Media 61995 en

Knowledge Management and
Creative HRM

Professor Ingi Runar Edvardsson
University of Akureyri, Iceland

Occasional Paper 14

Department of Human Resource Management
University of Strathclyde

2003

Knowledge Management and Creative HRM

Introduction

Knowledge management (KM) is about developing, sharing and applying knowledge
within the organization to gain and sustain a competitive advantage (Petersen and
Poulfelt 2002). How, then, is human resource management (HRM) related to
knowledge management? Scholars have argued recently that knowledge is dependent
on people and that HRM issues, such as recruitment and selection, education 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; Robertson and
Hammersley 2000). Stephen Little, Paul Quintas and Tim Ray go as far as to trace the
origin 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 as
strategy, selection and hiring, training, performance management, and remuneration
have on the creation and distribution of knowledge within firms. Second, the paper
attempts to assess whe ther or not knowledge management requires a particular human
resource strategy.

This paper is a work in progress based on a literature review. However, at the end of
the paper a synthesis of previous debate is presented to enrich the theoretical debates.

Knowledge Management

The popularity of KM has increased rapidly, especially after 1996, and it has become
a central topic of management philosophy and a management tool. This popularity is
reflected in the growing number of articles and books on the topic. In 1995 there were
45 articles about knowledge management in the ABI/Information database, 158 in
1998, and in 2002 the number has increased to 835 (Edvardsson, 2003; Petersen and
Poulfelt 2002). Specific journals have even been established. In 1997, the Journal of
Knowledge Management and Knowledge and Process Management were introduced,
and the Journal of Intellectual Capital was introduced in 2000 (Petersen and Poulfelt
2002). Many organisations have also introduced knowledge management
programmes. A recent KPMG survey of 423 leading European and American
companies found that 68 per cent of respondents were undertaking some kind of KM
imitative (KPMG 2000). Another recent UK survey found that 64 per cent of the
responding firms had introduced KM and 24 per cent were at the introduction stage
(Moffett et al. 2003).

I:I-rootofficeDepartmental CommitteesResearch CommitteeOccasional PapersPapersOccasional Paper 1
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Scarbrough and Swan (2001) argue that the rise and growth of KM is one of the
managerial responses to the empirical trends associated with globalisation and post-
industrialism. These trends include the growth of knowledge worker occupations, and
technological advances created by ICT. In organisational terms, they argue, this new
era is characterised by flatter structures, debureaucratisation and ‘virtual’ or
networked organisational forms. As already noted Little, Quintas and Ray (2002)
point out that outsourcing and staff redundancies made organisations vulnerable
regarding the knowledge of core processes. Kluge et al. (2001) ague that the value of
knowledge tends to perish quickly over time and that companies need to speed up
innovation and enhance creativity and learning. Finally, Daft (2001) stresses the shift
in the environment and markets of organisations. Ever more organisations have been
transformed recently due to the shift from stable to unstable environments.
Accordingly, the uncertainty of the business has escalated, with more external
elements to consider and frequent, unpredictable changes. A growing number of
organisations have adopted team working, organic structures and knowledge-centric
cultures as a consequence.

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 disciplines, such as psychology, ma nagement science, organizational
science, 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 organizational
practices and approaches related to generating, capturing, disseminating knowledge
relevant to the organisation’s business (World Bank 1998).

Moreover, there is also a lack of consensus on knowledge itself. Some see knowledge
as a commodity like any other that can be stored and made independent of time and
place, 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 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 – for example, client database or directories. The most
fundamental and common classification of organisational knowledge is along the
explicit-tacit dimension. In this classification, explicit knowledge is considered to be
formal and objective, and can be expressed unambiguously in words, numbers and
specifications. Hence, it can be transferred via formal and systematic methods in the
form of officia l statements, rules and procedures and so is easy to codify. Tacit
knowledge, by contrast, is subjective, situational and intimately tied to the knower’s
experience. 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 a
complex 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 difficult
to draw in practice. To understand completely a written document (explicit
knowledge) often requires a great deal of experience (tacit knowledge): ‘A
sophisticated recipe is meaningless to someone who has newer stood in a kitchen, and
legal text can be all but incomprehen sible without some legal training’ (Kluge
2001:10) for example.

