1. INTRODUCTION:
In the era
of Knowledge Economy, the knowledge skills and capabilities of the employees
collectively have become important sources of the firm’s competitive advantage.
Knowledge Management (KM) is about developing, sharing and applying knowledge
within the organization to gain and sustain a competitive advantage (Petersen
and Poulfelt 2002). Knowledge sharing among employees
can create new knowledge and enhance the innovative capability of the firm.
Being the heart of the firm Human Resources are the core focus as HRM. HR
generates ‘Human Capital advantage’ through recruiting and retaining
exceptional human talents that provide value and cannot be easily
imitated/duplicated by other organizations. The values and uniqueness of core
employees’ knowledge, skills and abilities help develop organizational
capabilities and contribute to organizational efficiency.
In the
Knowledge Economy, HRM faces new challenges set by new and changing business
environment. It requires new ways of thinking and acting, new policies and
practices, new techniques and new job requirements. Hence, the growing
importance of knowledge and its management influence the role of HRM.
Then, how
is HRM related to KM......?
Scholars,
recently, have argued about the dependence of knowledge on people and the
importance of managing the knowledge within the organization.HRM issues such as
recruitment and selection, education (training) and development, performance
management, pay and reward as well as the creation of a learning culture are
vital for managing knowledge within firms ( Evans 2003; Carter and Scarbrough 2001; Currie and Kerrin
2003;Hunter et al 2002)
Knowledge Management:
The
popularity of KM has increased rapidly, especially after 1996, and it has
become a major topic of management philosophy and a management tool.
Scarborough and Swan (2001) argue that the rise and growth of KM is one of the
managerial responses to the empirical trends associated with globalization and
post- industrialism. These trends include the growth of knowledge worker
occupations, and technological advances created by ICT. In organizational
terms, they argue, this new era is characterized by flatter structures, bureaucratisation and ‘virtual’ or networked organizational
forms.
There is no
agreed definition of KM, even among practitioners. One reason for this lack of
agreement stems from the fact that people working in the KM field come from a
wide range of areas, such as Psychology, Economics, Management Science,
Sociology, Production, Engineering and so on. Most definitions are however,
similar on one point as they take a very practical approach to knowledge, i.e.,
how knowledge can contribute to organizational effectiveness (Hlupic et al.2002). In most cases the term is used loosely
to refer to a broad collection of organizational practices and approaches
related to generating, capturing, disseminating knowledge relevant to the organisation’s business (World Bank 1998).
Moreover,
there is also lack of consensus on knowledge itself. Some see knowledge as a
commodity like other that can be stored and used independent of time place,
while other see knowledge as social in nature and very dependent on context. It
is very important to separate the concepts of data, information, tacit
knowledge and explicit knowledge (Daft 2001; Hunter et al. 2002). Data can be
viewed either as factual, raw material or as signals with no meaning.
Information is data related to other data, has meaning and is refined into
structured or functional forms within a system.
What is knowledge?
Knowledge
is full utilization of information and data coupled with the potential of
people’s skills, competencies, ideas, commitments and motivations.
It is
justified true belief.
It is
information in context meaning full information.
It
understands based on experience.
The most
fundamental and common classification of organisational
knowledge is along the explicit-tacit dimension. In this classification, tacit knowledge, is subjective
situational and intimately tied to the knower’s experience. Thus, it is
difficult to formalise, document and communicate to
others. Insight, intuition, beliefs, personal skills and craft and using
rule-of-thumb to solve a complex problem are examples of tacit knowledge. Explicit knowledge is considered to be
formal and objective, and can be expressed unambiguously in words, numbers and
specifications. Hence, it can be transferred in the form of official
statements, rules and procedures and so is easy to codify.
To
understand completely a written document (explicit knowledge) often requires a
great deal of experience (tacit knowledge). Corporations use different knowledge
management (KM) processes and practices to promote productivity, business
flexibility, and creativity.
Hansen has developed two strategic
types of KM in organizations
·
Codification-oriented KM strategy
·
Individual-oriented KM strategy
Codification-oriented KM strategy:
Some
companies emphasize computers and information systems. Knowledge is recorded
and stored in a database, making it easy for employees to access and repeatedly
make use of. This is called Codification-oriented KM strategy.
Individual-oriented KM strategy:
This type
of KM strategy involves keeping knowledge by individuals. Communication,
dissemination, and sharing of knowledge depend primarily on face-to-face
interactions among people.
