Why Workplace Innovation?

The evidence

Transforming leaders see their organisations as systems of interdependent parts. They know that change succeeds when individual initiatives are reinforced – rather than undermined – by management behaviours, performance metrics, fluid structures and employee voice.

So what does a systemic organisational vision look like?

The key concept here is workplace innovation. It describes workplace practices and cultures which enable employees at all levels to use their knowledge, competences and creativity to the full. It builds workplaces in which people come to work to undertake their functional tasks in the most effective way possible and to improve the organisation. Evidence shows that workplace innovation leads to significant and sustainable improvements in both organisational performance and employee engagement and well-being.

Our team and its partners co-created workplace innovation as a concept and we’re delivering it in practical ways to organisations across Europe. Workplace innovation is spreading. It is part of the EU’s strategy for innovation and competitiveness, adopted by governments to boost economic growth and prosperity and by companies across Europe.

The Productive Organisation

Researchers have accumulated a vast body of evidence relating to the impact of workplace innovation on productivity, quality, customer service, financial performance and a broad array of other business outcomes.

One of the most significant studies, the Employee Participation and Organisational Change (EPOC) survey of 6000 workplaces in Europe, confirms that direct employee participation can have strong positive impacts on productivity, innovation and quality. Of firms which implemented semi-autonomous groups, 68% enjoyed reductions in costs, 87% reported reduced throughput times, 98% improved products and services, and 85% increased sales.
A representative sample of 398 Finnish manufacturing firms with more than 50 employees found that practices such as employee empowerment and labour-management cooperation are positively correlated with firm productivity. Research among 650 Dutch SMEs also indicated that companies with workplace innovation initiatives achieve higher productivity and financial results compared with other firms.
Another study based on 932 Dutch companies of different sizes in different private business sectors demonstrated that factors including participative and dynamic management practices, flexible organisation and smarter working lead to better performance in relation to turnover, profit, market share, innovation, productivity, reaching new clients and reputational capital.
Extensive Swedish surveys found a very clear link between flexible, empowering forms of work organisation and performance: flexible organisations were more productive (+20- 60%), showed a much lower rate of personnel turnover (-21%), and a lower rate of absence due to illness (-24%) compared with traditionally organised operational units.
A review of some sixty American articles shows that the magnitude of the impact on efficiency outcomes is substantial, with performance premiums ranging between 15% and 30% for those investing in workplace innovation.

High performance and good work: mutually supportive, not a trade-off

As well as enhancing business performance, empowering work practices increase employee motivation and well-being, playing a particularly important role in reducing stress, enhancing job satisfaction and mental health, and improving retention.

An evaluation of 470 workplace projects undertaken in Finland between 1996 and 2005 shows that improvements in quality of working life have a strong association with improvements in economic performance, and indeed may actually enable them. Findings suggest that participation is the main driver of this convergence between economic performance and employee well-being.
Likewise a German study examined companies in the production, trade and services sectors where positive improvements were made in physical workload, sickness absence, ergonomics, work organisation, safety, style of leadership, and stress management. Managers in these companies reported improved performance across a range of indicators, resulting both in a decrease in absenteeism and an increase in social and vocational competences.

So if it’s that good, why isn’t everyone doing it?

Great question! We know that only a minority of businesses and public sector organisations are making full use of these evidence-based practices. In Europe as a whole, for example, less than 20% of employees are in jobs that allow them to use discretion and judgement in how they undertake their tasks according to evidence from the 2019 European Company Survey. Yet the same evidence shows that these workers make significantly enhanced contributions to business performance and enjoy better health and wellbeing at work.

Long-established ways of doing things are, of course, a powerful force for inertia. Change can be disruptive even when we know that current ways of working are inefficient or prevent us from taking full advantage of new opportunities. Some managers feel threatened or are simply resistant to the idea that employees should be empowered to exercise discretion in their work, contribute to improvement and innovation, and play a wider role in decision-making.

[accessally_course_navigation prev_button=’Previous’ next_button=’Next’]