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Given the different nature of explicit and tacit knowledge the knowledge management
process 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 in
knowledge re-use. Her attempts are therefore entirely of explicit knowledge character.
She takes knowledge creation (as in research or new product development) for
granted, 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 processes

Explicit knowledge

Knowledge Capturing Packaging Distributing Using
creation knowledge knowledge knowledge knowledge
e

Tacit knowledge

Knowledge Distributing Using
creation knowledge knowledge

Source: Based on Lynn Markus (2002) and Daft (2001)

Capturing or documenting knowledge can occur in at least four ways, according to
Lynn Marcus. First, documenting can be a passive by-product of the work process of
virtual teams or communities of p ractices, who automatically generate archives of
their informal electronic communications that can be searched later. Second, it can
occur within a structure such as that provided by facilitators using brainstorming
techniques, 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-fact
strategy for later re-use, such as learning histories, expert help files or the creation of
a data warehouse.

Packaging knowledge is the process of culling, cleaning and polishing, structuring,
formatting or indexing documents against a classification scheme. Lynn Markus
argues that knowledge distribution can be passive as sending mass mail, newsletters,
or establishing a notice board. An active distribution of knowledge involves After
Action Reviews, selective knowledge pushing and specialised conferences. In the end,
using knowledge is divided by Lynn Markus into recall, i.e. that information has been
restored, in what location, and under which classification, and recognition (that the
information meets the user’s needs, and actually applying the knowledge). McAdam
and Reid (2001) give a different v ersion of knowledge use. According to them, the
benefit of KM is to produce commercial value for the customer, increasing

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innovation, and for employees knowledge management can mean increased autonomy
and 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 main
differences lie in the distribution of knowledge. Distribution of tacit knowledge has
been most successfully achieved by apprenticeship, communities of practices,
dialogue, meetings, informal talks, conferences, lectures and mentorship. The use of
knowledge 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 broken
arrows show the more recursive flows. The recursive arrows show that KM is not a
simple sequential process. Thus it is likely that in the distribution phase some
problems in the packaging stage might be discovered, leading to changes in the
packaging of knowledge. Similarly, in the knowledge use stage it is often revealed
that a certain type of knowledge is not available or that specific knowledge is
outmoded. More often than not, that would mean that new knowle dge has to be
developed (knowledge creation). Probably no company starts at square one, as it
already has knowledge that is waiting to be distributed and used.

In the early stages of KM, the literature was heavily biased towards technological
solutions and lacked any deeper analysis of knowledge. A literature review of KM
themes of articles in ABI/Inform database in 1998 revealed that approximately 70 per
cent of all themes discussed were related to information technology or information
systems (Scarbrough and Swan 2001). Moreover, the KM strategies adopted by firms
are predominantly technical in nature. Thus Moffett . (2003) found that 43 per cent of
UK firms had adopted a technical strategy towards KM, 27 per cent of firms had no
strategy at all, 14 per c had cultural strategy (stressing organisational structure,
ent
strategy, culture and employee emancipation), and only three per cent had a mixture
of technical and cultural strategy. In a similar manner, the KPMG Consulting
Company 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 knowledge
in databases for re-use – managers soon faced knowledge management problems.
These problems included encouraging employees to use existing knowledge stored in
databases instead of reinventing the wheel. Scarbrough (2003) describes a global
bank, which invented KM in 1996 because a major client left the bank because they
felt they were not getting an integrated service across countries. Also, the feeling
among the bank’s top management was that resources were being wasted because
different units and departments failed to learn from one another and were therefore

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continuously ‘reinventing the wheel’. Many managers faced the problem that
employees did not use the million dollar ICT-systems, but relied on the old personal
networks to receive relevant information. Furthermore, for a knowledge worker it
tends to be a challenge to find a new solution to a problem, but from a company’s
perspective that is a waste of time if a good solution is already available. Also,
knowledge sharing within organisations is an issue. Hoarding knowledge is common
for various reasons, such as power relations, property rights over who owns the
knowledge and job insecurity. A good example of the latter case is a middle manager
fearing 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 the
KM process. The following HRM practices have been found essential for knowledge
management (Evans 2003; Scarbrough 2003): KM and HRM strategy; recruitment
and selection; training and development; performance management; reward and
recognition; career management, and creating a learning environment.