When a
‘codification-oriented KM strategy’ is being employed, HRM focuses on hiring
workers who can blend into the internal knowledge system, train employees for
teamwork and computer learning, participate in the development of an electronic
documentation system, and encourage frequent interactions among employees and
the sharing of knowledge about the business. If an ‘Individual-oriented KM
strategy’ is being used, HRM focuses on hiring workers who can solve problems.
Therefore,
for effective knowledge management, KMand HRM
strategies must work in tandem. Authors appreciate the Nonaka
and Takeuchi Spiral Model of KM conversion of tacit and explicit knowledge.
Nonakaand Takeuchi Model
Four modes
of knowledge conversion, Socialization, Externalization, Combination and
Internalization
Socialization:
From tacit knowledge to tacit knowledge.
Externalization:
From tacit knowledge to explicit knowledge.
Combination:
From explicit knowledge to explicit knowledge.
Internalization:
From explicit knowledge to tacit knowledge.
Knowledge
sharing and use happen through the ‘knowledge spiral’ which starts at the
individual level and moving up through expanding communities of interaction cross sectional,
departmental, divisional and organizational boundaries.
The
knowledge spiral is a continuous activity of knowledge flow, sharing, and
conversion by individuals, communities, and the organization itself.
The two
steps in the knowledge spiral:
·
Externalization, which converts tacit into explicit know ledge
·
Internalization, which converts explicit into tacit knowledge.
Knowledge Management
Davenport
and Prusak (1998) characterize Knowledge as a synthesized floating mass that includes structured
experiences, verbalized information, unique expert opinion and evaluation, an
integration of new experiences, and the provision of an information framework.
In an organization, knowledge exists not only in the form of documentation and
storage systems; it also comes from daily work routines, processes, execution,
and standards.
KM is
defined by O’Dell and Grayson (1998) as the continual process of giving valid
information to other members of the organization and helping them act in proper
ways that improve the organization’s performance.
Why KM?
The purpose
of KM is to manage information/knowledge that is scattered among the
individuals, departments, and branches of the organization and use it
effectively to effectively to improve the performance of the organization.
These days
KM is inevitable as the firms are facing increasing complicated market
environments and competition.
The focus
of KM is
1. To use knowledge achieve
creative goals and promote effective decision making, so that the organization
can better adapt to market changes and respond to market demands. To use KM
effectively, an organization must manage its activities properly and encourage
its employees to share information and ideas so that new knowledge can be
created.
2. To disseminate this personal knowledge after it is documented
by KM system.
Knowledge Process:
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Knowledge Acquisition |
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Knowledge Creation |
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Knowledge Dissemination |
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Knowledge Accumulation |
Knowledge Acquisition
When
organization finds any knowledge gap in a certain area, the lacking knowledge
has to be acquired from outside or
created inside.
The
organization may turn to other companies to assist it in developing the ability
to acquire this knowledge (outsourcing).
Alternatively, it can hire skinned personal (recruiting) from the marketplace.
Finally, companies can cooperate with one another by combining their resources
through mergers or consolidation.
Knowledge Creation
Companies
must establish internal knowledge-creation mechanisms to develop unique
abilities that can be difficult for its competitors to imitate and thus have
the potential to achieve enviable product innovation and technical
breakthroughs.
Knowledge Dissemination
Knowledge
dissemination refers to the activities a unit performs to spread information
efficiently and effectively to other units in the organization so that others
can share and use this information. Employees in an organization must
understand and adapt to others’ Knowledge
and skills. A common knowledge base is necessary for the effective
dissemination of different specialized areas of knowledge. Most knowledge is
unique. Thus, to disseminate knowledge effectively, people need adequate
abilities and explicit intentions.
Knowledge Accumulation
Knowledge
accumulation is the transformation of that already exists in the organization’s
long or short-term memory. In simple
language, it is the storing of the existing knowledge. If this transaction is
efficient and effective, it can save time and effort for other members.
Organizations usually employ the following three major channels to store their
core resources:
1. Database and management
information system,
2. Special projects and educational
training, and
3. The organization’s objectives,
structure, systems, as well as written documents and files.
Human Resource Management
Human
Resource Management has gained much popularity in the 1980’s. HRM can be viewed
as part of the strategic managerial function in the development of business
policy, in which it plays both a determining and contributory role.
