Knowledge Management and       Creative HRM    Professor Ingi Runar Edvardsson      University of Akureyri, Iceland       ...
Knowledge Management and Creative HRMIntroductionKnowledge management (KM) is about developing, sharing and applying knowl...
Scarbrough and Swan (2001) argue that the rise and growth of KM is one of themanagerial responses to the empirical trends ...
Given the different nature of explicit and tacit knowledge the knowledge managementprocess varies for the two types of kno...
innovation, and for employees knowledge management can mean increased autonomyand intrinsic benefit of increased learning....
continuously ‘reinventing the wheel’. Many managers faced the problem thatemployees did not use the million dollar ICT-sys...
mainly at employees. This approach includes finding and training them, arranging forthem to be paid, explaining management...
resource practices to use to link with which competitive strategy, organizations canchoose from five human resource practi...
Schuler and Jackson (2003:318) summarise the three HRM practices thus:               Thus, the innovation strategy has sig...
Personalization refers to personal development of knowledge and it is shared mainlythrough direct person-to-person contact...
Hansen et al. warn against mixing strategies but instead suggest u   sing one strategypredominantly and use the second str...
knowledge integration. The most important element in the recruitment process wasthe company’s culture, not technical abili...
unique business problems. Once on board, their most important training comes fromworking with experienced consultants who ...
•    Knowledge acquisition – What knowledge has the individual brought into the         organisation?    •    Knowledge sh...
non-financial strategies may have had a relationship with lower turnover. Theseincluded leadership, fulfilling work and pa...
Table 2: Exploitative and explorative learning strategies towards knowledgemanagement                            Exploitat...
training, as well as job design, usually mean that one strategy becomes dominantwithin firms. Hansen et al. also argue tha...
ReferencesBeardwell, I. (2001) ‘An introduction to human resource management: strategy, style      or outcome’ in I. Beard...
Little, S., Ouintas, P. and Ray, T. (2002) ‘PART III Knowledge, Innovation and      Human Resources’ in S. Little, P. Ouin...
Endnotes1  This represents the debates within the strategy approach in general. On the one handthere is the prescriptive a...
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  1. 1. Knowledge Management and Creative HRM Professor Ingi Runar Edvardsson University of Akureyri, Iceland Occasional Paper 14Department of Human Resource Management University of Strathclyde 2003
  2. 2. Knowledge Management and Creative HRMIntroductionKnowledge management (KM) is about developing, sharing and applying knowledgewithin the organization to gain and sustain a competitive advantage (Petersen andPoulfelt 2002). How, then, is human resource management (HRM) related toknowledge management? Scholars have argued recently that knowledge is dependenton people and that HRM issues, such as recruitment and selection, education anddevelopment, performance management, pay and reward, as well as the creation of alearning culture are vital for managing knowledge within firms (Evans 2003; Carterand Scarbrough 2001; Currie and Kerrin 2003; Hunter et al 2002; Robertson andHammersley 2000). Stephen Little, Paul Quintas and Tim Ray go as far as to trace theorigin of KM to changes in HRM practices: One of the key factors in the growth of interest in knowledge management in the 1990s was the rediscovery that employees have skills and knowledge that are not available to (or ´captured´ by) the organization. It is perhaps no coincidence that this rediscovery of the central importance of people as possessors of knowledge vital to the organization followed an intense period of corporate downsizing, outsourcing and staff redundancies in the West in the 1980s (2002: 299).The aim of this paper is, first, to analyse which impact HRM practices, such asstrategy, selection and hiring, training, performance management, and remunerationhave on the creation and distribution of knowledge within firms. Second, the paperattempts to assess whe ther or not knowledge management requires a particular humanresource strategy.This paper is a work in progress based on a literature review. However, at the end ofthe paper a synthesis of previous debate is presented to enrich the theoretical debates.Knowledge ManagementThe popularity of KM has increased rapidly, especially after 1996, and it has becomea central topic of management philosophy and a management tool. This popularity isreflected in the growing number of articles and books on the topic. In 1995 there were45 articles about knowledge management in the ABI/Information database, 158 in1998, and in 2002 the number has increased to 835 (Edvardsson, 2003; Petersen andPoulfelt 2002). Specific journals have even been established. In 1997, the Journal ofKnowledge Management and Knowledge and Process Management were introduced,and the Journal of Intellectual Capital was introduced in 2000 (Petersen and Poulfelt2002). Many organisations have also introduced knowledge managementprogrammes. A recent KPMG survey of 423 leading European and Americancompanies found that 68 per cent of respondents were undertaking some kind of KMimitative (KPMG 2000). Another recent UK survey found that 64 per cent of theresponding firms had introduced KM and 24 per cent were at the introduction stage(Moffett et al. 2003).I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 114.doc
  3. 3. Scarbrough and Swan (2001) argue that the rise and growth of KM is one of themanagerial responses to the empirical trends associated with globalisation and post-industrialism. These trends include the growth of knowledge worker occupations, andtechnological advances created by ICT. In organisational terms, they argue, this newera is characterised by flatter structures, debureaucratisation and ‘virtual’ ornetworked organisational forms. As already noted Little, Quintas and Ray (2002)point out that outsourcing and staff redundancies made organisations vulnerableregarding the knowledge of core processes. Kluge et al. (2001) ague that the value ofknowledge tends to perish quickly over time and that companies need to speed upinnovation and enhance creativity and learning. Finally, Daft (2001) stresses the shiftin the environment and markets of organisations. Ever more organisations have beentransformed recently due to the shift from stable to unstable environments.Accordingly, the uncertainty of the business has escalated, with more externalelements to consider and frequent, unpredictable changes. A growing number oforganisations have adopted team working, organic structures and knowledge-centriccultures as a consequence.There is no agreed definition of KM, even among practitioners. One