REFLECTIVE PRACTICE
Workplace innovation for better
jobs and performance
Frank Pot
Institute for Management Research,
Radboud University Nijmegen, Nijmegen, The Netherlands
Abstract
Purpose – The purpose of this paper is to describe the need for workplace innovation policies and
practices in Europe and evaluate programs that already have been developed.
Design/methodology/approach – The paper describes the concept of workplace innovation and
trends in society explaining its emergence. The paper then presents and discusses the results of
evaluation research as far as this is available.
Findings – A growing number of countries is conducting or developing some kind of programme on
workplace innovation. These programmes differ in size and governance. Evaluation research shows
that simultaneous improvement of performance and quality of working life is possible under certain
conditions such as the participation of employees in change projects.
Research limitations/implications – Concepts and designs of evaluation research projects differ
considerably. This gives new challenges for companies, trade unions, governments and researchers. In
EU2020, little attention is paid to workplace innovation but there is a ray of hope in the draft integrated
guidelines for employment policies and in the Flagship Initiative Innovation Union.
Originality/value – Social innovation in the workplace, or workplace innovation, is a new concept,
covering to some extent new practices that appear to be relevant for organisations and governments.
Keywords Organizational performance, Europe, Job satisfaction, Workplace, Innovation
Paper type Viewpoint
1. Global leadership
DSM Anti-infectives in The Netherlands holds global leadership positions in active
pharmaceutical ingredients such as penicillin. Key drivers of profitability are price and
access to global markets. The key success factors are new technologies and operational
excellence. The ingredients are produced using enzymes in biotechnological processes.
Operational excellence was achieved by the introduction of autonomous teams and the
creation of a special job, that of the operation expert, who gears activities of different
departments for one another. After the introduction of these changes, the plant produced
50 per cent more with 50 per cent fewer staff members in each shift. Its competitive
position is among the first three of the world.
2. Workplace innovation
This is a very good example of what we nowadays call workplace innovation.
Workplace innovation is defined as the implementation of new and combined
interventions in the fields of work organisation, human resource management
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1741-0401.htm
This paper was a keynote presentation at the World Productivity Congress in Antalya, Turkey
in November 2010.
IJPPM
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Received November 2010
Accepted November 2010
International Journal of Productivity
and Performance Management
Vol. 60 No. 4, 2011
pp. 404-415
q Emerald Group Publishing Limited
1741-0401
DOI 10.1108/17410401111123562
and supportive technologies. Workplace innovation is considered to be complementary
to technological innovation. Some people use the broader concept of non-technological
innovation, in which also dynamic management, new marketing practices and external
collaboration are included. I will assert and try to convince you that by introducing
workplace innovation, improvement of quality of working life (QWL) and organisational
performance can be achieved simultaneously (Pot and Koningsveld, 2009). This gives
new challenges for companies, trade unions, governments and researchers.
3. Examples of companies
I shall give some examples of other companies that are moving in that direction. IKEA is
one example of firms that know how to mobilise human resources. If you go shopping at
IKEA, you see short meetings of department staff standing in a circle in the shop itself,
discussing what should be done and what can be improved. IKEA also has a spectacular
product and process redesigning model, called future search. IKEA includes all
stakeholders, customers, suppliers, employees, management, etc. and is able to decide on
innovation within a couple of days (Weisbord and Janoff, 2005).
For IBM (2008) “today, collaboration is the name of the game.” They are looking for
ways to connect communities of employees, partners, customers and others to create a
world of new innovators. Although 75 per cent of CEOs said in 2006 that collaboration is
very important, only a little more than half said they actually collaborate to a large
extent. The CEOs considered their employees to be the most significant source of
innovative ideas, followed by business partners and customers. A large number of
interventions in work organisation and development of new ICT-tools was to make IBM,
a smart company and should enable IBM to sell this concept to their customers as well.
At Philips, workplace innovation was initiated in the real estate department to
develop smarter offices and to economise by decreasing the number of office buildings.
The current office space at that time was under-utilised for 40 per cent of the time.
