Prof. GU Qinxuan: Driving Innovation through Strategic Choices in HR Management Models 2023-10-27

In a report from the 20th National Congress of the Communist Party of China, it was emphatically stated that "we must adhere to the principle that science and technology are primary productive forces, talent is the primary resource, and innovation is the primary driving force.” It underscored the necessity to “strengthen the principal position of enterprises in technological innovation and bring into play the leading and supporting roles of technologically advanced enterprises.” Additionally, the report called for an acceleration in the development of significant global talent centers and innovation hubs. Talent forms the foundation of innovation, and at its core, innovation-driven development is propelled by talent. In the accelerated implementation of innovation-driven national development strategies, a pivotal role is played by businesses in actualizing their innovative potential. This is dependent on their selection and execution of effective human resource management models, aimed at attracting, motivating, and developing creative personnel, thereby enhancing the organization's creativity and innovation levels.


Matching HR Management Models with Innovation-Driven Approaches


An effective human resource management model to foster innovation must be congruent and compatible. It should align not only internally within the company but also with external factors. Across different types of enterprises such as state-owned, private, and foreign-funded, significant variances exist in the foundational functions and supporting elements of human resource management. These are profoundly influenced by the corporate system, governance structure, and cultural values. Consequently, internal compatibility within the enterprise is paramount. From the perspective of internal alignment, there are two aspects to consider: the congruence within the human resource management model itself, and its alignment with the company’s strategy and other organizational elements.


On one hand, the human resource management model encompasses various functional modules such as human resource planning, job analysis and design, recruitment and selection, training and development, performance evaluation and management, compensation design and management, labor relations and conflict management, and team building and management. These modules need to be intrinsically "bundled" and combined to work synergistically, stimulating and enhancing the creativity and innovation of both individuals and teams within the company, and subsequently, the organization’s overall creative and innovative capabilities. For instance, Google firmly believes that "employees are everything," and thus, recruitment is deemed “the most important thing” at Google. Their hiring philosophy revolves around “only hiring people better than yourself” and “better a shortage than a bad hire.” Google provides a wealth of training opportunities, fostering a learning organization. They employ a transparent, challenging Objectives and Key Results (OKR) performance management system. In terms of compensation and benefits, outstanding employees are recognized with ample and uncapped remunerations, and comprehensive welfare benefits are extended to all employees. Additionally, the importance of employee surveys and participation is emphasized. Evidently, Google’s human resource management model is well-aligned with its internal system.


On the other hand, based on strategic human resource management theories, the human resource management model should support and serve the company's business strategy and strategic objectives. As a crucial organizational system and policy, it needs to align with the company's innovation strategy, technical capabilities, organizational structure, and culture, providing mutual support and reinforcement, and collectively contributing to the realization of the company's strategic goals, fostering continuous innovation, and sustainable development. From an external perspective, in alignment with social situational theory, the human resource management model should adapt to the industry type and characteristics, the overall level of innovation and capability within the industry, both domestically and internationally, as well as the degree of open-source innovation, market dynamism, and complexity. For instance, if the industry emphasizes open innovation and has a high degree of open-source innovation, companies need to integrate internal R&D resources with external R&D resources for more optimized human resource planning, especially in the planning of R&D personnel.


Considering both internal and external perspectives ensures the selection of an appropriate human resource management model, facilitating innovation and high-quality development within the enterprise.


Ecosystem for Implementing HR Management Models


Once a company has chosen a human resource management model that is conducive to innovation and aligns with its needs, it is crucial to establish an ecosystem to ensure that the human resource management model synergizes with the company's innovation activities, fostering high-quality innovative outcomes. From an ecosystem perspective, this includes the micro-level within the company, the meso-level within the industry and industrial clusters, and the macro-level across regions and countries. The ecosystem is comprised of various elements including businesses, government bodies, research institutions, professional and industry associations, talent intermediaries, and management consulting agencies, each playing a unique and vital role in ensuring the effective implementation of the human resource management model.


