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Encourage Employee Innovations
Employee innovations (inventions and process improvements) are a source of competitive advantage and profitability. Your company’s success depends on how you leverage and protect the intellectual property (“IP”) created by employees. Unfortunately, many companies quash innovation by having overly rigid policies that do not reward employees. Protecting IP Rights Company ownership of the rights to employee inventions requires a written assignment of rights. However, Draconian contracts that require signing over all rights (to anything that an employee ever thinks of) are a big turn-off to high talent people. Many competing companies are started by disgruntled employees taking their ideas and inventions elsewhere. Providing Incentives The goal is to reward innovations (patented or not) that contribute to the success of the company. Usually this includes recognition and some monetary compensation. If the incentives are not well structured, they can backfire. Pitfalls include spoiling team relationships by creating competition, distrust and jealousy. The criteria for eligibility must be carefully defined. For example, if you reward the number of patent filings, you will see lots of patent applications being filed. Just filing patent applications does not ensure a benefit to the company. It’s important to link the recognition and reward to results that benefit the company in a measurable way. Recognition is an inexpensive way to acknowledge successful contributions. A recognition lunch or dinner, a plaque, or an article in the company newsletter can mean a lot. Some companies create honor awards to recognize outstanding employees. Monetary compensation is more complex and requires careful consideration. Once established, monetary reward policies are difficult to change without a backlash. The ultimate acknowledgement of a successful innovation is to allow the creator to share in the commercialization of the innovation. For example, at 3M, technical innovators can apply for corporate grants to support their investigation into an idea that doesn’t fit into the business plan of their division. When the worth of the invention is established, and a new product is created, the creators are rewarded with leadership roles. Maintaining a productive workplace is critical Both products were successful because the companies encouraged employees to pursue their ideas. Cross-company communications also helped. The failed 3M glue, which was created by an adhesives engineer, was explained to other employees at one of 3M’s regular in-house seminars. Applying it to little bits of paper occurred to an employee in product development. Dupont’s chemist had to persuade a technician to risk gumming up his spinneret with her untried material. In conclusion, it is a good business practice to protect the company’s rights by requiring that employees (and contractors) sign an agreement with assignment of rights, confidentiality and non-compete provisions. The agreement should be reasonable and explain the company’s policy in plain English. If you use a standard agreement, it should be reviewed periodically, by a knowledgeable business attorney, to ensure that it covers the legal bases in light of recent court decisions. In addition, consider establishing business practices that encourage innovation and link recognition and rewards to the results achieved by the company. Jean D. Sifleet, Esq., CPA Big firm expertise - Small firm accessibility.™ P.S. Avoid legalistic boilerplate! Don’t assume that because a document is full of legalistic terms that it is accomplishing your goals. Most probably, it is not. I prepare documents in clear, simple language that are tailored to the specific situation, and are focused on accomplishing your goals and protecting your interests. eNews
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