Torrington
and Hall (1998) interpret HRM by comparing it with traditional personnel
management. They argue the personnel management is workforce-centred, directed mainly at employees. This approach
includes finding and training them, arranging for them to be paid, explaining
management’s expectations, justifying management’s actions and satisfying
employee’s work-elated needs. The people who work in
the organisation are the starting point, and they are
a resource that is relatively inflexible in comparison with other resources,
such as money and materials. HRM, on the other hand, is resource-cantered,
according to Torrington and hall. HRM is directed mainly at management needs
for human resources (not necessary employees) to be provided and deployed.
Human
capital is scarce, of great value, and difficult to duplicate and replace.
Therefore, it is considered a strategic asset that can promote organizational
values. The achievement of an effective HRM system requires the organization to
urge all its subunits and department to coordinate with one another.
HRM strategies
1. The buy-bureaucratic strategy:
It emphasizes outside-recruiting, limited training, exact job definitions and
seniority as the criteria.
2. The make-organic strategy: It
emphasizes internal promotions, extensive training, comprehensive job
definitions, and the employee’s abilities or performance as the criteria.
Organizations
that effectively use internal and external human resources and establish an HRM
system based on KM can quickly blend their old and new information and
experiences to efficiently make organizational changes in a coordinated manner.
When a firm
is recruiting, it screens and selects candidates who possess qualifications,
personal characteristics, and skills suitable for the job. The firm must then
continually train the employees it hires to increase their professional
knowledge and sharpen the skills they need to do their jobs, an incentive
program should also be set up to promote and motivate employee performance.
Because of the uniqueness of the needed abilities, corporations must have
appropriate organizational of employee knowledge.
It is suggested
that employees should offer viable, long-term employment strategies that can
attract, assure, and develop optimal human resources and thus create long-term
competitive advantage.
Hence,
consistent with a human resources perspective, managers should hire, maintain,
and develop core employees who cannot be imitated by competitors. Such
employees make positive contribution to an organisation’s
capabilities and contribute to its effectiveness.
Knowledge Management and Human Resource
Management
Knowledge
cannot produce value by itself; it requires management, communication, and
information technology to be useful and effective. An organization must use HRM
system to confirm the knowledge, skills, experience, and creativity of every
employee. The abilities of this employee can be strengthened further through
educational training and development systems. Excellent reward, incentive, and
communication systems constructed in way that make employee feel their
knowledge and efforts are appreciated by the company, can also enhance their
abilities. When employees abilities are strengthened, so are their intentions
to communicate and disseminate knowledge among themselves, and a culture of
knowledge sharing is established.
The
positive attitude/s of knowledge processes have to be considered while
hiring new employees, changing staff
profile, recruitment practices, training and development, retention of employee
with expertise. This view is emphasized by Davenport and Prusak,
who argue that one of the most important factors of development a
knowledge-oriented culture is the selection of knowledgeable employees
(Davenport and Prusak 1999).
New
management roles are being development in order to make knowledge processes in
organizations flow better. These new manager roles aim at enabling the
knowledge flow. Skyrme and Amidson
identify four roles for managers: to develop the big picture, to actively
support the knowledge program, to oversee the development of knowledge
infrastructure, and to enable the building of connections, coordination and
communication (Sky me and Amid on 1997).
There has
been a discussion going on about knowledge work, knowledge intensive firms
(KBO’s) and the critical role of organizational competencies. Knowledge in
organization is considers to become an increasingly important source of value
creation and competitive advantage for them. Therefore the creation, sharing
and protection of knowledge are crucial to the success of a modern
organization. Especially knowledge incentive organization base (Donaldson
2001).The analyses of these deserves the attention of researches, and in these
discussions, the necessary attention should be given to the role of HRM in KM.
Organizations
nowadays also undergo organization changes in leadership and employee roles.
They use information and communication technology is in order to enable a quick
flow of information, andto improve their performance.
The growing role of innovation also shows the need for looking at human
resources management from the knowledge perspective .Business organization
react differently to different challenges of knowledge era. On one hand they
open new position they form KM teams with representatives from management and
knowledge professionals (Wig 1994), develop formal structures for knowledge
management such as CKO, CLO (Skyrme and Amid on 1997)
or Knowledge Managers and Knowledge Management Directors. The use of
professional service rendered by the organization shows the influential status
of knowledge and its management in the organizational value of today’s
economics.
For More than a decade, knowledge –intensive
business services (KIBS) have been a popular topic of research (Farkas and Kuhnel 2002,EMCC
2005,OECD 2006,Toivenen 2004,2007,Dobarai and Farkas
2007).They are especially popular because of the growing importance of
knowledge and innovation. Today even international organizations, such as the
EU (EMCC 2005, 2007) or the OECD (OECD 2006).recognize the role these
organization play in the national economies. There are projects in connection
with KIBS which are supported by EU or OECD.