Micro-level Perspective: Ecosystem within the Company for Implementing HR Management Models

The company is the primary entity for realizing the desired outcomes of the human resource management model and is a central element within the constructed ecosystem. The ecosystem within the company encompasses senior management, middle and lower-level line managers, professional HR managers, culture and atmosphere, and reward systems. Senior managers provide innovative leadership and exemplary behavior, line managers possess the ability to manage both business operations and their department’s staff, professional HR managers bring their expertise, and the company upholds a talent-first philosophy. The cultivation of an innovative culture and atmosphere, along with the establishment of both tangible and intangible reward mechanisms for innovation, collectively form an ecosystem that ensures the human resource management model chosen under the innovation-driven approach yields the expected outcomes.


Mid-level Perspective: Industry and Industrial Cluster Ecosystems for HR Management Models


The aggregation and orderly flow of talent play a crucial role in synchronizing the development of industrial chains and innovation. Ensuring that the chosen human resource management models in enterprises yield the expected outcomes necessitates the establishment and development of ecosystems at the industry and industrial cluster levels. These ecosystems should facilitate the attraction, utilization, development, and motivation of talent. Focusing on China’s strategic emerging industries and related sectors, this calls for the construction of supportive ecosystems through government agencies in high-tech zones, professional and industry associations, talent intermediaries, and co-creation spaces.


High-tech zones are hubs for innovative industries, where government agencies play a vital role in developing ecosystems. They ensure effective interactions between enterprises, universities, and research institutions, facilitate shared talent resources, and contribute to the efficient allocation and orderly flow of talent. This creates a supportive environment that fosters a culture of innovation.


Professional and industry associations, alongside talent intermediaries, provide external professional services crucial for implementing HR management models. For example, the Shanghai Integrated Circuit Industry Association offers talent development services and facilitates the sharing of practical experience in enhancing R&D organization performance through tools like OKR. Talent intermediaries, operating in a standardized market, provide high-quality talent services to enterprises.


The continuous development of open and open-source innovation has led to the emergence of co-creation spaces within industry clusters. These spaces offer access to external innovative talents and resources, fostering collaboration and sharing mechanisms with internal talents, which in turn, supports the successful implementation of HR management models.


Macro-level Perspective: Regional and National Ecosystems for HR Management Models


Innovation is driven by talent. Both central and local governments in China recognize the critical role of talent in accelerating the implementation of innovation-driven development strategies, resulting in significant policy initiatives. For instance, in October 2022, the central government issued "Opinions on Strengthening the Construction of High-Skill Talent Teams in the New Era." Such policies have a positive impact on HR management in enterprises within their respective regions.


To guarantee the expected outcomes of HR management models under innovation-driven enterprises, focus areas include improving talent evaluation, establishing competitive talent aggregation systems, introducing knowledge value-oriented income distribution, and creating fair, orderly, and positive talent competition environments.


In terms of talent evaluation, it is essential to refine the basis and methods for a scientific evaluation, tailored to the various talent types needed by enterprises. For basic research talents, evaluation systems aligned with the nature of basic research and talent growth are required. In establishing competitive talent aggregation systems, both national and regional levels are actively implementing initiatives to attract talent, supported by various "Talent Project Plans." For income distribution based on knowledge value, the focus is on the "triple" salary structure and distribution mechanism for enterprise R&D talents, pushing forward systemic reforms and providing policy guidance and support for enterprises, particularly state-owned enterprises. This ensures professional and technical talents are adequately motivated and valued.


Finally, building a fair, orderly, and positive talent competition environment is critical for realizing the expected effects of HR management models in innovation-driven enterprises. Strengthening legal regulations, optimizing talent flow mechanisms, refining talent contract management, enhancing regional talent service systems, and creating a societal atmosphere that respects and fairly selects talent are all essential steps in this process.