However, it very soon became clear that this “mobile working” required changes in the
work organisation, better ICT-support and changes in the way employees were
managed: managing by output and not by presence. So the HR department joined in. The
implementation of workplace innovation is worldwide. Eindhoven in The Netherlands
and New Delhi were pioneers in 2009. In a presentation to employees, the management
said:
Philips cares about people. As employees, you create our company’s future. Workplace
innovation will enable new, more flexible ways of working, to benefit both you and the future
of Philips, which means, we will create work environments that enable you to be more
productive, inspired and creative: to live our brand (Wiesenekker, 2008).
This kind of mobile working was also introduced at Microsoft Nederland. One of the
effects is that 49 per cent of the employees reported higher productivity, 1 per cent lower
and 50 per cent the same (presentation October 2010).
Another example is the Asian Development Bank, which has its headquarters in
Manila. Olivier Serrat, head of the Knowledge Management Centre, writes that
“harnessing creativity and innovation in the workplace [...] has become the critical
organisational requirement of the age”. A form is being distributed to the branches to
“assess a workplace’s friendliness to creativity and innovation” (Serrat, 2009).
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4. National programmes
A growing number of countries is conducting or developing some kind of programme
(www.workinnet.org) aimed at labour productivity, development of competences,
quality of work, learning and innovation. Examples of programme titles are: work place
development (Finland), innovative Arbeitsgestaltung; Innovationsfa
¨
higkeit (Germany),
value creation (Norway), social innovation (The Netherlands and Belgium), management
and work organisation renewal (Sweden) and workplace innovation (Ireland and the
UK). These policies on the level of organisations and sectors are connected to policies on
national and European levels concerning “flexicurity” (employment, education and
social security; European Commission, 2007) and innovation. Key concepts are “dynamic
management” (absorption of external knowledge), “working smarter” and “utilisation of
skills and competences”.
Examples of countries outside Europe, who have recently been working on national
programmes are Canada, South Korea and Singapore. In Canada, the programme
Workplace Skills Initiative has been carried out in 2008-2010. In South Korea, an
initiative for a workplace innovation programme was taken in 2009 by the Korea
Workplace Innovation Centre. Unfortunately, the centre is running out of budget because
the Lee Myung-bak administration cut funding in 2010 after a strike, last December at the
affiliated Korean Labour Institute. Workplace innovation in Korea is still relatively scarce,
but research shows positive effects on performance, mediated by worker attachment to
the workplace (Frenkel and Lee, 2010). Although in Singapore finance minister Tharman
Shanmugartnam advocates on internet “to get into the virtuous cycle of better skills,
better jobs, higher wages and incomes”, the emphasis of the Productivity@Work part of
the SPRING programme is mainly on productivity and not on QWL.
5. Urgency
Why have these programmes come into existence, already before the financial and
economic crises? There are four main reasons for the emerging attention for workplace
development. The first one is the need to enhance labour productivity to maintain our level
of welfare and social security in the near future with fewer people in the workforce due to
the ageing population. The second reason is the need to develop and utilise the skills and
competences of the potential workforce to increase added value as part of a competitive and
knowledge-based economy. The third reason is that private and public work organisations
can only fully benefit from technological innovation if it is embedded in workplace
innovation (making technology work by means of proper organisation). The fourth reason
is that workplace innovation itself appears to be more important for innovation success
than technological innovation does. Research by the Erasmus University/Rotterdam
School of Management in industrial sectors shows that technological innovation accounts
for 25 per cent of success in radical innovation, whereas non-technological innovation,
or social innovation – as it is called in The Netherlands – accounts for 75 per cent.
The success of incremental innovation can be based for 50 per cent on each technological
and non-technological innovation (Volberda et al., 2006).
6. Evaluations in EU countries
Evaluation research has been carried out in some countries and I would like to share
some results with you. Interesting data have been collected about the results of the
Finnish Workplace Development Programme – concerning “work, organisational
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and management practices” – in 470 projects in the years 1996-2005. Management and
staff representatives and experts of 409 projects in different sectors and of different sizes
made a self-assessment. Performance was measured by labour productivity, quality of
goods and services, quality of operations, flexible customer service and smoothness of
operations. QWL covered team-like working methods, cooperation between
management and staff, social relationships in the workplace, development
of vocational skills and mental well-being. In a cluster analysis, three groups were
distinguished: the best group (achieving better performance and better QWL) with
152 projects, the worst group (poor or no impact for both factors) with 31 projects and a
group with the remaining projects. In the best group, employment was increased
significantly more than in the worst one. The most striking difference between the best
group and the worst one was that in the best group, the staff played a role in initiating the
project more often, employee participation was stronger and internal collaboration was
better than in the worst group (Ramstad, 2009).