Combination of KM and HRM strategies
Beard well
(2001) points out that strategy has been one of the cornerstones of the HRM
debate since the 1980s.The extent to which HRM has come to play a role in the
direction and planning of organizations has been a persistent theme not only
among academics but also among practitioners in the field. Beard well also
mentions that there are two rival approaches in strategic HRM. On the one hand
is the matching model emphasising the necessity of
‘tight fit’ between HR strategy and business strategy. On the other hand is the
more flexible Harvard model which recognises that
there are a variety of stakeholders in the organization, such as shareholders,
various groups of employees, the government and community. The creation of HRM
strategies are bound to recognise these interests and
fuse them as much as possible into the human resource strategy and ultimately
the business strategy.
Schuler and
Jackson (2001) link competitive stratifies with HRM practices in an interesting
way. They use of porter’s competitive advantage, as the essence of Competitive
strategy (a Prescriptive approach). Emerging from his discussion id that there
are three competitive strategies that firms can use to gain competitive
advantage. The first, innovative strategy
is used to develop products or services different from those of competitors.
Enhancing product and/or service quality is the primary focus of the second
strategy, quality enhancement strategy,
while with the final one, cost reduction
strategy, firms typically try to gain competitive advantage by lower-cost
producer (Schuler and Jackson 2003).
The three
strategies require people with different knowledge, abilities and technical
skills, or role behaviours, as Schuler and Jackson
term it.When deciding what human resource practices
to use to link with which competitive strategy, organizations can choose from
five human resource practice ‘menus’. According to Schuler and Jackson (2003)
these aspects are planning, staffing, appraising, compensating, and training
and development choices. Eachdimension runs along a
continuum. Planning choices can either be formal or informal, short termor long term, based on job simplification or job
enrichment and so on.
Schuler and
Jackson argue that firms pursuing the innovative strategies are likely to have
the following HRM characteristics (1) Jobs that require close interaction and
co-ordination among groups of individuals, (2) Performance appraisals that are
more likely to reflect long-term and group-based achievements, (3) Jobs that
allow employees to develop skills that can be used in other positions in the
firm, (4) Compensation system that emphasize internal equity rather than
external or market-based equity, (5) Pay rates tend to be low, but that allow
employees to be stockholders and more freedom to choose the mix of components
(salary, bonus, stockoption) that make up their pay
package and (6) Broad career paths to reinforce the development of a broad
range of skills. These practices facilitate co-operative, interdependent
behaviour that is oriented towards the longer term, and foster exchange of
ideas and risk taking (Schuler and Jackson (2003).
The key HRM
practices of firms that pursue quality-enhancement strategy are likely to have
(1) relatively fixed and explicit job descriptions, (2) high levels of employee
participation in decisions relevant to immediate work conditions and the job
itself, (3) a mix of individual; and group criteria for performance appraisal
that is mostly short-term and results oriented, (4) relatively egalitarian
treatment of employees and some guarantees of employment security and (5)
extensive and continuous training and development t of employees, These
practices facilitate quality enhancement by helping to ensure highly reliable
behaviour from individuals who can identify with the goals of the organization
and, when necessary, be flexible and adaptable to new job assignments and
technological changes.
In
attempting to gain competitive advantage by pursuing a strategy of cost
reduction, key human resource practice choice include, according to Schuler and
Jackson(2003): (1) relatively fixed (stable) and explicit job descriptions that
allow little room for ambiguity, (2) narrowly designed jobs and narrowly
defined career paths that encourage specialization, expertise, and efficiency,
(3) short-term, result-oriented performance appraisals, (4) close monitoring of
market pay levels o\for use in marketing compensation decisions and 95) minimal
levels of employees training and development. These practices maximize
efficiency by providing means for management to monitor and control closely the
activities of employees.
Schuler and
Jackson (2003) summarize the three HRM practices:
The
innovation strategy has significant implication for human resource management.
Rather than emphasizing managing people so that work harder (cost-reduction strategy) or smarter (quality strategy) on the same products or services, the
innovation strategy requires people to work differently.
This, then, is the necessary ingredient.
Finally,
Schuler and Jackson argue that in reality firms’ strategies, such as low cost
and quality, or quality and innovation. These combinations might result in the
challenge of stimulating and rewarding different role behaviours
while at the same time trying to manage the conflicts and tensions that may
arise as a consequence.