Human Resource Management

Human Resource Management gained much popularity in the 1980s. Beardwell
(2001) points out in a su mmary of the field that there exists considerable controversy
as to the origin, characteristics and philosophy of HRM, and its capacity to influence
the nature of the employment relationship. Moreover, the debate surrounding HRM
can 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 personnel
management. They argue that personnel management is workforce-centred, directed

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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-related 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 cash and mate rials. HRM, on the other
hand, is resource-centred, according to Torrington and Hall. HRM is directed mainly
at management needs for human resources (not necessary employees) to be provided
and deployed. Demand rather than supply is the focus of activity. It is totally
identified with management interests, being a general management activity, and is
relatively distant from the workforce as whole, as employee interests can be enhanced
only through effective overall management. Finally, it is argued by Torrington and
Hall (1998) that both personnel management and HRM can be present in one
organisation, 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 of
personnel management.

Independent of the similarities or differences between HRM and personnel
management, the core business of the HR function is to develop the employees in
accordance 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 next
section turns to these issues, and focus upon their role in enhancing knowledge
management.

KM and HRM strategies

Beardwell (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 organisations has been a persistent theme not only among
academics but also among practitioners in the field. B eardwell 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. Tha t model
recognises that there are a variety of stakeholders in the organisation, such as
shareholders, various groups of employees, the government and the 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. 1

Schuler and Jackson (2003) link competitive strategies with HRM practices in an
interesting way. They make use of Porter’s competitive advantage, as the essence of
competitive strategy (a prescriptive approach). Emerging from his discussion is 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 being the
lowest-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

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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. Each dimension runs along a continuum. Planning choices can
either be formal or informal, short term or long term, based on job simplification or
job enrichment and so on.

Schuler and Jackson argue that firms pursuing the innovative strategy 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 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 be
stockholders 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 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 orientated, (4) relatively egalitarian treatment of employees and some
guarantees of employment security and (5) extensive and continuous training and
development 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 choices 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-orientated
performance appraisals, (4) close monitoring of market pay levels for use in making
compensation decisions and (5) 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.

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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 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. The
main features of Schuler and Jackson’s link between strategy and HRM practices are
presented in Figure 2.

Figure 2: The link between strategy and HRM practices

Skill requirements

Broad

Creative Smart
HRM HRM
Strategy

Innovation Effectiveness

Hard
HRM

Narrow

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 organisations
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 increases effectiveness and growth (Hansen et al. 1999:110):
‘The reuse of knowledge saves work, reduces communications costs, and allows a
company to take on more projects.’ It is thus closely related to exploitative learning,
which tends to refine existin g capabilities and technologies, forcing through
standardization and routinization, and is risk-averse (Clegg and Clarke 1999).

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Personalization refers to personal development of knowledge and it is shared mainly
through direct person-to-person contacts. Dialogues, learning histories, and
communities of practise are among the techniques that have to be used in order to
facilitate tacit knowledge sharing. It is based on the logic of ‘expert economics’, that
is, it is used primarily to solve unique problems, w here rich, tacit personal knowledge
is needed, such as in strategy consulting. Personalization and explorative learning are
closely related, where explorative learning is associated with complex search, basic
research, innovation, risk-taking and more relaxed controls. The stress is on
flexibility, investment in learning and the creation of new capabilities (Clegg and
Clarke 1999). The codification and personalization strategies help to frame the
management practices of the organization as a whole as outlined in Table 1.

Table 1: Knowledge Management Strategies

Codification Strategy Personalization Strategy

General 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 shared

Use of ICT Invest heavily in ICT Invest moderately in ICT

Human 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-one
Training and Development Train people in groups and through mentoring
computer-based distance learning

Rewards Systems Reward people for using and Reward people for directly sharing
contributing to document databases knowledge with others

As Table 1 indicates, 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. (1999:113) 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.

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Hansen et al. warn against mixing strategies but instead suggest u sing one strategy
predominantly and use the second strategy to support the first: ‘We think of this as an
80-20 split: 80 per cent of their knowledge sharing follows one strategy, 20 per cent
the other’ (1999:112). Other studies however have found that a mix of strategies were
usually the case in highly successful knowledge management companies (Kluge et al.
2001). For example, as Davenport (1998:54) states, ‘successful knowledge projects
usually address knowledge transfer through various channels, recogniz ing that each
adds value in a different way and that their synergy enhances use’.