In another investigation, a representative sample of 398 manufacturing firms with
more than 50 employees in Finland in 2005, it was found that innovation practices such
as performance-based pay, flexible job design and employee involvement, developing
employee skills and labour-management cooperation are positively correlated to firm
productivity.
In Germany, there have been no systematic evaluations so far. One exception is the
management survey of AOK (an insurer) among 212 partner companies. A wide variety
of issues were paid attention to in these companies (both in production sectors and in
trade and services), ranging from physical workload (91.5 per cent of production
companies; 80 per cent of trade and services) to sickness absenteeism, ergonomics, work
organisation, safety, style of leadership, up to stress management (30.8 per cent
production; 50.5 per cent trade and services; Bonitz et al., 2007). Performance results as
assessed by management were substantial (Figure 1).
Further analysis shows that higher productivity goes hand in hand with better
communication and higher employability, resulting from both a decrease in absenteeism
and an increase in social and vocational competences (Bonitz et al., 2007, p. 34).
However, not all specific interventions had a significant effect. Profit-sharing and
consultative committees seem to matter more than individual incentive systems, teams,
job rotation and formal training strategy (Jones et al., 2008).
Finally – concerning Finland – a survey among 5,270 employees confirmed the
expected positive effects of workplace development on QWL, but the research did not
cover performance outcomes (Kalmi and Kauhanen, 2008).
In an important report on “high performance work systems” (HPWS) in Ireland,
employee well-being was only measured by employee turnover. Nevertheless, the
conclusions of this investigation among 132 medium to large companies in the
manufacturing and services industries are relevant. The results of HPWS confirm that:
[...] strategic human resources management practices are clearly associated with business
performance outcomes, including labour productivity, innovation levels and employee
well-being. The more novel findings relate to the discovery that other factors, including
diversity and equality systems and workplace partner systems, are positively and
synergistically associated with significantly higher levels of labour productivity, workforce
innovation and reduced employee turnover (Flood et al., 2008, p. 10).
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In the UK, a lot of attention is paid to management-worker cooperation. It is difficult to
link management-worker cooperation directly to performance, but a review by
Totterdill et al. (2009) show that a combination of representative and direct partnership
of management and staff exerts a positive influence on the development of activities
and practices that have a direct impact on performance. Fricke and Totterdill (2004,
p. 3) stress the importance of workplace innovation for regional development:
Critically, workplace innovation should be seen as the product of a complex process of
learning grounded in, for example, vertical and horizontal interaction within firms,
networking between firms (industry associations, supply chain relationships, etc.), public
policy, vocational training, industrial relations, the financial system and so on.
Damanpour et al. (2009, p. 671) studied the adoption of innovation types over four years
in a panel of 428 service organisations in the UK. They found that:
[...] the combinative adoption of innovation types (service, technological, administrative, fp)
over time helps develop organisational capabilities and affects organisational conduct and
outcome. [...] Organisational success in service organisations does not follow a technological
trajectory and depends on the adoption of both technological and non-technological
innovations.
Cristini and Pozzoli (2008) looked at the diffusion of innovative workplace practices in the
UK and Italy and their impact on the firm’s added value, using data from the 2004
Workplace Employee Relations Survey on British establishments and two surveys on
manufacturing firms located in the North of Italy. The average incidence of innovative
Figure 1.
Performance effects as
assessed by management
33.7%
41.1%
43.2%
62.1%
37.9%
50.5%
48.4%
60.0%
51.6%
56.8%
27.4%
24.8%
29.9%
27.4%
50.4%
41.0%
53.0%
59.8%
66.7%
70.9%
0 102030
Percentage
40 50 60 70 80
Better position on the labor market
Quality and innovation
Reduced failure rate
Increased customer satisfaction
Reduced absenteeism
Process optimisation
Productivity increase
Consultation relevant for practice
Less comopensation for sick people
Optimised health protection
Trade and services Production companies
Source: Bonitz et al. (2007, p. 23)
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practices is similar in bothcountries, but theydiffered in terms of the composition of the set
of workplace practices. Italian firms prefer functional flexibility ( job rotation), information
sharing and meetings while British firms have opened to teamwork, human relations
training and employees’ financial participation. In both countries, functional flexibility is
positively and human relations training negatively related to performance measures.
