Finland: Survey findings underline need for innovation in workplaces

A national survey of well-being at work concludes that only one in four Finnish workplaces can be seen as innovative. A policy report based on the survey identifies a number of ways in which the quality of working life could be improved, such as more systematic innovative thinking, better change management and wider use of new technology.

Innovation imbalance in Finnish workplaces

Key findings from a large-scale national survey in Finland on organisational developments, innovation and well-being at work have now been compiled in a policy report that also presents a number of development proposals for Finnish working life.

The survey concludes that although Finland invests heavily in workplace-level development activities, only one in four Finnish workplaces can be seen as innovative, with teams actively involved in developing new products and services. Finnish companies are one-sided in their focus on cutting costs, say the survey authors, and often concentrate on extending the life cycle of existing products and services rather than rethinking them or diversifying. In many cases, innovation is reduced rather than boosted, and the survey found no clear improvements in the quality of working life.

The survey was conducted according to the Meadow concept developed at EU level, based on interviews with employers and employees in private and public sector workplaces. The research focused on the innovativeness and renewal capacity of workplaces, and on employees’ relationship to their work and to changes at the workplace. It found that the imbalance of innovation activities is greater in Finland than in any other EU country included in the research. One in four organisations surveyed did not demonstrate either innovation or work engagement on the part of employees.

The policy report makes proposals that are guided by the vision presented in the National Working Life Development Strategy with a specific focus on innovation and productivity. The development strategy, which aims to make Finnish working life the best in Europe by 2020, is based on the Government Programme for the 2011–2015 parliamentary term. It was prepared by the Ministry of Employment and the Economy in 2012 through broad cooperation with social partners, ministries, public authorities and associations.

About the survey

Between 2012 and 2014, the Finnish Funding Agency for Innovation (Tekes) funded a research project based on the guidelines for collecting and interpreting data on organisational change and restructuring that were developed within the European Commission-funded project 'Measuring the dynamics of organisations and work' (Meadow). The Meadow concept was created to enable the collection of reliable and comparable information about multiple aspects of change at work and in organisations at the European level. Previously, Meadow research has also been conducted in Norway, Sweden and Denmark. The Finnish Meadow survey was influenced by the contents of these surveys, but had a slightly different orientation as it contained more questions related to organisational changes and ways to implement them, as well as questions on the role of employees and their well-being.

The research was carried out by researchers from the Work Research Centre at the University of Tampere. The results were published in three separate research reports. The first focused on the perspectives of employers (in Finnish, 3 MB PDF); the second focused on the perspective of employees (in Finnish, 336 KB PDF); and the third combined the two perspectives (in Finnish, 1.9 MB PDF). The third report also analyses factors that relate to a company's productivity and innovativeness, as well as the well-being of employees.

The research project is part of the large-scale national networking project Working Life 2020 that aims to implement the national strategy. The social partners are involved in the project, as the steering committee includes representatives from all peak-level social partners from the private and public sector: the Central Organisation of Finnish Trade Unions (SAK), the Finnish Confederation of Professionals (STTK), the Local Government Employers (KT), the Office for the Government as Employer (VTML), the Commission for Church Employers (KiT), the Confederation of Unions for Professional and Managerial Staff in Finland (Akava) and the Confederation of Finnish Industries (EK).   

Methodology 

The strength of the Meadow methodology is that it combines employer and employee perspectives. It provides a comprehensive picture of the effects of organisational change. The research method consists of telephone interviews with 1,531 employer representatives and 1,711 employees in the same organisations, constituting a representative sample of Finnish companies and public bodies that have at least 10 employees. The interview data were then combined with register data from Statistics Finland describing organisations and their personnel.

For the private sector, the unit of data collection was companies. About half of the interviews in the private sector were conducted in industrial companies and the other half in service companies. In the government sector, the corresponding units of data collection were either government offices or parishes; in the municipal sector, the units were municipalities, administrative units of a municipality or federations of municipalities.

The part of the survey based on interviews with employers examined how organisations use policies, apply management practices and organise work, and how they address and cope with change. The employee interviews focused on correlations between organisational change, work engagement and well-being. The employer interviews were conducted among general managers, owners/proprietors, human resources or personnel managers and other managers. The employees interviewed were randomly selected from the same units as the employers, based on the registration data. This means they are not representative of all Finnish employees, since the target group is workplaces and organisations. Only employees who had worked in their current organisation for at least 1.5 years were interviewed.

Key findings

With the collapse of previously strong national clusters in metal and engineering, wood processing and telecommunications, many Finnish companies are now forced to seek new ways to succeed. With an ageing population threatening the long-term sustainability of public finances, the public sector is also under great pressure to improve efficiency and productivity. These structural changes are clearly apparent in the Meadow survey, which finds that over half of workplaces have introduced organisational change in the past few years. An even greater proportion has undergone changes in working methods, work systems or assignment distribution.

Public debate about Finnish working life has often focused on the negative aspects of the many and frequent organisational changes. The Meadow survey, however, finds that 70% of employees feel that changes have improved their sense of meaningfulness at work while 64% reported that changes had improved their work assignments. More than 70% of employees said they were satisfied or quite satisfied with their involvement in decisions about organisational change.

However, the research clearly shows that the form of the changes, rather than actual change, is decisive for employees’ psychological well-being. Not surprisingly, work engagement is better than average in organisations that have expanded or introduced new functions. This is also true where responsibilities have been distributed downwards or where new units have been created. Work engagement is weaker in organisations that have restructured, laid off staff or outsourced work. Interestingly, the survey found that in organisations where there had been no organisational changes in the previous two years, a considerably lower level of meaningfulness at work than average was reported. The results show that people thrive best in organisations that grow, and where power and responsibility are shared.

