Introduction

Human resource management (HRM) plays a significant role in organisation and is regarded by human resource personnel as the most important management function.  HRM has replaced personnel management over the years to make it more efficient in the way it functions.

This report aims to look at the main role human resources plays in the success of an organisation which uses innovation and management of knowledge as a critical success factor. The first part of the report will be looking at human resource management as a function in order to give an overview of human resource management, as well as other parts of the human resource function that are important. Human resource management looks at the responsibility of the human resources department.

The second part of the report will look at the role human resource management plays to trigger innovation in an organisation. This comprises three main parts of human resource management that contribute to innovation. Human resource planning is a way of looking at the role human resource management will play in innovation and knowledge management. This part of the report will look at the role recruitment and selection, training and development and employee motivation, will play in determining innovation in the company

There are other factors in a company that are critical in determining innovation in companies. Human resource management cannot function on its own in order achieve a suitable level of innovation in a company. Other factors this report will be looking at will include: technology, financial resources, communication, and support from other departments.

The main question to be answered here is how far can human resource management influence innovation without the help of any other factor.

Human Resource Management as a Function

Human resource management in a part of  management function that deals with designing the management system in such a way that human talent and capabilities are well utilised in order to meet the goals of an organisation (Mullins, 2002; Mathis and Jackson, 2007). The Human resource function is considered the most important function of a company, because without the right employees to do the right job at the right time, the company will fail to achieve its goals no matter the amount of other resources the company has invested in (Mathis and Jackson, 2007). The role of human resources keeps changing over the years as the work force and laws on human resources keep changing (Mathis and Jackson, 2007). Therefore, organisations should always adapt to these changes when carrying out functions in the human resources department.

There are three main roles in human resource management: administrative, operational and strategic roles (Bratton and Gold, 2001). The administrative role is responsible for record keeping and information system, the operational role is responsible for managing human resource activities in line with strategies, and the strategic role is responsible for identifying strategies for human resources that can contribute to the organisation’s end result (Bratton and Gold, 2001;Mathis and Jackson, 2007).

The human resource function faces challenges like globalisation (moving to new geographic location), changes in the political and economic climate, work force diversity of all kinds, and organisational culture and ethical behaviour (Bratton and Gold, 2001; Mathis and Jackson, 2007). The organisation has to face these challenges and come up with good human resources strategies in order to succeed in their environment and industry. In order for an organisation to succeed in their human resource development, they have to be different from other organisations, with a strategy personalised to each individual organisation. This can be done through strategic human resource management, which is the use of an organisation’s employees to create and maintain competitive advantage (Bratton and Gold, 2001; Mathis and Jackson, 2007). Human resources plays a huge role in innovation and effective management of knowledge in the success of an organisation. The success of an organisation, to a certain extent, depends on how the organisation plans and develops its human resources capital.  Or, in summary: an organisation is its people.

Role of HRM function in innovation

The human resources function is responsible for identifying the needs for human resources, searching for the right candidate, training them, developing them and retaining them. Getting the right people for the right job to work at the right time place at the right time will lead to success in an organisation in both the short and long term. Strategic human resource management implemented to create a competitive advantage can be used in innovation and effective management on knowledge. There are three main activities that can be used by the human resource department to create a competitive advantage:  recruitment and selection (HR planning), training and development, and employee retention (motivation). Being different is very important for companies today in order to maintain their exisiting customers and attract new ones. This reason is why these companies turn to innovation to distinguish themselves from other firms in their industry. Companies use innovation today to generate revenue and profits.

Innovation is a process of striving for the commercial success of an invention through evolutionary changes in the perception of a new market or service by using a technologically based invention which leads to market tasks, development and production (Kumar and Phrommathed, 2005). For an organisation to undertake the process of innovation, there must be an aspect of creativity going (Jolly, et al 2002). Creativity is putting together new and original ideas that are likely to be used by the company in the future while innovation, on the other hand, is combining these ideas with other factors or resources of the company to create the end results of creativity which could be products, services and/or processes (Jolly et al, 2002). Therefore, ideas cannot be generated in the absence of human resources.

