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Workplace innovation practices

‘Making the Union fit for the digital age’, one of the key priorities of the Von der Leyen Commission, is often linked to innovation. For many people the nature of public sector activities makes it difficult to identify them as innovative. And yet, innovation in the public sector is central to economic and social life; public organisations instigate and implement policies that affect the economic and social wellbeing of millions of citizens and businesses, including when it comes to their digital future. As Senior Research Manager at Eurofound, Stavroula Demetriades is responsible for research in the areas of innovation, workplace practices and job creation. She is also adjunct professor in the Business School at University College Dublin. In her article she discusses workplace innovation practices in the public sector, which she considers crucial to deal with today’s challenges. A topic which is also relevant when it comes to the use of innovative digital audit techniques by auditors.

By Stavroula Demetriades, European Foundation for Improvement of Living and Working Conditions (Eurofound)

Workplace innovation practices

Enhancing public sector performance and stimulating innovation within public organisations are important prerequisites for improving services and addressing the big challenges our European societies are faced with. Innovation, even though it is not always acknowledged, has been key to the public sector. Indeed, as is demonstrated in Eurofound research, workplace innovation in the public sector is practised by various organisations in the Member States.

In Eurofound’s workplace innovation research we asked managers, employees and employee representatives about their work practices with a view to exploring the organisations’ pathways, motives and outcomes.

What exactly is workplace innovation?

In our research we define workplace innovation as a newly implemented practice or combination of practices that enable employees to participate in organisational change and renewal either structurally (how work is organised) or culturally (in terms of empowerment of staff, motivation, attitudes, etc.) and hence improve the quality of working life and performance. The main characteristics of workplace innovation are (see also Figure 1):

• practices that are new to the organisation and have been implemented;

• interventions that change the culture or structure of the organisation;

• addressing a specific organisational goal;

• involving employees in organisational change or innovations;

• enhancing the organisation’s performance and well-being.

Figure 1 — Workplace innovation characteristics (Eurofound concept)

Source: author

Motivations and outcomes of the workplace innovation practices introduced

We all know that change is not always welcome in organisations and often comes at a cost. So we were keen to understand what motivates the case study organisations to introduce these workplace innovation practices and what outcomes they achieve. Why they wanted to do things differently, devote time and other resources to this endeavour. Overall, the most frequently cited reason for initiating workplace innovation was to improve efficiency and enhance innovative capability.

The implementation, the how, is often not given enough attention and this makes a big difference to the success of a workplace innovation practice introduced. A workplace innovation practice that works well in one organisation can be implemented in a demoralising fashion in another one and thus gets very different results. The case examples showed that new technologies were introduced to support the workplace innovation practices. Without a clear focus on what is intended to be achieved, advanced technological solutions on their own will never be the answer. What drives the successful implementation of the practices are employee participation and the commitment of top management followed by leadership.

With regard to the outcomes and impacts of these practices on organisations, employees and their representatives, managers reported improvements in employee engagement, sustainability and performance. Employees also mentioned increased learning opportunities and more interesting jobs. The voice of employee representatives was also strengthened.

Eurofound’s research evidence on innovation in the private sector and the role of workplace practices suggests that certain bundles of workplace practices are more likely to be linked with innovation. Combining bundles of work organisation with employee participation practices, and Human Resource Management (HRM) with employee participation (see Figure 2) have a positive link with innovation (in products, services, processes and marketing).

Figure 2 — Workplace practices and their association with innovation

Public sector examples

The public sector examples presented below, are illustrative of the adopted practices.

A tax office with high customer satisfaction reports

It is astonishing that a tax office, collecting citizens’ and businesses’ money would enjoy high levels of customer satisfaction but this Polish regional office (in the town Wieliczka) was determined to promote modern solutions by raising the quality of their services. This is a tax office with a mission.

The main elements of the workplace innovation practices they introduced included the following: organisational transformation, change of approach towards service delivery to taxpayers and use of new technologies to facilitate internal organisation (Figure 3). Flexible project teams carry out their tasks combining competences of different functions in a non-hierarchical structure. With a focus on raising the quality of the service and a citizen-centred approach, they adopted modern solutions suitable for the new era. Management and employees agreed on prioritising anti-corruption and anti-mobbing practices. Stimulating employee participation with mentoring programmes, innovative HRM solutions and concern for employee well-being were at the core of their workplace innovation practices.

Figure 3 — A tax office with a mission

Source: author

Thanks to its change of approach and practices, the tax office registered an increase in its level of tax revenue. The head of the Tax Office in Wieliczka is aware that this effective performance would not have been possible without the involvement of the employees. Employees feel empowered and motivated: they feel that their voice does matter in the organisation and they have real influence on the functioning of the organisation.

Organisational focus — innovation lies in every single employee

Lietuvos energijos gamyba is an organisation active in the energy sector and of strategic importance because of its role in national energy security. The organisation wanted to increase its service efficiency, transparency and response to consumers’ (and citizens’) interests. The employee-driven innovation pathway chosen has continuous cycles of innovation at its heart. The Innovation Committee invites employees from every corner of the organisation to submit ideas at regular intervals for new or improved processes, products and services. They have identified two priority areas: i) technological; and ii) organisational innovations — related to the company’s overall working culture, business model, etc. Incremental and smaller innovation ideas approved by the Innovation Committee were sent to the relevant unit(s) for implementation. Larger-scale projects and ideas involving substantial financial resources were allocated sufficient budget to see the projects through to their implementation. Feedback was given to employees on innovation ideas which had not been selected and rewards were given to selected suggestions turned into innovation projects. These work practices were supported by the trade union, which contributed its own ideas as to how to reward employees in a meaningful way and in line with public sector regulations.

