Knowledge Management

HR management systems can help track and distribute information throughout the organization

Much as the industrial revolution changed the nature of work and had far-reaching implications for how we manage human resources in organizations, the current knowledge revolution has far-reaching implications for how we manage knowledge workers. It is widely agreed that a firm’s competitive advantage is determined by how well it leverages its organizational knowledge.

A human resource management system (HRMS), if properly realigned, can play a vital role in contributing to the management of organizational knowledge. These redesigns will help move such systems out of the realm of being just passive support to becoming active aids to organizational members.

We must use technology to meet organizational goals and challenges. One of the central challenges that all managers face is how to manage organizational knowledge. Knowledge workers are specialists ranging from HR and marketing professionals to software engineers, project managers and business analysts. Knowledge is the key component of their work, so they consume and generate it on a daily basis, but they detest arbitrary schedules. Because they are involved with the design of mechanical or logical products using informational systems, they are expected to take in knowledge, process it and disseminate it to other members of the organization.

For an organization to remain dynamic, successful management of this knowledge is key. Knowledge management includes all activities involved with the generation, dissemination and maintenance of knowledge to meet organizational goals. Just as humans must create knowledge, they also consume it. Moreover, their interactions with other humans is a mechanism for knowledge transfer, so when they leave an organization (voluntarily or involuntarily), they take their knowledge—both professional and social—with them.

HR management is central to knowledge management in an organization. Conducting small redesigns to HRMSs will alleviate the traditional hurdles in knowledge management. The most salient questions in knowledge management are:

• How do we promote knowledge contribution?

• How do we identify sources of knowledge?

• How do we appropriately replenish knowledge?

• How do we protect and preserve knowledge?

Each of these questions can be answered with HRMSs.

Knowledge value

In most organizations, 20 percent of the knowledge workers generate 80 percent of the knowledge. Those who generate and disseminate knowledge do so for the benefit of everyone in the organization, yet they are only rewarded if the knowledge is used. Without sufficient incentives over time, knowledge providers have less reason to generate knowledge. Moreover, unless knowledge contribution incentives are in place, people may hoard such knowledge and use it as a source of power within or against the organization.

Some HRMSs manage compensation and incentive schemes, such as annual bonuses and merit increases. Many of these incentives, however, do not account for whether an employee has contributed ideas or insights; they measure how well employees perform their jobs rather than how much they contribute to the firm’s knowledge. To properly encourage knowledge contributions, organizations must realign incentive schemes to accurately account for these vital contributions.

Organizations constantly change. Employees may seek more lucrative or more secure jobs, while organizations downsize or rightsize to reduce cost and meet numbers. In the middle of all this commotion, employees may decide to withhold their knowledge and take such insights when they leave—at the expense of the organization. The most effective way to thwart this situation is to establish a knowledge market.

Knowledge Marketplace

An internal knowledge market is a place within an organization where individuals can buy and sell knowledge. It facilitates and motivates employees to share information while contributing to a climate for organizational knowledge exchange. A market mechanism provides various options for pricing knowledge, which can be used to reward employees. Such markets can be deployed over corporate intranet portals and linked to an HRMS.

For example, Infosys, a 17,000-employee consulting and information technology (IT) firm based in Bangalore, India, has implemented an internal knowledge market called K-Shop. Employees can submit research papers, project experiences and other types of knowledge goods through a web site. Experts review and publish these documents. Both the reviewer and author are compensated via knowledge currency units (KCUs). Each reader of the document must pay a certain number of KCUs for use of the document. KCUs can be redeemed for cash and other gifts. Thus, these KCUs serve as incentives while rating the quality of knowledge provided.

In 1993, Fujitsu, a technology company based in Tokyo with more than 150,000 employees, started FIND2, a knowledge management or exchange system through which engineers can buy and sell their knowledge. When a “knowledge provider” registers information in the system, he sets the price of that knowledge. A “knowledge seeker” then chooses knowledge options from the FIND2 menu, and their prices appear at a click. If the knowledge seeker decides to purchase the knowledge, the sum of the knowledge price, plus a shipping and handling fee, is charged to the knowledge seeker’s department. If the knowledge is available in an electronic format, it is sent on a floppy disk or via e-mail. If not, a copy fee is charged as well. The department where knowledge originated receives the sales fees.

Knowledge Identification

Knowledge creation is only the beginning. The next issue is deciding where this knowledge should reside. How is knowledge moved from creators/producers to seekers/consumers? This problem is challenging because organizations reorganize perpetually through downsizing, rightsizing, outsourcing, and mergers and acquisitions. Hence, people with requisite knowledge get moved around or taken out of the organization; others with new knowledge enter the organization. Reorganization modifies job duties and departments, while downsizing and outsourcing may cause an organization to lose valuable tacit knowledge—that stored within the minds of those removed from the organization.