Role of Recruitment and selection

Recruitment and selection is part of human resources planning in an organisation (Bratton and Gold, 2001). This stage of human resources management is highly important to an organisation. An organisation should be able to identify the need for human resources and why they need it. Planning for recruitment involves demand and supply of labour. Recruitment is the process of attracting, screening, and selecting the right people for the right job in an organisation (Bratton and Gold, 2001).This is the stage of human resources management that can determine the success of an organisation. A company that carries out this process efficiently and effectively is likely to succeed in the future. Many companies outsource this task to agencies and specialists in the HR recruitment field.

The recruitment process gives the company the opportunity to recruit creative individuals that can be innovative and help carry the company forward. During the recruitment process, the company has to make sure the right individual is being recruited. This can be done by carrying out the following:

• Job description should be specific and straight forward by defining what the job is about and the person specification needed for the job.
• Organisations should advertise jobs where they can attract the most qualified candidates for the job. For example, an organisation advertising and executive post can use the Financial Times or any top business newspaper.
• Making sure the right candidate with the right experience and qualification for the job is selected. Selecting the right candidate may seem simple but is, in fact, extremely difficult, so various methods are employed to minimise risk as much as possible.

Companies like Standard Chartered Bank consider the recruitment and selection process to be the most important process in their Talent Management program. The Talent Management program is based attracting and selecting the best employees for the program (standaredchartered.com, 2010). This is one of the company’s greatest strengths and serves at a competitive advantage to the company. It is worth noting, too, that countries vary in their methods: lost large French companies, for example, test a candidates handwriting by using graphology tests, a practise rarely used in the UK.

Training and Development

Many companies today face intense competition, thus forcing them to focus on being creative and innovative, improving quality of goods and services, and increasing productivity and efficiency by making these aspects an important part of their company’s training for professionals for changes in the companies (Roffe, 1999). Through this process of innovation, organisations create competitive advantage to place the organisation in a position in the market by making sure managers inform employees of the urgency of innovation, and providing them with skills that will enable them to be creative, efficient, and to be customer focused at every level (Roffe, 1999). Training employees in an organisation gives them knowledge and helps them to generate ideas that can be used for innovation.

Training programs should be well designed to meet the needs of the organisation and also the trainees. Organisations should design personalised training and development programs for each employee to help them manage knowledge of the organisation according to their goals. Training gives employees an insight into an organisation and to learn how information is being communicated and shared. This can be found in most graduate training programs where selected candidates are trained on the organisation’s operations. This training is carried out in stages in order to monitor  employee progress and how well they understand organisation goals and ethos.

Motivation and retention

Although innovation is about science and engineering, incentives also play a big role to motivate employees to be creative and innovative (Drucker, 2007). Most people arguably think of incentives as being all about money. However, other forms of motivation include: training, long-term contracts, good working conditions, shared offered to employees, empowering employees and bonuses (Mullins, 2002). Motivated employees tend to stay in a company longer because of the benefit they gain from the company. This reduces the rate of employee turnover – i.e. the rate at which employees leave the company (Mullins, 2002). Motivated employees tend to generate ideas for the company because they know they will benefit from the success of the idea being generated. For example, Penguin Books gives much more generous benefits to pregnant women and those with children than the law demands, thus attracting some top performing women in the female-dominated publishing industry.

Other factors contributing to innovations and Management of Knowledge

There are other factors, apart from human resources management, which can affect innovation and knowledge management of the company. These factors include: importance of technology, availability of financial resources, and contribution from other departments and communication.

Technology

Organisations use the development of new technology, new product and services, new organisational structure and the new production process as raw materials to develop knowledge which leads to enlarging and enhancing innovation in organisations (Carneiro, 2000). A great many companies have changed from a more traditional mode of operation to a more innovative approach, making them perform twice as much as other firms in terms of profits gained from the innovation of products and services (Tidd, 1997). This can be seen in companies that have achieved better results through combining competitive orientation with innovation, by putting together the knowledge of individuals and technology to manage changes in organisation, and as a result have moved from a traditional way of management to a more innovative way (Carneiro, 2000).