The essential elements of this workplace innovation practice included the following: a systematic approach to innovation (rather than ad-hoc practices), bottom-up action, creating a culture, leadership, clear communication, rewards and trade union support (see Figure 4). One of the lessons learned by this organisation in the process is that unless there is an enabling culture and environment, any new innovation practices introduced ad-hoc will not have a chance to take root and flourish.

Figure 4 — A systematic approach to workplace innovation

Source: author’s elaboration

Addressing future challenges

We have entered an era which has ushered in much more complex societal challenges and simple solutions will not suffice. As the US essayist HL Mencken wrote, ‘For every complex problem there is an answer that is clear, simple and wrong.’ For instance, addressing the climate change challenge or disruptive developments in digitalisation will require more than one unit, more than one department and more than one government: coordinated EU responses are needed. Preparing organisations for change will require more than adopting ad-hoc practices such as suggestion box schemes or innovation committees. It requires a systemic approach addressing cultural issues (e.g. behaviour, being risk averse), structural interventions, alignment with strategies, etc. Organisations need to start with the challenges they are faced with, invite employees to participate, and then set objectives to innovate actions, experiment, implement, measure, grow and scale. Activities need legitimacy, staff and suitable budgets.

There has been a tendency in the last years among public sector organisations to use experimentation so that they can more confidently shape the future public space. Practice and experience in the public sector in the last decade show that there has been a change in the language, moving away from ‘innovation’ to ‘transformation.’ (1) This suggests a perceived need for more fundamental changes rather than small-scale innovative solutions.

Perhaps it is not a coincidence that international organisations such as the United Nations Development Programme (UNDP) have recently decided to launch 60 acceleration labs across the globe. Starting from innovation labs in their early innovation efforts, which tested and prototyped solutions, now they are exploring systemic solutions.

European institutions and agencies have also been promoting innovation labs, sharing knowledge on innovation, experimentation and design approaches. Eurofound initiated co-creation sessions and experimental approaches. The European Court of Auditors already runs its own innovation lab and promotes innovation within the service. Public auditors help policy makers to shape the future. In their audits, they cover different perspectives, can make use of machine learning or AI and need to experiment with new approaches in an environment that enables and stimulates innovation.

As the Eurofound studies show (see Box 1), pioneers in workplace innovation in both the private and public sectors, have chosen different pathways. However, the role of the human factor is crucial for organisational innovation, performance and sustainability in both areas.

Box 1 — Recent Eurofound studies on workplace innovation

Eurofound (2017), Innovative changes in European companies

Eurofound (2016). Win-win arrangements: Innovative measures through social dialogue at company level.

Eurofound (2015), Third European Company Survey — Workplace innovation in European companies

Eurofound (2015). Third European Company Survey — Overview report: Workplace practices — Patterns, performance and well-being

Applying workplace innovation practices in public audit organisations

Regarding the public sector audit organisations themselves, introducing workplace innovation practices could be beneficial for the entire organisation. External and internal drivers of change continually affect public audit services in the form of new policies, technological developments, perceived needs for improved services, etc. As a result, the auditors’ focus changes to redefine audits according to the new reality and its possible futures. Making use of workplace innovation practices within auditing services may contribute to improving the service and the auditors’ work. The process always starts from defining concrete organisational goals (see Figure 1) on what needs to be improved within the audit organisations and why. It is important that the needs are clearly defined, and the likely complexity is appreciated. For instance, digital auditing could be introduced by auditors as a means of enhancing efficiency and innovation within the service using metrics on performance and well-being. However, it should be made clear at the outset that this is not a technology-driven exercise; technology is used to meet the organisation’s goals. For such important changes, auditors should also consider how to manage innovation risks in a controlled environment while allowing space for experimentation and the involvement of auditors. Figure 5 below demonstrates a workplace innovation approach to applying digital innovation.

Figure 5 — Digital auditing with workplace innovation tools

Source: author

It is equally important to appreciate the role of auditors in reviewing other organisations’ workplace innovation practices. In that role, auditors could encourage, stimulate and assess such practices within the audited organisations. The Australian National Audit Office created a Better Practice Guide whose aim was to provide a decision-support framework so that public organisations could better manage innovation. The guide also aimed at encouraging an innovation culture within the Australian public service. In a way, this is an innovative role for the auditors themselves: they provide the tools to other public organisations for innovative behaviour and practices.

Public sector auditors reviewing the workplace innovation practices within the audited organisations could follow a similar approach to the one presented above. The introduction of workplace innovation practices by the audited organisation is premised on the assumption that these will improve organisational performance. Hence, the auditors should seek evidence demonstrating the following — an indicative list:

  • concrete organisational goals that the new practice addresses;
  • identification of practices (what are the actual practices adopted?) and how they contribute to the organisational goals;
  • role of employees in the process;
  • structural changes (for example, new organisational units), cultural interventions (leadership support, innovation culture);
  • investments in developing new capabilities in the organisation in line with the new practices introduced and with a view to meeting the organisational goal;
  • costs and risks;
  • performance outcomes and impacts: measurement of outcomes (concrete ways of measuring the impact of the new practices in organisational performance and well-being).

With substantial changes taking place in the external environment, the public sector needs to adapt fast. Adopting workplace innovation practices could help audit organisations to contribute to better public services and innovation.

(1) See for example Bason, C. (2019), Leading public sector innovation: Co-creating for a better society (second edition), Policy press.

This article was first published on the 1/2020 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.

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The ECA Journal features articles on a variety of current audit topics, the ECA’s role and work. It is available in electronic form below, and paper copies can be ordered online at the EU Bookshop.

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