On the basis of extensive research into how HR departments dealt with business model innovation, their role was spelt out by Paul Sparrow and his colleagues (2010) as follows:
Source review The role of HR in business model innovation – Sparrow et al (2010: 14–15)
A central task for HR directors is to identify how they as a leader, and how their function’s own delivery model, structure, and the people processes it manages, add value during periods of business model change. In order for organizations to make their models work, they have to understand the potentially deep implications they have for people management. People management experts have to make sure that those engineering the new business models are working on assumptions that can reasonably be executed.
To contribute to business model innovation HR directors need to:
- understand the implications of the existing and potential business model in terms of the organization structure and the new or enhanced capabilities the people involved will require;
- contribute to the redesign of the organization to meet the requirements of the business model change programme;
- plan organization development activities that systematically improve organizational capability in terms of process – how things get done;
- mastermind change management programmes that provide for the acceptance and smooth implementation of change;
- conduct workforce planning exercises that identify more specifically the numbers of people required with specified skills and knowledge;
- formulate and implement talent management strategies that provide for the development, deployment, recruitment and retention of
talented people – those individuals who can make a difference to organizational performance through their immediate contribution and in the longer term;
- develop performance management and contingent reward systems – what Sparrow et al (2010: 16) call ‘performance-driven processes’;
- plan and manage learning programmes to ensure that people have the skills required to implement the new or changed business model;
- establish knowledge management procedures for storing and sharing the wisdom, understanding and expertise accumulated in the organization about its processes, techniques and operations.
In addition, as Schuler and Jackson (2007: 31) point out, ‘… because an innovation strategy requires risk taking and tolerance of inevitable failures, HRM in firms pursuing this strategy should be used to give employees a sense of security and encourage a long-term commitment’.