Again, HRMSs can help cultivate this knowledge. These systems have internal directories or databases with phone numbers, e-mail addresses and other information for staff. Adding several extensions will help identify knowledge providers and sources, creating a knowledge map. While these mechanisms have been implemented in big consulting firms, their diffusion to the rest of the marketplace has been slow.

All it takes to implement such a knowledge map is to add two more fields to the existing employee database: one for areas of expertise and one for modes of communication. Then individuals can use the database to find expertise.

Employees have multiple means of communication. Moreover, not all employees are located in one area. Hence, while knowing who has the requisite knowledge is important, knowing how to get in touch with such individuals is critical. Within this system, employees can provide their preferred communication medium for knowledge exchange, along with alternatives.

The development of this database has a secondary benefit when it comes to the development of knowledge replenishment and training programs.

Knowledge Evaluation and Training

Over time, old knowledge can become a burden to the organization. Too much knowledge might institutionalize practices and make organizational change more difficult. Unless old knowledge is purged and deleted, individuals may not be ready to generate new ideas or adapt to new knowledge and thoughts. Hence, the constant evaluation of one’s stock and replenishment through training programs and/or hiring new personnel will be an important part of knowledge management.

The knowledge market discussed earlier incorporates a price mechanism that is suitable for knowledge evaluation. For example, in Fujitsu’s FIND2 system, knowledge not frequently accessed will be priced lower than other items and eventually will be deleted. Knowledge used frequently will be priced appropriately and appreciated.

Once an organization successfully eliminates junk or useless knowledge, it will need to replenish knowledge. Knowledge maps, if successfully updated in a timely fashion, might help an organization provide the right training to the right employees. The distribution map of expertise pinpoints whom or which unit or department has more expertise in valued knowledge domains. To fill gaps and discrepancies in expertise distribution, effective job rotation programs could be devised. Moreover, the organization could look at areas where employees may need to seek training to develop more skills.

Knowledge Protection

Since knowledge is a valuable resource that makes an organization competitive, it must be protected. To preserve the value of any asset, one needs to conduct routine maintenance activities. Protection and destruction practices safeguard organizational knowledge. Knowledge with strategic importance must be protected from planned and unplanned depletion. Planned depletion includes the loss of knowledge from personnel downsizing, mergers and acquisitions, and voluntary movement of personnel.

In such cases, an organization must have mechanisms to capture and retain knowledge. One common method is the use of exit interviews that capture individuals’ job-performance knowledge before they leave an organization. Another popular defense mechanism is debriefings after missions. Debriefings capture tacit insights gained and make them available to the rest of the organization.

While these activities are widely conducted in organizations, they could be improved with technology. With developments in video imaging, bandwidth and storage media, such debriefings could be electronically recorded for ease of dissemination. Moreover, they need not only happen when an employee leaves an organization; they could occur on a routine basis to capture the unstated insights of employees. These extractions could take the form of on-the-job supervision and recording of activities, so that new employees can learn from recordings. Most experts cannot articulate well how they perform their tasks. Such mechanisms will go a long way in helping newcomers learn by protecting such knowledge in its true form.

Unplanned depletion of knowledge can occur through human actions such as theft, knowledge leaks and intelligence activities from competitors, and through natural events such as earthquakes, floods and tornadoes that may damage organizational premises. Adequate security, backup and control mechanisms need to be in place to prevent such sabotages and to recover from natural disasters. Protection capabilities must be adequate to secure both tacit and explicit forms of knowledge.

Protecting explicit documents is a function of traditional security mechanisms such as passwords on documents and secured access to corporate property. These precautions fall under the realm of efforts associated with traditional disaster recovery and crisis planning. Securing tacit knowledge is much more difficult. One must ensure that employees are bound by non-disclosure agreements and background checks, and that they are trained appropriately.

HRMSs can come to the aid of organizations here, as well. Employee records can be routinely checked and scrutinized. In highly sensitive organizations, it is not uncommon to find counterintelligence activities. Such activities help ensure the integrity of the corporation without much publicity and damage. Moreover, a few organizations have already begun to use radio frequency identification tags to monitor workers’ onsite location. This kind of technology prevents inappropriate systems access by unauthorized people.

HRMSs are yet to mature into an effective corporate asset. Depending on design, HRMSs can serve other valuable purposes. For instance, if linked to project management systems, they will directly feed operational data that can be used to monitor human resource usage and performance. They can be used for crisis management by helping to locate personnel and damage.

In the knowledge economy, knowledge is the resource. HRMSs are its custodians and facilitators. HR managers have much to gain by helping an organization manage knowledge; this could help redesign the role of the HR manager and attract due respect for the position.

Kevin C. Desouza is a researcher who has served as a consultant in knowledge management and is the author of Managing Knowledge with Artificial Intelligence (Quorum, 2002). Yukika Awazu is an independent researcher in knowledge management.