Successful transitions through workplace innovation – Frank Pot and Peter Totterdill

Investing in good jobs and employees is crucial to negotiating the green and digital transitions.

Technological innovation in the workplace is likely to fail, or fall short, unless it is combined with organisational innovation. That means high employee involvement, creation of ‘good jobs’—bringing empowerment and development opportunities—and recognition that learning on the job is as important as formal education and training.

In the European Union this is increasingly understood. Yet the 2019 European Company Survey found that only 20 per cent of establishments in the EU-27 were characterised by ‘high investment in jobs and people and high involvement’. There remains much room for improvement.

Twin transitions

‘Workplace innovation’ was adopted by the European Commission in October 2012 as one of the objectives of the Europe 2020 strategy. It has been commended by the commission, as well as other EU bodies and high-level committees—including the European Economic and Social Committee—several times in the last decade.

Last year, in the European Pillar of Social Rights Action Plan, the commission presented workplace innovation as a response to the green and digital transitions:

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Social dialogue, information, consultation and participation of workers and their representatives at different levels (including company and sectoral level) play an important role in shaping economic transitions and fostering workplace innovation, in particular with a view to the ongoing twin transitions and the changes in the world of work.

From 2013 to 2017, the commission funded the European Workplace Innovation Network (EUWIN). EUWIN describes workplace innovation as ‘new and combined interventions in work organisation, human resource management, labour relations and supportive technologies’.

Systemic approach

Workplace innovation is a participatory process which leads to empowering practices and sustains continuing learning, reflection and innovation. It is not about redesigning individual jobs but a systemic approach, recognising the interdependence of work organisation, technologies, the structure of control and labour relations.

The concept integrates aspects of diverse policy-related agendas, including innovation, digitalisation, productivity, job quality, lifelong learning, wellbeing at work, skills and social dialogue. It fits the human- and socio-centric concept of Industry 5.0.

The results are better jobs (wellbeing at work, lifelong learning, reduction of stress risks) and better performance (labour productivity, innovation capacity). These were confirmed by the latest European Company Survey.

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Workplace innovation also contributes, according to Dani Rodrik and Stefanie Stantcheva, to higher productivity and growth for the economy as a whole. They emphasise the significant economic, social and political costs of failure to generate good jobs—notably lagging communities with poor social outcomes (health, education, crime) and social and political strife (populist backlash, democratic malfunction). But a private employer fails to take these ‘externalities’ into account unless prompted to do so by the state.

Low-road trap

If workplace innovation is proven to be beneficial for organisations, why then is it not more commonplace? Many reasons can be adduced: convention, lack of knowledge, preference for ‘command and control’ management instead of ‘participation and trust’, adversarial industrial relations and so on.

During the 2008 financial crisis, some companies fell into a low-road trap, focused on cost-cutting at the expense of long-term competitiveness, although others recognised that a crisis was exactly the time to go more firmly on to the high road. The same divergence has been evident during the Covid-19 crisis: according to Eurofound companies with high-quality jobs and high employee involvement have performed better.

More generally, the market mechanism will not produce workplace innovation by itself. Rodrik and Charles Sabel contended recently that the shortfall in ‘good jobs’ could be viewed as a massive market failure—a gross economic malfunction, not just a source of social inequality and exclusion.

There is little point trying to persuade the hard core of companies and managers locked into traditional mindsets. But there is great potential in targeting the many business leaders struggling to address chronically weak productivity or employee engagement, those grappling with the emerging challenges of global competition—new technology, green transition and demographic change—and those simply inspired by the evidence.

Permanent attention

One of the lessons is that workplace innovation needs permanent attention and stimulation, including by policy-makers. EUWIN identifies ‘a pressing need for social partners and governments to work together in designing and implementing new forms of soft regulation, promoting and resourcing workplace innovation through awareness campaigns, capacity building, knowledge dissemination, the creation of learning networks, social partner agreements, research, and direct support to businesses’.

Good examples are the recent European Social Partner Framework Agreement on Digitalisation and the Horizon 2020 project Beyond 4.0. The real gain for companies as well as public organisations lies in creating an empowered workforce actively engaged in improving all aspects of the business, as well as undertaking its functional tasks in the best possible way.

Yet there is one important caveat. Generating a sustainable flow of employee ideas for improvement and innovation is not a quick fix, via a simple suggestion scheme or away-day. Every aspect of workplace culture and practice must be considered: delegation of decision-making to individuals and teams, performance measurement, line-management roles and behaviours, and the example set by leaders.

As it stands, too many companies are missing critical opportunities to make a difference—to their performance, to their employees and to the environment.

Frank Pot is emeritus professor of social innovation of work and employment at Radboud University Nijmegen, honorary adviser to the European Workplace Innovation Network (EUWIN) and former director of TNO Work and Employment.

Peter Totterdill is a founding director of Workplace Innovation Europe, created to promote workplace innovation through research, policy advocacy and in-company facilitation. He was  professor of Work Organisation at Nottingham Trent University and is a visiting professor at Mykolas Romeris University, Vilnius.