Recruitment and selection

Given that knowledge management is often adopted by organizations in complex,
unpredictable environments, traditional selecting and recruitment practices have more
often than not to be modified. Thus, Scarbrough (2003) points out that in innovative
organisations the selection of individuals with both appropriate skills and appropriate
attitudes has been identified as crucial to the project team’s ability to integrate
knowledge from diverse sources. He stresses that conventional approaches to
selection may need to be revised in the light of the unpredictable knowledge flows
involved in innovation projects. In such settings, it may simply be too difficult to
specify the requisite knowledge and expertise in advance. This view is closely related
to the social process model of recruitment and selection deriving from social
psychology. Its primary concern is to analyse the often immediate social context
assessors use to make judgements and to show how those judgements are not the
outcome of objective, quantifiable processes but the result of more complex social
judgements. The main assumptions of this model are: that people change constantly in
the course o their careers in firms; that subjective self-perceptions are critical to
f
people’s work motivation and performance; that self-perception are influenced by
assessment 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 can
even block knowledge sharing between groups or departments in firms organised
according the functional principle. In their study of a pharma ceutical company, they
found that assessment centres through which graduates were selected were
functionally focused, with sales assessment centres and marketing assessment centres
being run separately. This strengthens the sub-cultures of functions and made
knowledge sharing between functions very difficult. Currie and Kerrin emphasis that
in order to enhance knowledge sharing employees with an appreciation of others’
perspectives have to be preferred, and they encourage the use of lateral career
movement by employees in order to develop the necessary appreciation of others’
perspectives.

Other studies highlight the importance of a fit between new recruits and the
organisation’s knowledge culture. These studies are, therefore, related to the person-
organisational fit literature within HRM, stressing a fit between organisational culture
and hiring of suitable personality, as well as the socialisation of individuals into the
culture of the firm (see Kristof 1996; Judge and Cable 1997). Swart and Nicholas
Kinnie (2003) description of recruitment in a software company in a niche market.
The company had extremely strict selection criteria, which served to strengthen

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knowledge integration. The most important element in the recruitment process was
the company’s culture, not technical ability. A senior software engineer was
responsible for recruitment. He usually used his wide networks within the industry to
identify candidates. At this stage , it was normally taken for granted that the employee
would have adequate technical tacit knowledge, as technically competent employees
would be well-known within their industry, and only excellent software engineers
were 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 a
consulting firm where candidates were screened out in two interviews. These
interviews involved several consultants from a number of disciplines as well as the
HR manager. The overriding importance was on the candidate’s ability to ‘fit in’ to
the firm’s distinctive way of working, which involved willingness and ability to work
in groups and share knowledge. Moreover, psychometric tests were used but little
weight was placed on their results. 2 Usually, the majority of the candidates were
rejected. On this finding Robertson and Hammersley write (2000:246): ‘...atypical
approaches to recruitment and selection have also be noted by other researchers in
KIFS ... highlighting what Keegan terms the mis-fit between these practices and those
within mainstream HRM literature.’

Finally, Evans (2003) argues for revising the interview and selection processes so that
they gather evidence about individuals’ knowledge-building behaviours. New
questions need to be asked, such as: How well networked is the individual? What role
does he/she play in the networks they belong to? What types of communities of
practice do they belong to? How have they helped develop their colleagues? How do
they keep their own knowledge up-to-date?

Training and development

Robertson and Hammesley (2000) point out that continuous professional development
is considered to be essential to professional and knowledge workers. In order to stay
at the forefront of their professional fields they must be constantly aware of
developments within their specific disciplines and professions and they need to
participate in activities that offer opportunities to further their own professional
development. Many researchers on knowledge management take this as given, and do
not devote considerable attention to it. Hansen et al. (1999) argue, as already noted,
that codification and personalisation strategies require that organisations hire different
kinds of people and train them differently. Codification firms tend to hire
undergraduates and train them in groups to be implementers, that is to develop and
implement change programs and information systems. Personalisation firms hire
MBA graduates to be inventors, that is, to use their analytical and creative skills on

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unique business problems. Once on board, their most important training comes from
working with experienced consultants who act as mentors.

Performance management

Performance management identifies who or what delivers the critical performance
with respect to the business strategy and objectives, and ensures that performance is
successfully carried out (Roberts 2001). Evans (2003) points out that on the basis of
what gets measured normally gets done it is important that firms consider the
knowledge component in their performance management systems. Moreover, she
recommends that a balance scorecard approach be adopted if employees are to realise
that the firm is taking knowledge management seriously.