reason for thislack of agreement stems from the fact that people working in the KM field come froma wide range of disciplines, such as psychology, ma nagement science, organizationalscience, sociology, strategy, 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 organisational effectiveness (Hlupic et al. 2002).In most cases the term is used loosely to refer to a broad collection of organizationalpractices and approaches related to generating, capturing, disseminating knowledgerelevant to the organisation’s business (World Bank 1998).Moreover, there is also a lack of consensus on knowledge itself. Some see knowledgeas a commodity like any other that can be stored and made independent of time andplace, while others see knowledge as social in nature and very dependent on context.Of particular importance is the need to separate the concepts of data, information,tacit knowledge and explicit knowledge (Daft 2001; Hunter et al. 2002). Data can beviewed either as factual, raw material or as signals with no meaning. Information isdata related to other data, has meaning and is refined into structured or functionalforms within a system – for example, client database or directories. The mostfundamental and common classification of organisational knowledge is along theexplicit-tacit dimension. In this classification, explicit knowledge is considered to beformal and objective, and can be expressed unambiguously in words, numbers andspecifications. Hence, it can be transferred via formal and systematic methods in theform of officia l statements, rules and procedures and so is easy to codify. Tacitknowledge, by contrast, is subjective, situational and intimately tied to the knower’sexperience. Thus, it is difficult to formalise, document and communicate to others.Insights, intuition, beliefs, personal skills and craft and using rule-of-thumb to solve acomplex problem are examples of tacit knowledge (Daft 2001; Hunter et al. 2002;Chua 2002). These two categories are closely interlinked so a bipolar map is difficultto draw in practice. To understand completely a written document (explicitknowledge) often requires a great deal of experience (tacit knowledge): ‘Asophisticated recipe is meaningless to someone who has newer stood in a kitchen, andlegal text can be all but incomprehen sible without some legal training’ (Kluge2001:10) for example.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 214.doc
  4. 4. Given the different nature of explicit and tacit knowledge the knowledge managementprocess varies for the two types of knowledge (see Figure 1). Lynn Markus (2001)sets out to improve the use of ICT in knowledge management, and in particular inknowledge re-use. Her attempts are therefore entirely of explicit knowledge character.She takes knowledge creation (as in research or new product development) forgranted, but divides the knowledge ma nagement process into the following stages:capturing or documenting knowledge, packaging knowledge, distributing knowledge(providing people with access to it) and reusing knowledge.Figure 1: Explicit and tacit knowledge management processesExplicit knowledgeKnowledge Capturing Packaging Distributing Using creation knowledge knowledge knowledge knowledge e Tacit knowledge Knowledge Distributing Using creation knowledge knowledgeSource: Based on Lynn Markus (2002) and Daft (2001)Capturing or documenting knowledge can occur in at least four ways, according toLynn Marcus. First, documenting can be a passive by-product of the work process ofvirtual teams or communities of p ractices, who automatically generate archives oftheir informal electronic communications that can be searched later. Second, it canoccur within a structure such as that provided by facilitators using brainstormingtechniques, perhaps mediated by the use of electronic meeting systems. Third,documenting can involve creating structured records as part of a deliberate, before-the-fact knowledge re-use strategy. Finally, it can involve a deliberate, after-the-factstrategy for later re-use, such as learning histories, expert help files or the creation ofa data warehouse.Packaging knowledge is the process of culling, cleaning and polishing, structuring,formatting or indexing documents against a classification scheme. Lynn Markusargues that knowledge distribution can be passive as sending mass mail, newsletters,or establishing a notice board. An active distribution of knowledge involves AfterAction Reviews, selective knowledge pushing and specialised conferences. In the end,using knowledge is divided by Lynn Markus into recall, i.e. that information has beenrestored, in what location, and under which classification, and recognition (that theinformation meets the user’s needs, and actually applying the knowledge). McAdamand Reid (2001) give a different v ersion of knowledge use. According to them, thebenefit of KM is to produce commercial value for the customer, increasingI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 314.doc
  5. 5. innovation, and for employees knowledge management can mean increased autonomyand intrinsic benefit of increased learning.The tacit knowledge management process has fewer parts than the explicit one.Although the knowledge creation process is similar in both cases, the maindifferences lie in the distribution of knowledge. Distribution of tacit knowledge hasbeen most successfully achieved by apprenticeship, communities of practices,dialogue, meetings, informal talks, conferences, lectures and mentorship. The use ofknowledge is also similar to that of the explicit one interpreted by McAdam and Reid.The solid arrows in Figure 1 show the primary flow direction, while the brokenarrows show the more recursive flows. The recursive arrows show that KM is not asimple sequential process. Thus it is likely that in the distribution phase someproblems in the packaging stage might be discovered, leading to changes in thepackaging of knowledge. Similarly, in the knowledge use stage it is often revealedthat a certain type of knowledge is not available or that specific knowledge isoutmoded. More often than not, that would mean that new knowle dge has to bedeveloped (knowledge creation). Probably no company starts at square one, as italready has knowledge that is waiting to be distributed and used.In the early stages of KM, the literature was heavily biased towards technologicalsolutions and lacked any deeper analysis of knowledge. A literature review of KMthemes of articles in ABI/Inform database in 1998 revealed that approximately 70 percent of all themes discussed were related to information technology or informationsystems (Scarbrough and Swan 2001). Moreover, the KM strategies adopted by firmsare predominantly technical in nature. Thus Moffett . (2003) found that 43 per cent ofUK firms had adopted a technical strategy towards KM, 27 per cent of firms had nostrategy at all, 14 per c had cultural strategy (stressing organisational structure, entstrategy, culture and employee emancipation), and