The effects of the other measures differ per country. Teamwork only rates positively in the
Italian sample and financial participation is only positive in the British sample.
Love et al. (2006) also found differences between countries. They used a nationally
representative postal survey of British and German manufacturing plants’ innovation
activity to investigate the impact of cross-functional teams. Using optimal combinations of
cross-functional teams in the innovation process increased innovation success in the UK by
29.5 per cent compared to 9.5 per cent in Germany. One explanation is that too much
occupational specialisation in German firms may reduce their ability to introduce effectively
cross-functional teams. The results suggest the potential value of cross-functional team
working in the more technical aspects of the innovation process, but that development of
market strategy should remain a focussed, single discipline activity.
Let us turn now to my home country, The Netherlands. Research by the Economic
Institute for small and medium size enterprises (SMEs) in 2008 in 650 Dutch SMEs
indicated that companies with workplace development projects achieve higher
productivity and financial results compared to companies that do not implement this
kind of projects. However, the outcomes regarding QWL have not been measured except
for employment that in most cases had increased (Hauw et al., 2009; Table I).
The Erasmus Competition and Innovation Monitor of the Erasmus University
Rotterdam – edition 2009 – included 910 Dutch companies of different sizes in different
private business sectors. The broad concept of social innovation of the Erasmus
Competition and Innovation Monitor (ECIM) covers dynamic management, flexible
organisation, working smarter and external cooperation. Compared to non-socially
innovative companies, the socially innovative companies perform better regarding
increase in turnover, profit and market share and regarding innovation, productivity,
new clients and reputation. Consistent with earlier results of the ECIM, technological
innovation by means of R&D and ICT investments determines 25 per cent of innovation
success, whereas social innovation (management, organisation and work aspects)
determines 75 per cent (Jansen et al., 2009; Table II).
In The Netherlands Employers Work Survey (edition 2008) The Netherlands
Organisation (TNO) for Applied Scientific Research includes four aspects in social
innovation: strategic orientation, product-market improvement, working flexibly and
organising more smartly. In different sectors, 3.468 employers with ten or more employees
filled in the questionnaire. Company performance was measured as a combination
Percentage change in performance last two years
Performance criterion SMEs without working smarter SMEs with working smarter
Company results 2 18
Company turnover 7 15
Productivity 5 14
Employment 6 11
Sources: Hauw et al. (2009); Economic Institute for SMEs
Table I.
Working smarter and
performance
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of an increase during the last two years in turnover, profit and labour productivity. This
combined performance was significantly better in organisations with more social
innovation. This is also the case for the four different aspects of social innovation.
The employer respondents in innovative companies were more contented with the terms
of employment and HR practices in their companies. Concerning the QWL: no correlation
existed between social innovation and job autonomy, except for the determination of
working times and breaks. A cluster analysis showed that the group of socially innovative
companies had a 35 per cent lower average percentage of absenteeism compared to the
non-socially innovative companies (Oeij et al., 2010).
After all these figures on programmes, you may be interested in an example of a
single firm, Bronkhorst High Tech in The Netherlands. This firm holds a worldwide
position on mass flow and pressure measurement and control for the process industry,
life sciences, food, energy, etc. Together, with the employees and supported by TNO,
the management implemented Demand Flow, Lean Manufacturing and training
on the job. The results were higher productivity (20 per cent), shorter throughput time
(2 30 per cent), a more flexible work organisation and enthusiastic staff.
7. Evaluation European level
Figures on the European level indicate that workplace innovation works, but that there
is room for improvement, both in the number of organisations that have implemented it
and as regards the results. An evaluation of five cases of internal flexibility measures
(organisational, payment schemes, working time, location and skills) showed that all
companies reported positive effects, in particular concerning financial results,
employability of employees and response to changes in market demands. Workload
and overtime were only reduced in two companies (Goudswaard et al., 2009). The
companies involved were Dexia bank in Belgium, GNK Autostructures in UK, MRW in
Spain, Palfinger in Austria and Saab Microwafe Systems in Sweden and Norway.
