-conscious culture the right , marshalling engaged employees who take the lead in innovating s to invest time and money in programs and activities that add value and improve the bottom line. Senior managers cannot implement such strategies. The staff must, and employees will only do so if they believe in the cost-cutting mission and they make it part of the culture.

From the McKinsey article:

“Most companies treat cost management as a one-off exercise driven by the need to manage short-term profit targets—and some of these exercises do succeed in the short term because of constant pressure from the CEO or CFO. Yet such hasty cost-cutting activity typically goes into reverse once the pressure is removed and rarely results in sustainable changes in cost structure. In our experience, the reason is that one-off exercises don’t require internal capability building. A better approach is to use the initial cost-reduction program as an opportunity to build a competency in cost management rather than in mere cost reduction. A more enduring approach includes changing the people think about costs by, for example, setting new policies and procedures and then modeling the desired behavior.”

Changing mindsets within a company requires HR expertise. Here is your opportunity to step in and help the CFO and his staff by ensuring the cost-cutting initiative is constructed sustainably; by taking the time to clearly communicate the strategic reasons for the change in culture; and by establishing training that instills within the staff an instinct to tie a dollar spent to a revenue-generating activity.

Done right, cost-cutting is not a burden, rather an innovative activity that inspires better use of available funds. Money saved can be used for anything that has the potential to generate return-on-investment, too.