only three per cent had a mixtureof technical and cultural strategy. In a similar manner, the KPMG ConsultingCompany came to the following conclusion: The finding of this report confirms that knowledge management is an accepted part of the business agenda... However, the full benefits of KM are being missed and organizations are failing to tackle KM´s real challenges. In particular, they are blind to the employee considerations and many still see knowledge management in purely technical terms. As a result, employees complain of information overload and of policies that fail to reward them for driving KM initiatives – for instance, by sharing and maintaining knowledge. Organizations are failing to grasp the fundamental changes to their day-to-day operations and culture that successful KM implementation requires. (2000: 24)Although KM did originally concentrate on ICT-issues – to codify explicit knowledgein databases for re-use – managers soon faced knowledge management problems.These problems included encouraging employees to use existing knowledge stored indatabases instead of reinventing the wheel. Scarbrough (2003) describes a globalbank, which invented KM in 1996 because a major client left the bank because theyfelt they were not getting an integrated service across countries. Also, the feelingamong the bank’s top management was that resources were being wasted becausedifferent units and departments failed to learn from one another and were thereforeI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 414.doc
  6. 6. continuously ‘reinventing the wheel’. Many managers faced the problem thatemployees did not use the million dollar ICT-systems, but relied on the old personalnetworks to receive relevant information. Furthermore, for a knowledge worker ittends to be a challenge to find a new solution to a problem, but from a company’sperspective that is a waste of time if a good solution is already available. Also,knowledge sharing within organisations is an issue. Hoarding knowledge is commonfor various reasons, such as power relations, property rights over who owns theknowledge and job insecurity. A good example of the latter case is a middle managerfearing about his job in the future quoted in Currie and Kerrin (2003:1035): The experience I have built up over the years is knowledge the organization needs. They have to keep me if they want to benefit from my years of experience. They can’t replace me with a young kid and I’m certainly not going to help them do so by giving away to young kid what I have learned through my years of experience.Finally, there often occur problems in the knowledge creation, or innovation process,where general structure and culture of the organisation seem quite essential.So far, I have given a brief summary of KM, and pointed out some problems in theKM process. The following HRM practices have been found essential for knowledgemanagement (Evans 2003; Scarbrough 2003): KM and HRM strategy; recruitmentand selection; training and development; performance management; reward andrecognition; career management, and creating a learning environment.Human Resource ManagementHuman Resource Management gained much popularity in the 1980s. Beardwell(2001) points out in a su mmary of the field that there exists considerable controversyas to the origin, characteristics and philosophy of HRM, and its capacity to influencethe nature of the employment relationship. Moreover, the debate surrounding HRMcan be characterised by four predominant approaches (Beardwell 2001:9): • That HRM is no more than a renaming of basic personnel functions, which does little that is different from the traditional practice of personnel management. • That HRM represents a fusion of personnel management and industrial relations that is managerially focused and derives from a managerial agenda. • That HRM represents a resource-based conception of the employment relationship, some elements of which incorporate a developmental role for the individual employee and some elements of cost minimisation. • That 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 personnelmanagement. They argue that personnel management is workforce-centred, directedI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 514.doc
  7. 7. mainly at employees. This approach includes finding and training them, arranging forthem to be paid, explaining management’s expectations, justifying management’sactions and satisfying employee’s work-related needs. The people who work in theorganisation are the starting point, and they are a resource that is relatively inflexiblein comparison with other resources, such as cash and mate rials. HRM, on the otherhand, is resource-centred, according to Torrington and Hall. HRM is directed mainlyat management needs for human resources (not necessary employees) to be providedand deployed. Demand rather than supply is the focus of activity. It is totallyidentified with management interests, being a general management activity, and isrelatively distant from the workforce as whole, as employee interests can be enhancedonly through effective overall management. Finally, it is argued by Torrington andHall (1998) that both personnel management and HRM can be present in oneorganisation, sometimes in one person. This duality can cause tension and ambiguity,but in the long run there is a tendency for HRM duality to increase at the expense ofpersonnel management.Independent of the similarities or differences between HRM and personnelmanagement, the core business of the HR function is to develop the employees inaccordance to the business strategy, select and hire people, train and develop the staff,evaluate their performance, reward them, and create a culture of learning. The nextsection turns to these issues, and focus upon their role in enhancing knowledgemanagement.KM and HRM strategiesBeardwell (2001) points out that strategy has been one of the cornerstones of theHRM debate since the 1980s. The extent to which HRM has come to play a role in thedirection and planning of organisations has been a persistent theme not only amongacademics but also among practitioners in the field. B eardwell also mentions thatthere are two rival approaches in strategic HRM. On the one hand is the matchingmodel emphasising the necessity of ‘tight fit’ between HR strategy and businessstrategy. On the other hand is the more flexible Harvard model. Tha t modelrecognises that there are a variety of stakeholders in the organisation, such asshareholders, various groups of employees, the government and the community. Thecreation of HRM strategies are bound to recognise these interests and fuse them asmuch as possible into the human resource strategy and ultimately the businessstrategy. 1Schuler and Jackson (2003) link competitive strategies with HRM practices in aninteresting way. They make use of Porter’s competitive advantage, as the essence ofcompetitive strategy (a prescriptive approach). Emerging from his discussion is thatthere are three competitive strategies that firms can use to gain competitive advantage.The first, innovative strategy, is used to develop products or services different fromthose of competitors. Enhancing product and/or service quality is the primary focus ofthe second strategy, quality enhancement strategy, while with the final one, costreduction strategy, firms typically try to gain competitive advantage by being thelowest-cost producer (Schuler and Jackson 2003).The three strategies require people with different knowledge, abilities and technicalskills, or role behaviours, as Schuler and Jackson term it. When deciding what humanI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 614.doc