Technology plays an important role in the 4Ps of innovation. According to Francis and Bessant (2004), there are four main ways a company can face innovation; process innovation, product innovation, position innovation and paradigm innovation

Source; http://www.managing-innovation.com/tools/4Ps.pdf

• Process Innovation is carried out by improving on the production process or service by getting the latest technology for the production process, facilitating the process and  improving on the company’s training a to increase performance (Stalk, 1993; Francis and Bessant, 2004).

• Product Innovation is part of the 4P’s of innovation and is carried out by developing a company’s current product or producing a new product or service for the company to show its innovative capabilities (Francis and Bessant, 2004). The product life cycle (PLC) is an important tool for product innovation and shows when a company can start the innovation process. At maturity, the market is saturated and sales are not changing. Therefore, for the company to continue making profits, they have to create a competitive advantage which can be done by product innovation or new product development (Kotler and Keller, 2008).

• Positional Innovation can be used by organisation to be different. This can be achieved by using the expertise of marketing and advertising agencies to attract potential customers using marketing research data to source information about these customers in order to make the right decisions (Tull and Hawkins, 1993). This tool is used by companies to satisfy customers’ needs in a different and better way than competitors, and makes staff feel better about the products and services they provide (Gummesson, 1987).
• Paradigm Innovation is a situation where the organisation adapts principles based on the way the organisation has been shaped and its culture, by reflecting on previous events (Kolb, 1983).

Financial Resources

The availability of finance also plays a significant role in an organisation where innovation and management of knowledge is a critical success factor. A company might have the idea on how to innovate its products but lack financial resources to put the idea in action. This will hinder the success of the company. Financial resources also play a role in training, paying wages/salaries for employees, and making available new technology to be used for the innovation process. The human resources management function will not be carried out efficiently and effectively in the innovation and knowledge management process without adequate finance.

Other factors that are important for innovation include the contribution from other departments in the company and communication between them. The human resources department is not the only department in an organisation. Other department include: marketing, production and finance. Working together, they can help the company to be innovative and successful. For example, information gathered from marketing research can help the human resources manager to know which candidates to employ to meet market changes, and will also help the company to know what how technology is needed. Communication is one of the key aspects in innovation and knowledge management. Communication on changes in the organisation are essential, as is communication between all departments which, ideally, should work as a team both within and between departments.

Conclusion

This report has looked at an overview of the function of human resources management and the responsibility of that department in an organisation. In order to answer the question as to what role the HRM plays in determining innovation  and knowledge management, the report looked at three main roles in the HR functions which are critical in determining innovation: recruitment and selection, training and development, and motivation. These factors have been mentioned in the report as being  core factors which play a crucial role in innovation. Despite the human resources role in innovation and management of knowledge, HRM is not the only factor that can influence innovation. The report also looked at factors like technology, financial resource, working with other departments, and communication.

Using expertise is a proven way of creating a competitive advantage. Ideas are generated by human employees in a company and these ideas are later put into action using technology capable of making the ideas a reality. Organisations cannot rely on just one factor in order to achieve a high level of innovation. Innovation and knowledge management requires a combination of many factors, working in harmony, in order to be efficient and effective.

Appendices

References

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• Carneiro, A. (2000). How does knowledge management influence innovation and competitiveness? A Journal of Knowledge Management; Vol. 4, page 87-98
• Francis, D and Bessant, J (2004) Targeting innovation and implications for capability development; Volume 25, page 171-183
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• Kotler, P. and Keller, K. (2008). Marketing Management: 14^th edition, Upper Saddle River, New Jersey, Prentice Hall

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• Standardchartered.com (2009). Business Review; People http://www.standardchartered.com/annual-report-07/en/business_review/people.html date accessed 13/01/2010

• Roffe, I. (1999). Innovation and creativity in organisations: a review of the implications for training and development; Journal of European Training. Volume 2, page 224-241

• Tull, D. and Hawkins, D. (1993). Marketing Research: Measurement and Method, Macmillan, New York