In the Innobarometer, commissioned by the European Commission, innovation
trends were investigated between 2006 and 2009 in sectors of industry that are supposed
to be innovative. The firms had at least 20 employees. Of the enterprises surveyed,
49 per cent introduced new or significantly improved organisational solutions (e.g. in
knowledge management, workplace organisation, external relations):
Organisational innovations were equally characteristic of enterprises where innovation
revenue is the primary or “only” significant source of sales income (both 63%), contrasted by
a markedly lower Figure (47%) among enterprises where innovation tends to be less
important” (Gallup Organization, 2009, pp. 21-2).
Performance
Performance social innovative versus not social
innovative organisations
Increase in turnover 15 % higher
Increase in profits 14 % higher
Innovation 37 % higher
Productivity 22 % higher
New clients 20 % higher
Reputation 12 % higher
Source: Jansen et al. (2009)
Table II.
Social innovation and
performance
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The most sought-after skills to support innovation were general communication skills
(58 per cent), capacity for team working (56 per cent), creativity (48 per cent) and
negotiation skills (46 per cent). To support innovation, 46 per cent of the firms introduced
mechanisms to collect innovative ideas from employees, while 40 per cent used staff
rotations and secondments to bring new perspectives to work processes. There are
differences between large and small companies. Of the large companies, 69 per cent
created cross-functional/departmental teams in innovation projects, whereas only
28 per cent of the small companies did so (Gallup Organization, 2009).
In the European Manufacturing Survey (3,000 companies) the effects of product
innovation, service innovation, technological innovation and organisational innovation
were compared. Only organisational innovation has positive effects on all relevant
performance indicators. The best results are achieved when technological innovation
and organisational innovation go hand in hand (Ligthart et al., 2010; Table III).
8. Conclusions workplace innovation
In a growing number of countries and sectors of industry, it is considered a matter of
urgency to develop all competences of the potential workforce and to increase labour
productivity by “working smarter”. The recent financial and economic crises have not
affected that conviction. It is an extra reason to invest in the simultaneous improvement of
QWL and performance by means of interventions in the domain of workplace innovation.
As the reader may already have noticed, it is difficult to draw general conclusions from
the research that we have presented because concepts, measurements and research
designs differ considerably. Nevertheless, our study convinced us that workplace
innovation can serve the objectives of both QWL and organisational performance, if those
objectives are combined purposefully in the process of redesigning work.
Delivery
time Ontime
Prod.
lead
time
Turnover
change
Added
value 05
Types of innovation
Product innovation þþþ þ
Technological process þ 2
Organisation process 2 þ
Product-related services þþþ
Alignment of innovation
Technological process and
organisational process 2 þ 2 þ
Technological process and product
related services 2
Technological process and product
innovation þþ
Organisational process and product
related services þ
Organisational process and product
innovation
Product related services and product
innovation 2
Source: Ligthart et al. (2010) available at: www.european-manufacturing-survey.eu (controlled for
Size, Country, Industry and RD-investments)
Table III.
Differential and
alignment performance
effects of innovation
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These conclusions are consistent with those of a review of research on the contribution of
teamwork to organisational performance. Out of 31 studies, 26 reported positive effects on
operational performance and 28 on financial performance. Most studies reported higher
employee commitment and satisfaction and lower levels of turnover and absenteeism
(Delarue et al., 2008). Some evaluation studies indicate that the effects are stronger if more
HR practices and/or organisational changes are implemented.
However, empirical evidence shows that simultaneous improvement of QWL and
performance is not always achieved. Conditions for success and failure appear to be
complex and partly depending on local circumstances. The most interesting lesson is
that the commitment of management combined with participation of employees is
definitely the most important condition for success in the QWL and performance. The
most important pitfall appears to be top-down projects rather than participatory projects
with employees and their supervisors.
9. European policy
As I mentioned before, there is room for improvement and the urgency is clear. Support
from the European Commission would be helpful. However, the many attempts in the
beginning of this year to include workplace innovation in the EU Strategy 2020
(European Commission, 2010a) failed. As was the case during the Lisbon Strategy,
workplace innovation is regarded as a private matter for employers. As Werner Wobbe
(2009) of the commission put it in a conference presentation in Stockholm:
Since its revision in 2005, the Lisbon Strategy has been based on a partnership between the EU
and Member States with a focus on the promotion of growth and more and better jobs.