  8. 8. resource practices to use to link with which competitive strategy, organizations canchoose from five human resource practice ‘menus’. According to Schuler and Jackson(2003) these aspects are planning, staffing, appraising, compensating, and training anddevelopment choices. Each dimension runs along a continuum. Planning choices caneither be formal or informal, short term or long term, based on job simplification orjob enrichment and so on.Schuler and Jackson argue that firms pursuing the innovative strategy are likely tohave the following HRM characteristics: (1) jobs that require close interaction and co-ordination among groups of individuals, (2) performance appraisals that are morelikely to reflect long-term and group-based achievements, (3) jobs that allowemployees to develop skills that can be used in other positions in the firm, (4)compensation systems that emphasize internal equity rather than external or market-based equity, (5) pay rates that tend to be low, but that allow employees to bestockholders and have more freedom to choose the mix of components (salary, bonus,stock options) that make up their pay package and (6) broad career paths to reinforcethe development of a broad range of skills. These practices facilitate co-operative,interdependent behaviour that is oriented towards the longer term, and fosterexchange of ideas and risk taking (Schuler and Jackson 2003).The key HRM practices of firms that pursue quality-enhancement strategy are likelyto have (1) relatively fixed and explicit job descriptions, (2) high levels of employeeparticipation 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 orientated, (4) relatively egalitarian treatment of employees and someguarantees of employment security and (5) extensive and continuous training anddevelopment of employees. These practices facilitate quality enhancement by helpingto ensure highly reliable behaviour from individuals who can identify with the goalsof the organization and, when necessary, be flexible and adaptable to new jobassignments and technological changes.In attempting to gain competitive advantage by pursuing a strategy of cost reduction,key human resource practice choices include, according to Schuler and Jackson(2003): (1) relatively fixed (stable) and explicit job descriptions that allow little roomfor ambiguity, (2) narrowly designed jobs and narrowly defined career paths thatencourage specialization, expertise, and efficiency, (3) short-term, result-orientatedperformance appraisals, (4) close monitoring of market pay levels for use in makingcompensation decisions and (5) minimal levels of employees training anddevelopment. These practices maximize efficiency by providing means formanagement to monitor and control closely the activities of employees.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 714.doc
  9. 9. Schuler and Jackson (2003:318) summarise the three HRM practices thus: Thus, the innovation strategy has significant implications for human resource management. Rather than emphasizing managing people so that they 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 combine strategies, such aslow cost and quality, or quality and innovation. These combinations might result inthe challenge of stimulating and rewarding different role behaviours while at the sametime trying to manage the conflicts and tensions that may arise as a consequence. Themain features of Schuler and Jackson’s link between strategy and HRM practices arepresented in Figure 2.Figure 2: The link between strategy and HRM practices Skill requirements Broad Creative Smart HRM HRM Strategy Innovation Effectiveness Hard HRM NarrowHansen et al. (1999) argue that there are basically two strategies for managingknowledge. They term these strategies ‘codification’ and ‘personalization’. Theformer refers to the codification of knowledge and its storage in databases where itcan be accessed and used readily by anyone in the company. Such organisationsinvest heavily in ICT for projects like intra net, data warehousing and data mining,knowledge mapping (identifying where the knowledge is located in the firm), andelectronic libraries. This increases effectiveness and growth (Hansen et al. 1999:110):‘The reuse of knowledge saves work, reduces communications costs, and allows acompany to take on more projects.’ It is thus closely related to exploitative learning,which tends to refine existin g capabilities and technologies, forcing throughstandardization and routinization, and is risk-averse (Clegg and Clarke 1999).I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 814.doc
  10. 10. Personalization refers to personal development of knowledge and it is shared mainlythrough direct person-to-person contacts. Dialogues, learning histories, andcommunities of practise are among the techniques that have to be used in order tofacilitate tacit knowledge sharing. It is based on the logic of ‘expert economics’, thatis, it is used primarily to solve unique problems, w here rich, tacit personal knowledgeis needed, such as in strategy consulting. Personalization and explorative learning areclosely related, where explorative learning is associated with complex search, basicresearch, innovation, risk-taking and more relaxed controls. The stress is onflexibility, investment in learning and the creation of new capabilities (Clegg andClarke 1999). The codification and personalization strategies help to frame themanagement practices of the organization as a whole as outlined in Table 1.Table 1: Knowledge Management Strategies Codification Strategy Personalization StrategyGeneral Strategy Develop ICT system that codifies, Develop networks for linking stores, disseminates and allows re- people so that tacit knowledge can use of knowledge be sharedUse of ICT Invest heavily in ICT Invest moderately in ICTHuman Resources: Hire new college graduates who Hire MBAs who like problem -Recruitment and Selection are well-suited to the re-use of solving and can tolerate ambiguity knowledge and the implementation of solutions Train people through on-to-oneTraining and Development Train people in groups and through mentoring computer-based distance learningRewards Systems Reward people for using and Reward people for directly sharing contributing to document databases knowledge with othersAs Table 1 indicates, Hansen et al.’s study makes several useful contributions toHRM. 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 thecritical ingredient of competitiveness. Second, this account stresses the need for bestfit between HRM practices such as reward systems and an organization’s approach tomanage knowledge work. According to Hansen et al. (1999:113) the relevant fit is asfollows: 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.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 914.doc