The research revealed a consistent connection between the degree of innovation in a company and the employees’ role in its development. Employee participation and initiatives were most frequent in companies that had introduced product or service innovations. The results also show that ‘ordinary’ employees have an important role in developing products, services and processes. In this respect, the results support recent research that has highlighted the role of employees in practical innovation activities.   

A majority of employees felt that they had an important role in developing their own work and workplace. Almost three in four reported that during the past year they had developed solutions for improving their own work and had presented new ideas to their supervisor or the management. However, only around a third had taken part in developing products or services.

One of the researchers' conclusions is that the effect on employees’ well-being of organisational changes is complex and that there is a need for more research on the factors that promote employees' positive adaptation to organisational changes. The research identified  factors that simultaneously embrace both innovation and work engagement, such as:

  • the participation of employees in developing products and services;
  • the autonomy of employees;
  • cooperation with external actors.

When controlling for several variables, structural factors such as which type of sector the organisation works in or the size of the organisation were shown to be of less importance.

Areas for development

The policy report from Tekes based on the survey summarises its findings and those of the three research reports. It identifies some of the areas where development is needed in order to encourage the innovation and productivity that is the aim of the National Working Life Development Strategy. Proposals focus on innovation activities, better management of change, encouraging acceptance of new roles in working life, preparing Finnish workers and employers for change, and wider adoption of digital technology.

Systematic innovation thinking

Finnish innovation activities should focus more strongly on the capacity and motivation of companies to renew their products and services, rather than just extending the life cycle of existing ones. Overall, the report calls for a more comprehensive and systematic ‘innovation thinking’ in both the private and the public sector. This would require increased investment in breakthrough innovations, accompanied by more support for small-scale developments and management skills to underpin the process.

Improved change management

As stated earlier, the attitudes of employees to changes in their workplace and their experience of these changes are surprisingly positive. The survey shows that negative attitudes are mostly generated by badly managed change. The reduced level of work engagement caused by poor management of change and a subsequent decline in productivity often negate any benefits expected from the change. The survey also shows that everyday development work carried out by personnel and major changes in operations do not cohere together in an effective manner in the public sector. Hence, the report proposes improvement in change management skills and a focus on the significance of work engagement and employee-driven innovation.

Towards shared leadership

One conclusion of the survey is that changes have resulted in only limited improvements in the overall quality of working life. The research  concludes that the slow development of working life threatens to lead to a growing underuse of Finnish workers' increased skills and competencies, growing frustration about the content of their work and consequently a decline in the significance of paid labour in relation to other areas of life.

The significance of leadership is thus highlighted not only in terms of change management, but in the overall process of changing working life. The report underlines the development of managerial work in the direction of shared leadership, away from traditional hierarchical management thinking. According to Tekes, value-creating innovations rely on broad-based cooperation and commitment throughout the organisation. The recommendation is thus to move towards shared leadership by redefining work roles. To accomplish this, the work community skills that shared leadership demands should increasingly be incorporated in education and training at various levels.

Maximising digital technology skills

Finland’s reputation as a high technology country stems mainly from the global success of telecoms company Nokia and the relatively large share of high technology exports. However, the Tekes report finds that the country’s long success as a producer of ICT-based products has obscured the fact that, on the whole, Finnish companies have not been very progressive users of ICT.

The Meadow survey reveals that Finns have good digital technology skills and competencies but that these are poorly utilised. Growth achieved through the use of ICT has in fact been modest compared to several other developed industrial countries, and ICT has been perceived as a tool to streamline existing processes and operations rather than as a platform for breakthrough innovations in products, services or business. The report concludes that achieving new growth in both productivity and employment requires a creative and far-reaching vision of the possibilities of ICT, and its systematic and comprehensive use in all activities. Knowledge in this area needs to improve to help Finnish businesses take advantage of the digital transformation as a resource for innovation management.

Commentary

The importance of promoting innovativeness in Finnish working life, both for employee well-being and for economic growth, is widely acknowledged. Innovation, work engagement and well-being at work are often highlighted in policy debate as important ways of generating growth. The report suggests that achieving the vision of the National Working Life Development Strategy by 2020 seems unrealistic and it calls for a 'rethinking of work' in all key sectors and industrial branches. The skills and competencies of workers are key factors for the radical changes needed.

This is, however, not an easy task. A recent large-scale study by Statistics Finland on how Finnish working conditions have developed between 1977 and 2013 shows that job insecurity has never been higher (in Finnish, 7.1 MB PDF) than the level reported in the national 2013 working conditions survey. Almost one in four workers feel threatened by unemployment and temporary layoffs, and one in five are afraid of being dismissed. As job insecurity has been shown to have a negative impact on work satisfaction and commitment, it is also likely to negatively affect work engagement.

Against this bleak background, it is encouraging to see that there is a strategic plan for the way forward and the extensive data generated by the Meadow survey will help to guide the way. An action plan based on Tekes’ recommendations and a roadmap specifying concrete measures to improve innovativeness and productivity in Finnish working life will be developed. Social partners and other key actors involved in the Working Life 2020 project will cooperate on the project.

Similar roadmaps are planned for other key areas that the national strategy focuses on, such as health and well-being at work. Tekes is also financing further analysis of the data to feed into the development of its innovation funding activities and the Working Life 2020 project. As part of this, the Finnish Meadow results will be compared with Meadow data from other Nordic countries. This will help to further identify the specific characteristics and challenges for Finnish working life.

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