It has already been noted that Schuler and Jackson (2003) argue that the general
strategy of organisations tend to shape HRM practices. They noted vast differences
between, among other things, performance management in organisations stressing
innovation on one hand, and effectiveness on the other. In the former the performance
management 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 that
the performance management system inhibited knowledge sharing, as much of the
conflict between different functions was due to the divergent objectives set out for
employees in the performance agreements. For example, objectives were volume
focused for sales employees and focused upon brand profitability for marketing
employees. The objectives were, moreover, short-term and mostly measurable in
nature. Any long-term considerations, such as development of learning capability was
therefore very marginal, and considered the ‘merely nice to do’ (p. 1037). The
opposite was found in a software company. Swart and Kinnie (2003) argue that a
long-term developmental focus on performance management was one of the central
factors in integrating knowledge within the organisation. The company had a complex
performance management process, which evolved through the suggestions and
practice of the software engineers. In the first stage, project performance reviews,
conducted by the project manager focused on project efficiency and the employee’s
technical ability within the project. Here, three forms of review were implemented: a
self-appraisal focusing on jointly set objectives, project performance, technical ability,
self-management, team contribution and customer satisfaction; a peer review of the
same dimensions; and a management review of the employee. A direct link was
established between project performance reviews and annual increases. In the second
stage, performance appraisal was conducted bi-annually by a mentor, focusing on
employee development and spanned project boundaries, thereby ensuring that practice
was shared throughout the organisation. The mentor collated all project performance
reviews, completed a protégé appraisal on overall performance areas and conducted a
performance discussion.

Performance management needs to consider, according to Evans (2003, 171), the
different ways in which in dividuals contribute knowledge. Managers need to
consider:

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• 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 recognition

Reward systems indicate what the organisation values and shapes individuals’
behaviour. Evans (2003) argues that there are mixed views as to whether
organisations need to introduce separate rewards to encourage knowledge building
and sharing. On the one hand, there is no need for separate rewards in theory, if
organisations have introduced a competency framework that includes knowledge
building and sharing behaviours, and which is linked to the performance management
system. On the other hand, another school of thought argues that rewards for
knowledge sharing and reuse should be more immediate and be of a public nature, as
this type of behaviour is important to the organisation.

Zárraga and Bonache (2003) write that traditional reward systems reward those who
produce rather than those who share. Therefore, if an individual is rewarded (by
promotion, for example) for what he/she knows and the others do not know, he/she is
being assessed as doing his/her job better than his/her colleagues, and sharing and
disseminating has a high cost to the individual. Knowledge sharing rewards is
therefore about lowering the cost of sharing or, similarly, increasing the benefit
associated 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 and
creation of knowledge.

Studies on knowledge workers have found that they tend to have high need for
autonomy, significant drives for achievement, stronger identity and affiliation with a
profession than a company, and a greater sense of self-direction. These characteristics
make 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 of
employee benefits; flexibility over working time and location, as well as being given
credit for significant pieces of work. Also, a reward is needed in those cases were
participation in communities of practices is expected of knowledge workers, for their
building up and keeping the community alive. Non-financial rewards are also
motivating for knowledge workers. For many knowledge workers it is as motivating
to have free time to work on knowledge-building projects, going to conferences, or
spending time on interesting projects, as monetary rewards (Evans 2003; Depres and
Hiltrop 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 ‘terms
of motivating strategies which may reduce knowledge worker turnover, it appears that

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non-financial strategies may have had a relationship with lower turnover. These
included leadership, fulfilling work and participation in key decisions.’

Career management

Currie and Kerrin (2003) observed in their study of a pharmaceutical company that
through different job placements during their training period, or more generally
through their career, graduates and a limited number of senior staff built up an
informal network of contacts that they trusted and who trusted them. This facilitated
the sharing of knowledge. Others have also noted how career systems are important in
shaping the flow of employees over time and the way that this interacts with the
acquisition and exchange of knowledge (Evans 2003; Scarbrough 2003; Swart and
Kinnie 2003).

Creating a learning environment

Evans (2003) stresses the role of HR managers in helping their organisation to
develop an organisational culture that supports knowledge building and sharing. The
steps necessary in such transformation process include: agreeing strategic priorities
and areas for change, helping demystify knowledge management by linking
knowledge management activity to established business processes and HRM
practices, and engaging others in the knowledge management dialogue. Specifically
HR can add value by developing a knowledge awareness programme as a separate
development activity, ensuring that the right leadership and receiving the right
developmental support. Most importantly, HR has to build a culture in which learning
from day-to-day practice is valued, encouraged and supported by providing time,
public and private spaces for learning, providing learning resources (information
centres, special learning laboratories, virtual university), and reward sharers and
learners.