  11. 11. Hansen et al. warn against mixing strategies but instead suggest u sing one strategypredominantly and use the second strategy to support the first: ‘We think of this as an80-20 split: 80 per cent of their knowledge sharing follows one strategy, 20 per centthe other’ (1999:112). Other studies however have found that a mix of strategies wereusually the case in highly successful knowledge management companies (Kluge et al.2001). For example, as Davenport (1998:54) states, ‘successful knowledge projectsusually address knowledge transfer through various channels, recogniz ing that eachadds value in a different way and that their synergy enhances use’.Recruitment and selectionGiven that knowledge management is often adopted by organizations in complex,unpredictable environments, traditional selecting and recruitment practices have moreoften than not to be modified. Thus, Scarbrough (2003) points out that in innovativeorganisations the selection of individuals with both appropriate skills and appropriateattitudes has been identified as crucial to the project team’s ability to integrateknowledge from diverse sources. He stresses that conventional approaches toselection may need to be revised in the light of the unpredictable knowledge flowsinvolved in innovation projects. In such settings, it may simply be too difficult tospecify the requisite knowledge and expertise in advance. This view is closely relatedto the social process model of recruitment and selection deriving from socialpsychology. Its primary concern is to analyse the often immediate social contextassessors use to make judgements and to show how those judgements are not theoutcome of objective, quantifiable processes but the result of more complex socialjudgements. The main assumptions of this model are: that people change constantly inthe course o their careers in firms; that subjective self-perceptions are critical to fpeople’s work motivation and performance; that self-perception are influenced byassessment selection procedures; and that modern jobs tend to involve interaction,negotiation and mutual influence, often taken place in multi-skilled, flexible, self-directed work teams (Iles, 1999).Currie and Kerrin (2003) argue that traditional recruitment and selection practices caneven block knowledge sharing between groups or departments in firms organisedaccording the functional principle. In their study of a pharma ceutical company, theyfound that assessment centres through which graduates were selected werefunctionally focused, with sales assessment centres and marketing assessment centresbeing run separately. This strengthens the sub-cultures of functions and madeknowledge sharing between functions very difficult. Currie and Kerrin emphasis thatin order to enhance knowledge sharing employees with an appreciation of others’perspectives have to be preferred, and they encourage the use of lateral careermovement by employees in order to develop the necessary appreciation of others’perspectives.Other studies highlight the importance of a fit between new recruits and theorganisation’s knowledge culture. These studies are, therefore, related to the person-organisational fit literature within HRM, stressing a fit between organisational cultureand hiring of suitable personality, as well as the socialisation of individuals into theculture of the firm (see Kristof 1996; Judge and Cable 1997). Swart and NicholasKinnie (2003) description of recruitment in a software company in a niche market.The company had extremely strict selection criteria, which served to strengthenI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1014.doc
  12. 12. knowledge integration. The most important element in the recruitment process wasthe company’s culture, not technical ability. A senior software engineer wasresponsible for recruitment. He usually used his wide networks within the industry toidentify candidates. At this stage , it was normally taken for granted that the employeewould have adequate technical tacit knowledge, as technically competent employeeswould be well-known within their industry, and only excellent software engineerswere invited for an interview. Swart and Kinnie continue by saying (2003:67): The senior software engineer and some of the directors then conducted interviews, which were very informal and took the form of a ‘communication of ideas or solutions’ to a particular software problem. The ability to generate innovative thought and then to communicate these ideas was important criteria in the selection process. Recruits needed to show how they would share their innovative ideas and cutting-edge know-how within a project team. This formed the basis on which the ‘knowledge network’ worked (as one senior software engineer referred to it).Similarly, Robertson and Hammersley (2000) describe the selection process in aconsulting firm where candidates were screened out in two interviews. Theseinterviews involved several consultants from a number of disciplines as well as theHR manager. The overriding importance was on the candidate’s ability to ‘fit in’ tothe firm’s distinctive way of working, which involved willingness and ability to workin groups and share knowledge. Moreover, psychometric tests were used but littleweight was placed on their results. 2 Usually, the majority of the candidates wererejected. On this finding Robertson and Hammersley write (2000:246): ‘...atypicalapproaches to recruitment and selection have also be noted by other researchers inKIFS ... highlighting what Keegan terms the mis-fit between these practices and thosewithin mainstream HRM literature.’Finally, Evans (2003) argues for revising the interview and selection processes so thatthey gather evidence about individuals’ knowledge-building behaviours. Newquestions need to be asked, such as: How well networked is the individual? What roledoes he/she play in the networks they belong to? What types of communities ofpractice do they belong to? How have they helped develop their colleagues? How dothey keep their own knowledge up-to-date?Training and developmentRobertson and Hammesley (2000) point out that continuous professional developmentis considered to be essential to professional and knowledge workers. In order to stayat the forefront of their professional fields they must be constantly aware ofdevelopments within their specific disciplines and professions and they need toparticipate in activities that offer opportunities to further their own professionaldevelopment. Many researchers on knowledge management take this as given, and donot devote considerable attention to it. Hansen et al. (1999) argue, as already noted,that codification and personalisation strategies require that organisations hire differentkinds of people and train them differently. Codification firms tend to hireundergraduates and train them in groups to be implementers, that is to develop andimplement change programs and information systems. Personalisation firms hireMBA graduates to be inventors, that is, to use their analytical and creative skills onI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1114.doc