A priority area on sustainable work organisation characterised by convergence between
productivity and QWL was not included, although it might be perceived in the realm of the
current priorities. The current European “perception of work” may be classified as an
individual one. This notion has a focus on the quality of a single workplace, its individual skill
requirements and the individual employment condition protection. The collaborative character
and its implications in the “Nordic debates” which are meant in the notion of “new forms of
work organisation“ are badly understood.
In addition, I would like to emphasise that – generally speaking – enterprise strategies
are mainly focused on the external world, customers and competitors and not on the
optimisation of internal resources. Moreover, innovation is considered to be tantamount
to technological innovation. Another reason might be that workplace innovation pays
off after some time, while the majority of managers are dependent on short-term results.
And last but not least, many employers do not like to change the existing balance of
power in their organisations.
What can be done? Of course, as is stated in the Berlin Declaration of WorkInNet:
European policymakers need to include sustainable work systems and work-oriented innovation
in the growth strategy if the EUROPE 2020 vision is to be achievable (WorkInNet (WIN),
2010). However, this is not sufficient; policymakers together with enterprises have to create
conditions underwhich more advanced forms of workplace innovation will occur on a large-scale.
[...] The need for such changes is no longer a matter of contention: there is ample evidence that
such workplaces perform better against all the economic and social measures that underpin
EUROPE 2020.
We are in good company. Some distinguished scientists in the USA have expressed the
same concern about the US-policy:
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President Obama and Congress have taken actions to respond to the deepening economic crisis
and have embarked on an ambitious strategy to transform the US economy to once again make
it work for all Americans. However, [...] research and practice over the past two decades has
demonstrated that translating large investments into long-term job growth and high
productivity requires complementary investments in training and workforce development, full
engagement of worker skills to drive innovation and partnership-based labor management
relations (Kochan et al., 2009, p. 2).
In the opinion of these scholars, labour laws and practices have to be changed. Research
in the USA also shows that the argument of many executives that they are prisoners of
iron economic laws which dictate that they have no choice but to match working
conditions offered by their lowest-cost competitors, is not valid (O’Toole, 2008).
Regarding the EU2020 strategy there is a ray of hope. In the proposal for a council
decision on guidelines for the employment policies in the member states (European
Commission, 2010c) “innovation in work organisation” and “social innovation” are
mentioned but the content of those concepts is not yet clear. The same holds for the
Flagship Initiative Innovation Union that was published 6 October 2010 (European
Commission, 2010b). Furthermore, the social partners also show interest in workplace
innovation and they are preparing an opinion on “innovative workplaces” in the
European Economic and Social Committee; part of it is a hearing on 15 December 2010.
However, we should not wait for the European Commission. Fortunately some national
programmes are running in the EU. These programmes differ in a number of respects.
Some are directed by the government, which supplies substantial amounts of money to
stimulate action and to finance research (e.g. Finland, Germany, Ireland). In other
countries, the government is neither leading, nor financially in the forefront and the
initiative lies primarily with social partners and companies (e.g. Belgium,
The Netherlands, UK), supported by consultants and researchers. This latter model
could be a risk. As we know from Frieder Naschold’s “best practice model” for national
workplace development, the strategic justification should primarily arise from macro-level
industrial policy issues rather than the industrial relations system or the research and
development system alone (Naschold, 1994). The most sustainable innovation can be
achieved if companies, social partners, governments and research organisations work
together.
Another example, in which more progress has been made already, starts from
productivity. In its memorandum “Productivity, the high road to wealth” (European
Association of National Productivity Centres (EANPC), 2005) and recent policy
statement (EANPC, 2010), the EANPC has elaborated on the connection between
productivity, innovation, work organisation, skills, health and social partnership. I can
strongly recommend you to read these documents.
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¨
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About the author
Frank Pot is a Work and Organisation Sociologist and Professor of Social Innovation at the
Institute for Management Research, Radboud University Nijmegen, The Netherlands. Until
recently, he was the Director of the Institute of Work and Employment at TNO for Applied
Scientific Research and board member of The Netherlands Centre for Social Innovation and of
the EANPC. Frank Pot can be contacted at: frank.pot@ardan.demon.nl
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