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Improving employee innovation

Increase profitability and staff retention with an innovative culture

On this page

  • Understand the benefits innovation will bring to your business
  • Learn how to develop an innovative business culture

Innovation is often associated with the introduction of new products or services in your business. But it can also be about changing the way you do business. 

To be successful, innovation will need to be supported by you, your staff and all other business partners. 

Innovation embraces:

  • new uses of technologies
  • improved industry methods
  • meeting changing customer demands or needs
  • better systems and processes. 

The benefits of innovation

If you develop a focus on innovation in your business, you'll ensure everyone in the business is working towards better business practices, and improving business efficiency and performance. 

Some of the other benefits include:

  • increased competitiveness – higher efficiency with lower costs and higher quality products
  • more efficient use of all resources
  • improved staff retention – staff like to work in innovative and challenging jobs that promote team work and problem solving
  • proactive approach to business – your business model is continually matching changing conditions
  • greater attraction of new customers by improving existing, or offering new, products or services or entering new markets.
Your approach to innovation will be driven by your business strategy, capability, market understanding and commitment to the process. Often, these processes will add capacity to your business with little or no additional costs. Your business competitiveness and survival is directly linked to your ability to innovate.

Engage your employees in innovation

Your employees are one of your most productive assets in your business. By creating an environment within your business that encourages innovative thinking and action, you'll inspire your employees to share their knowledge, experience, skills, suggestions and recommendations.

Here are ten different ways you can look to create an innovative environment in your business:

1. Encourage an innovation culture

There should be a recognition in your workplace that not trying anything new is often the biggest risk. So encourage your employees to:

  • be honest and open
  • share ideas
  • explore initiatives without fear of retribution.

2. Hire people with different perspectives

Look for employees who:

  • understand your vision
  • align with your culture – but aren't necessarily the same as you
  • may have different perspectives
  • come from diverse backgrounds
  • have passions
  • you recognise as having capabilities.

Having employees with an alternative set of ideas and problem-solving approaches will easily generate an innovative approach.

Learn more about the recruitment process 

3. Lead by example 

Be open and approachable to new ideas. Many large companies often provided allocated time for their employees to break from routine roles to inspire new thoughts – this could be an employee retreat, allocated time each day or a day out of the office.

Encourage every one of your employees to share new ideas, and provide support, for example by setting up:

  • meetings
  • suggestion boxes
  • suggestion area on the internal intranet
  • dedicated times and/or rooms.

4. Have a process  

Ensure there's a process which everyone understands for assessing each new idea. Employees will be encouraged to make suggestions and recommendations if they're confident the idea will be appropriately considered. This must be supported by acknowledgement and feedback in a timely manner.

5. Implement quickly   

Where possible, implement employees ideas and suggestions quickly. When employees see they're influencing the direction of the business, they'll be extremely motivated to continue to share ideas, work towards the success of the idea and encourage productivity of other employees.

6. Reward employees   

Even if the idea is not implemented, the employees should be encouraged to suggest all ideas. Rewards can be for individuals or even teams or for the whole workforce – the important thing is that employees see that you appreciate their efforts to improve the business.

7. Create opportunities   

Create work practices to encourage new initiatives:

  • Have regular job swaps that foster new perspectives from different employees.
  • Develop cross functional teams (employees from different parts of the business) to brainstorm improvements to processes and other areas of the business.
  • Introduce a new ideas or "what if?" section to regular meetings.

8. Create a collaboration space

Provide a dedicated area that will promote interaction with employees. Often informal discussions lead to improved employee relationship and trust, which embraces collaboration that can ultimately lead to innovation. Large companies often have open spaces where employees can sit and chat in a relaxing environment.

9. Offer training

Offer training to employees that will inspire new thoughts and approaches to the business. They'll gain additional experience and the business will benefit from possible new ideas and approaches your employee has learned.

10. Invest in resources

Innovation is an investment in the future of your business – not an everyday expense – so allocate appropriate resources to innovation in your business, and include:

  • appropriate time
  • finances
  • employee support
  • leadership
  • actions.

By implementing a culture of innovation in your business – supported by work practices to encourage employee participation – your business will move forward in line with customer demand, industry best practice and benefit from improved profitability that's a result of considered growth.

Most importantly, your team will be highly motivated, dedicated and inspired to contribute to the success of your business, as well as your vision.

Looking for assistance?

The Victorian Government's Future Industries Fund could help your business become more innovative.

Case study: How to motivate your employees

'Moving from being a micromanaging small business owner to an empowering team leader is a journey, and it was very hard ... I'm pretty sure that's why a lot of small businesses don't grow past a certain point.'

Tristan White, The Physio Co.

Read more

The happy staff from Physio co.