  13. 13. unique business problems. Once on board, their most important training comes fromworking with experienced consultants who act as mentors.Performance managementPerformance management identifies who or what delivers the critical performancewith respect to the business strategy and objectives, and ensures that performance issuccessfully carried out (Roberts 2001). Evans (2003) points out that on the basis ofwhat gets measured normally gets done it is important that firms consider theknowledge component in their performance management systems. Moreover, sherecommends that a balance scorecard approach be adopted if employees are to realisethat the firm is taking knowledge management seriously.It has already been noted that Schuler and Jackson (2003) argue that the generalstrategy of organisations tend to shape HRM practices. They noted vast differencesbetween, among other things, performance management in organisations stressinginnovation on one hand, and effectiveness on the other. In the former the performancemanagement system tends to focus on long-term and group-based achievements,while in the latter, performance appraisals tend to be short-term and result-oriented.In their study of a pharmaceutical company Currie and Kerrin (2003) found out thatthe performance management system inhibited knowledge sharing, as much of theconflict between different functions was due to the divergent objectives set out foremployees in the performance agreements. For example, objectives were volumefocused for sales employees and focused upon brand profitability for marketingemployees. The objectives were, moreover, short-term and mostly measurable innature. Any long-term considerations, such as development of learning capability wastherefore very marginal, and considered the ‘merely nice to do’ (p. 1037). Theopposite was found in a software company. Swart and Kinnie (2003) argue that along-term developmental focus on performance management was one of the centralfactors in integrating knowledge within the organisation. The company had a complexperformance management process, which evolved through the suggestions andpractice of the software engineers. In the first stage, project performance reviews,conducted by the project manager focused on project efficiency and the employee’stechnical ability within the project. Here, three forms of review were implemented: aself-appraisal focusing on jointly set objectives, project performance, technical ability,self-management, team contribution and customer satisfaction; a peer review of thesame dimensions; and a management review of the employee. A direct link wasestablished between project performance reviews and annual increases. In the secondstage, performance appraisal was conducted bi-annually by a mentor, focusing onemployee development and spanned project boundaries, thereby ensuring that practicewas shared throughout the organisation. The mentor collated all project performancereviews, completed a protégé appraisal on overall performance areas and conducted aperformance discussion.Performance management needs to consider, according to Evans (2003, 171), thedifferent ways in which in dividuals contribute knowledge. Managers need toconsider:I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1214.doc
  14. 14. • Knowledge acquisition – What knowledge has the individual brought into the organisation? • Knowledge sharing – How has the individual applied their knowledge to help others to develop? • Knowledge re-use – How frequently has the individual re-used existing knowledge and what has been the outcome? • Knowledge development – Has the individual actively developed his/her own knowledge and skills? How well has the individual applied his/her learning?Reward and recognitionReward systems indicate what the organisation values and shapes individuals’behaviour. Evans (2003) argues that there are mixed views as to whetherorganisations need to introduce separate rewards to encourage knowledge buildingand sharing. On the one hand, there is no need for separate rewards in theory, iforganisations have introduced a competency framework that includes knowledgebuilding and sharing behaviours, and which is linked to the performance managementsystem. On the other hand, another school of thought argues that rewards forknowledge sharing and reuse should be more immediate and be of a public nature, asthis type of behaviour is important to the organisation.Zárraga and Bonache (2003) write that traditional reward systems reward those whoproduce rather than those who share. Therefore, if an individual is rewarded (bypromotion, for example) for what he/she knows and the others do not know, he/she isbeing assessed as doing his/her job better than his/her colleagues, and sharing anddisseminating has a high cost to the individual. Knowledge sharing rewards istherefore about lowering the cost of sharing or, similarly, increasing the benefitassociated with that type of behaviour. Furthermore, they argue that group incentives,promotion systems that encourage individuals to be more collaborative and 360°appraisal systems are practices that help create a suitable climate for the transfer andcreation of knowledge.Studies on knowledge workers have found that they tend to have high need forautonomy, significant drives for achievement, stronger identity and affiliation with aprofession than a company, and a greater sense of self-direction. These characteristicsmake them likely to resist the authoritarian imposition of views, rules and structures(Depres and Hiltrop 1995; Hertzberg 1997; Horwitz et al. 2003). Accordingly,mixtures of rewards are needed to motivate knowledge workers. These include:equitable salary structures; profit-sharing or equity-based rewards; a variety ofemployee benefits; flexibility over working time and location, as well as being givencredit for significant pieces of work. Also, a reward is needed in those cases wereparticipation in communities of practices is expected of knowledge workers, for theirbuilding up and keeping the community alive. Non-financial rewards are alsomotivating for knowledge workers. For many knowledge workers it is as motivatingto have free time to work on knowledge-building projects, going to conferences, orspending time on interesting projects, as monetary rewards (Evans 2003; Depres andHiltrop 1995). Thus, in their study on the ways in which Singapore companies attract,motivate and retain knowledge workers, Horwitz et al. (2003:34) found that in ‘termsof motivating strategies which may reduce knowledge worker turnover, it appears thatI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1314.doc