Conclusion and Implications

This paper has concentrated on how HRM practices can encourage knowledge sharing
and re-use. Attention has been given to strategy, selection and recruitment processes,
training, reward systems, performance management, career management and the
creation of learning environments. Table 2 summarises some of the many possible
relationships between HRM and KM. Most importantly, the table illustrates that
management practices do not operate alone, divorced from the rest of the
organisation. Practices are, instead, interrelated and require a degree of compatibility
and careful coordination.

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Table 2: Exploitative and explorative learning strategies towards knowledge
management
Exploitative learning Explorative learning Strategy
strategy

General strategy Effectiveness, low cost Innovation, new capabilities

KM Strategy Codification of knowledge Personalisation of knowledge

Focus Short-, medium-term Long-t erm

HRM practices: Psychometric testing, Social process, cultural fit of
Recruitment descriptions of knowledge share and networking

Reward Mostly monetary, varied Non-monetary and monetary, group
incentives, collaborative rewards

Performance Hard objectives, result- Developmental objectives
Management oriented, short-term, Balance-scorecard, 360º,
functionally specific goals group-orientation, long-term

Training At start, then continues, Mentorship, on-going, broad skills
specific skills

Career Management Individual advancement Integrated part of organisation
knowledge development and transfer

Desired Behavioural Documenting knowledge, Risk-taking, exchange of
Outcomes low risk-taking, specialisation ideas, co-operation, long-term
effectiveness, short-term commitment

The 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. The
general strategy has an overall impact on HRM policy as stressed in the table. It is
not necessary to mention each HRM practice in the table, but interestingly,
exploitative learning strategy fosters the following behavioural outcomes: people
document their knowledge on databases, low risk-taking is preferred, there is a
specialisation of tasks, effectiveness and short -term commitment between employers
and employees. This can be termed effective HRM. In essence, the codification of a
knowledge strategy is an attempt to mechanise knowledge. The explorative learning
strategy, on the other hand, encourages the following behavioural outcomes: risk-
taking, co-operation, exchange of ideas and long-term commitment. I, therefore, term
it as ‘creative HRM’.

It is clear then, that there are at least two strategies associated with knowledge
management. As with all other strategies, these can be mixed within firms, such as an
explorative learning strategy being dominant within R&D, while exploitative learning
strategy being common within production departments. However, as Hansen et al.
(1999) emphasises, the general investment in ICT, the hiring of particular staff, their

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training, as well as job design, usually mean that one strategy becomes dominant
within firms. Hansen et al. also argue that firms that offer standardised and mature
products and services tend to choose the exploitative strategy, while firms offering
customised and innovative products tend to choose explorative strategy. Given
globalisation, rapid technological changes, shifting markets, and ever more complex
organisational environments, the explorative learning strategy and creative HRM will
probable 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 due
to the prevalent ideology of work standardisation and extensive division of labour
(Warhurst 2002).

Knowledge management and the role of human resource management in knowledge
management are still in their infancy. Most of the research conducted so far is based
on case studies and interviews, so generalisations of results are problematic. Former
studies reveal that HRM strategies may differ depending on mediating variables such
as industry type, ownership structure (multinational–domestic) and cross-cultural
factors (Horwitz et al. 2003). Future research would thus benefit from longitudinal
studies, cross-national comparisons, as well as industrial sectors differences. Also,
basic concepts of the debate have to be defined and theor ies developed. Future
research should address these shortcomings and in this paper I have attempted to push
the theoretical framework further ahead.

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Endnotes

1
This represents the debates within the strategy approach in general. On the one hand
there is the prescriptive approach, where the strategy process is seen as a
straightforward rational process, where top management can both analyse the business
environment and implement the most appropriate strategy within the company. The
emergent strategy approach, on the other hand, looks at strategy as a process, and a
co-operative activity of employees, customers and top management. Also, it states
that the planning stage cannot easily be separated from the implementation stage
(Steinthorsson 2003).
2
According to the adherences of psychometric testing (Five Factor Model of
Personality), then openness to experience (imaginative, original, unconventional, and
independent individuals) would fit quit well to innovative and knowledge sharing
organisational culture. Moreover, these qualities could be codified and measured
(Judge and Cable 1997; Mount et al. 1998).

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