Hansen et
al. (1999) argue that there are basically two strategies for managing
knowledge. They term these strategies ‘codification’ and ‘personalization’. The
former refers to the codification of knowledge and its storage in databases
where it can be accessed and used readily by anyone in the company. Such
organizations invest heavily in ICT for projects like intra net, data
warehousing and data mining, knowledge mapping (identifying where the knowledge
is located in the firm), and electronic libraries. This increase effectiveness
and growth (Hansen et al, 1999).
‘The reuse
of knowledge saves work, reduces communications costs, and allows a company to
take on more projects.’ It is thus closely related to exploitive learning, which tends to refine existing capabilities
and technologies, forcing through standardization and routinizaton,
and is risk-averse (Clegg and Clarke 1999).Personalization
refers to development and enhancement of personal knowledge and it is shared
mainly through direct person contacts i.e., through dialogues, learning
histories, and communities of practice, etc. It is based on the logic of
‘expert economics’. That is, it is used primarily to solve unique problems,
where rich, tacit personal knowledge is needed. Personalization and explorative learning are closely
related, where explorative learning and more relaxed controls.
Hansen et
al.’s study makes several useful contributions to HRM. First, it links both KM
and HRM to the competitive strategy of the firm, that is, it is not knowledge
in itself but the way it is applied to strategic objectives that is the
critical ingredient of competitiveness. Second, this account stresses the need
for best fit between HRM practices such as reward systems and an organization’s
approach to manage knowledge work. According to Hansen et al. (1999) the
relevant fit is as follows:
The two
knowledge management strategies call for different incentive systems, in the
codification model, managers need to develop a system that encourages people to
write down what they know and to get those documents into the electronic
repository.. In fact, the level and quality of employees’ contributions to the
document database should be a part of their annual performance reviews.
Incentives to stimulate knowledge sharing should be very different at companies
that are following the personalization approach. Managers need to reward people
for sharing knowledge directly with other people. Hansen et al. warn against
mixing strategies but instead suggest using one strategy predominantly and use
the second strategy to support the first.
As
Davenport (1998) states, ‘successful knowledge projects usually address
knowledge transfer through various channels, recognizing that each adds value
in a different way and that their synergy enhances use’.
Employees
are most likely to increase their motivation to create knowledge if they are
given decision-making power or learn on the job to blend their knowledge into
the organization. In addition, a creative culture and atmosphere,
straightforward communication channels, and monitoring of the external
environment all promote the integration and transmission of knowledge within an
organization.
Competency
measurement techniques have clear benefits for recruitment and selection
decision to obtain the most qualified people, place them in the job, and also
play an important role in the selection of training and development programs,
and also for their dismissal. The workforce needs a high level of knowledge in
their profession, communication and cooperation skills. Attitudes towards
knowledge sharing and learning are a factor to be considered during hiring
process. Attending professional and
personal development courses can be helpful as motivator for future knowledge
transfer.
The
following table shows the ideal integration of KM and HRM
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HR Role |
HR Actions |
Knowledge
Processes |
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Knowledge Facilitator |
1. Hire employees (in
large part) based on
learning capabilities. |
Knowledge Acquisition |
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2. Map
key sources of employee knowledge within
the organization. |
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3. Create incentives to encourage knowledge acquisition and
knowledge sharing among employees. |
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4. Facilitate rapid, creative, and effective application of knowledge to organizational problems and opportunities. |
Knowledge Creation |
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Human
Capital Steward |
1. Track and utilize the full range of employee talents -- not just
traditional knowledge,
skills and abilities. |
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2. Treat workers as volunteers or free agents who
“own” their
intellectual capital. |
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3. Create resource flexibility by identifying multiple uses for individual
employees wherever possible. |
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4. Create coordination flexibility by adapting and
applying HR practices across a wide range of situations. |
Knowledge Dissemination |
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5. Create an organizational culture of continuous learning, inquiry, and
personal responsibility for avoiding obsolescence. |
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6. Staff the organization with an appropriate mix of core, associate, and peripheral workers. |
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Relationship Builder |
1. Create and reinforce a sense of community across all units of the
organization. |
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2. Show employees how their individual actions and outcomes affect
the entire organizational system. |
Knowledge Accumulation |
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3. Create
opportunities for
cross-functional
and cross-occupational collaboration, learning, and shared experiences. |
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4. Identify and cultivate boundary spanners that connect distant parts of
the organization together. |