  15. 15. non-financial strategies may have had a relationship with lower turnover. Theseincluded leadership, fulfilling work and participation in key decisions.’Career managementCurrie and Kerrin (2003) observed in their study of a pharmaceutical company thatthrough different job placements during their training period, or more generallythrough their career, graduates and a limited number of senior staff built up aninformal network of contacts that they trusted and who trusted them. This facilitatedthe sharing of knowledge. Others have also noted how career systems are important inshaping the flow of employees over time and the way that this interacts with theacquisition and exchange of knowledge (Evans 2003; Scarbrough 2003; Swart andKinnie 2003).Creating a learning environmentEvans (2003) stresses the role of HR managers in helping their organisation todevelop an organisational culture that supports knowledge building and sharing. Thesteps necessary in such transformation process include: agreeing strategic prioritiesand areas for change, helping demystify knowledge management by linkingknowledge management activity to established business processes and HRMpractices, and engaging others in the knowledge management dialogue. SpecificallyHR can add value by developing a knowledge awareness programme as a separatedevelopment activity, ensuring that the right leadership and receiving the rightdevelopmental support. Most importantly, HR has to build a culture in which learningfrom day-to-day practice is valued, encouraged and supported by providing time,public and private spaces for learning, providing learning resources (informationcentres, special learning laboratories, virtual university), and reward sharers andlearners.Conclusion and ImplicationsThis paper has concentrated on how HRM practices can encourage knowledge sharingand re-use. Attention has been given to strategy, selection and recruitment processes,training, reward systems, performance management, career management and thecreation of learning environments. Table 2 summarises some of the many possiblerelationships between HRM and KM. Most importantly, the table illustrates thatmanagement practices do not operate alone, divorced from the rest of theorganisation. Practices are, instead, interrelated and require a degree of compatibilityand careful coordination.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1414.doc
  16. 16. Table 2: Exploitative and explorative learning strategies towards knowledgemanagement Exploitative learning Explorative learning Strategy strategyGeneral strategy Effectiveness, low cost Innovation, new capabilitiesKM Strategy Codification of knowledge Personalisation of knowledgeFocus Short-, medium-term Long-t ermHRM practices: Psychometric testing, Social process, cultural fit ofRecruitment descriptions of knowledge share and networkingReward Mostly monetary, varied Non-monetary and monetary, group incentives, collaborative rewardsPerformance Hard objectives, result- Developmental objectivesManagement oriented, short-term, Balance-scorecard, 360º, functionally specific goals group-orientation, long-termTraining At start, then continues, Mentorship, on-going, broad skills specific skillsCareer Management Individual advancement Integrated part of organisation knowledge development and transferDesired Behavioural Documenting knowledge, Risk-taking, exchange ofOutcomes low risk-taking, specialisation ideas, co-operation, long-term effectiveness, short-term commitmentThe KM and HRM strategies presented previously have many things in common.Thus the codification strategy and low -cost strategy both focus on effectiveness,lowering cost and standardisation. That is the essence of exploitative learning.Similarly, personalisation strategy and innovation strategy centre on new capabilities,innovation and new ways of working. This is at the heart of explorative learning. Thegeneral strategy has an overall impact on HRM policy as stressed in the table. It isnot necessary to mention each HRM practice in the table, but interestingly,exploitative learning strategy fosters the following behavioural outcomes: peopledocument their knowledge on databases, low risk-taking is preferred, there is aspecialisation of tasks, effectiveness and short -term commitment between employersand employees. This can be termed effective HRM. In essence, the codification of aknowledge strategy is an attempt to mechanise knowledge. The explorative learningstrategy, on the other hand, encourages the following behavioural outcomes: risk-taking, co-operation, exchange of ideas and long-term commitment. I, therefore, termit as ‘creative HRM’.It is clear then, that there are at least two strategies associated with knowledgemanagement. As with all other strategies, these can be mixed within firms, such as anexplorative learning strategy being dominant within R&D, while exploitative learningstrategy being common within production departments. However, as Hansen et al.(1999) emphasises, the general investment in ICT, the hiring of particular staff, theirI:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1514.doc
  17. 17. training, as well as job design, usually mean that one strategy becomes dominantwithin firms. Hansen et al. also argue that firms that offer standardised and matureproducts and services tend to choose the exploitative strategy, while firms offeringcustomised and innovative products tend to choose explorative strategy. Givenglobalisation, rapid technological changes, shifting markets, and ever more complexorganisational environments, the explorative learning strategy and creative HRM willprobable be utilised by a ever growing number of organisations in the near future.However, it is a paradox that many managers still rely on the e xploitative strategy dueto the prevalent ideology of work standardisation and extensive division of labour(Warhurst 2002).Knowledge management and the role of human resource management in knowledgemanagement are still in their infancy. Most of the research conducted so far is basedon case studies and interviews, so generalisations of results are problematic. Formerstudies reveal that HRM strategies may differ depending on mediating variables suchas industry type, ownership structure (multinational–domestic) and cross-culturalfactors (Horwitz et al. 2003). Future research would thus benefit from longitudinalstudies, cross-national comparisons, as well as industrial sectors differences. Also,basic concepts of the debate have to be defined and theor ies developed. Futureresearch should address these shortcomings and in this paper I have attempted to pushthe theoretical framework further ahead.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1614.doc
  18. 18. ReferencesBeardwell, I. (2001) ‘An introduction to human resource management: strategy, style or outcome’ in I. Beardwell and L. Holen (eds.) In Human Resource Management: A contempory approach, Harlow: Prentice Hall.Carter, G. and Scarbrough, H. (2001) ‘Towards a second generation of KM? The people management challenge’, Education and Training, 43:4/5, 215-224.Chua, A. (2002) ‘Taxonomy of organisational knowledge’, Singapore Management Review, 24:2, 69-76.Clegg, S. and Clarke, T. (1999). ‘Intelligent Organizations?’ in S. R. Clegg, E. Ibarra- Colado and L. Bueono-Rodriquez (eds.) Global Management: Universal Theories and Local Realities, London: Sage.Currie, G. and Kerrin, M. (2003) ‘Human resource management and knowledge management: enhancing knowledge sharing in a pharmaceutical company’, International Journal of Human Resource Management, 14:6, 1027-1045.Daft, R.F. (2001) Organization Theory and Design, Cincinnati: South-Western College Publishing.Davenport, T.H., De Long, D.W. and Beer, M.C. (1998) ‘Successful Knowledge Management Projects’, MIT Sloan Management Review, 39:2, 43-57.Despres, C. and Hiltrop, J.M. (1995) ‘Human Resource Managment in the Knowledge Age: Current practice and perspectives on the future’, Employee Relations, 17:1, 9-24.Edvardsson, I.R. (2003) Að miðla og nýta þekkingu. Hugleiðingar um þekkingarstjórnun. Unpublished mimeo, University of Akureyri.Evans, C. (2003). Managing for Knowledge: HR’s strategic role, Amsterdam: Butterworth-Heinemann.Hansen, M.T., Nohria, N. and Tierney, T. (1999) ‘What’s your strategy for managing knowlegde?’ Harvard Business Review, 77, 106-116.Herzberg, F. (1997) ‘The Motivation – Hygiene Theory’ in D.S. Pugh (ed.) Organization Theory. Selected Readings, London: Penguin Books.Hlupic, V., Pouloudi, A. and Rzevski, G. (2002) ‘Towards an Integrated Approach to Knowledge Management: “Hard”, “Soft” and “Abstract” Issues’, Knowledge and Process Management, 9:2, 90-102.Horowitz, F.M., Heng, C.T., and Quazi, H.A. (2003) ‘Finders, keepers? Attracting, motivating and retaining knowledge workers’, Human Resource Management Journal, 13:4, 23-44.Hunter, L., Beaumont, P. and Lee, M. (2002) ‘Knowledge management practice in Scottish law firms’, Human Resource Management Journal, 12:2, 4-21.Iles, P. (1999) Managing Staff Selection and Assessment, Buckingham: Open University Press.Judge, T.A. and Cable, D.A. (1997) ‘Applicant Personality, Organizational Culture, and Organizational Attraction’, Personnel Psychology, 50, 359-394.Kluge, J., Wolfram, S. and Licht, T. (2001) Knowledge Uplugged. The McKinsey & Company global survey on knowledge management. Houndsmills: Palgrave.KPMG Consulting (2000) Knowledge Management Research Report 2000 , Annapolis/London.Kristof, A.L. (1996) ‘Person-Organization Fit: An integrative review of its conceptualisations, measurement, and implications’, Personnel Psychology, 49, 1-49.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1714.doc
  19. 19. Little, S., Ouintas, P. and Ray, T. (2002) ‘PART III Knowledge, Innovation and Human Resources’ in S. Little, P. Ouintas and T. Ray (eds.) Managing Knowledge: An Essestial Reader, London: The Open University in association with Sage Publications.Lynne Markus, M. (2001) ‘Toward a Theory of Knowledge Reuse: Types of Knowledge Reuse Situations and Factors in Reuse Success’, Journal of Management Information Systems, 18:1, 57-93.McAdam, R. and Reid, R. (2001) ‘SME and large organisation perception of knowledge management: comparisons and contrasts’, Journal of Knowledge Managment, 3:3, 231-241.Moffett, S., McAdam, R., Parkinson, S. (2003) ‘An empirical analysis of knowledge management applications’, Journal of Knowledge Management, 7:3, 6-26.Mount, M.K., Barrick, M.R. and Steward, G.L. (1998) ‘Five -Factor Model of Personality and Performance in Jobs Involving Interpersonal Interactions’, Human Performance, 11, 145-165.Petersen, N.J. and Poulfelt, F. (2002) Knowlegde Management in Action: A Study of Knowledge Management in Management Consultancies, Working Paper 1-2002, Kaupmannahöfn: Copenhagen Business School.Roberts, I. (2001) ‘Reward and performance management’ in I. Beardwell and L. Holen (eds.) Human Resource Management: A contemporary approach , Harlow: Prentice Hall.Robertson, M. and Hammersley, G.O. (2000) ‘Knowledge management practices within a knowledge -intensive firm: the significance of the people management dimension’, Journal of European Industrial Training, 24:2/3/4, 241-253.Scarbrough, H. (2003) ‘Knowledge management, HRM and the innovation process’, International Journal of Manpower, 24:5, 501-516.Scarbrough, H. and Swan, J. (2001) ‘Explaining the diffusion of knowledge management: The role of fashion’, British Journal of Management, 12, 3-12.Schuler, R.S. and Jackson, S. E. (2002) ‘Linking Competitive Strategies with Human Resource Management Practices’ in S. Little, P. Ouintas and T. Ray (eds.) Managing Knowledge: An Essential Reader, London: The Open University in association with Sage Publications.Steinthorsson, R.S. (2003) Stefnumiðuð stjórnun: Fimm greiningarlíkön. Tímarit um viðskipi og efnahagsmál, 1:1, 25-52.Swarts, J. and Kinnie, N. (2003) ‘Sharing knowledge in knowledge-intensive firms’, Human Resource Management Journal, 13:2, 60-75.Torrington, D. and Hall, L. (1998) Human Resource Management, London: Prentice Hall.Warhurst, C. (2002) ‘Towards the “better job”: Scottish work and employment in the “knowledge age” in G. Hassan and C. Warhurst (eds.) Tomorrow’s Scotland , London: Lawrence & Wishart.World Bank (1998) What is knowledge management? A background to the World Development Report. Washington, DC: World Bank.Zárraga, C. and Bonache, J. (2003) ‘Assessing the team environment for knowledge sharing: an empirical analysis’, International Journal of Human Resource Management, 17:7, 1227-1245.I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1814.doc
  20. 20. Endnotes1 This represents the debates within the strategy approach in general. On the one handthere is the prescriptive approach, where the strategy process is seen as astraightforward rational process, where top management can both analyse the businessenvironment and implement the most appropriate strategy within the company. Theemergent strategy approach, on the other hand, looks at strategy as a process, and aco-operative activity of employees, customers and top management. Also, it statesthat the planning stage cannot easily be separated from the implementation stage(Steinthorsson 2003).2 According to the adherences of psychometric testing (Five Factor Model ofPersonality), then openness to experience (imaginative, original, unconventional, andindependent individuals) would fit quit well to innovative and knowledge sharingorganisational culture. Moreover, these qualities could be codified and measured(Judge and Cable 1997; Mount et al. 1998).I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1914.doc