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KNOWLEDGE-RELATED ISSUES IN HUMAN RESOURCE MANAGEMENT

KATALIN DOBRAI

ABSTRACT

In the knowledge economy, human resource management faces new challenges set by the new business environment. It requires new ways of thinking and acting, new policies and practices, new technologies and new job requirements. The growing importance of knowledge influences the functions of HRM. The authors aim is to show certain aspects of the connection of knowledge management for the HRM theory and practice. In accordance with this aim, the paper highlights a number of issues, insights and findings which can have significant implications for the management of human resources within organizations in the knowledge era. The paper focuses on human resource theories and practices, which are used to support learning and knowledge sharing in organizations, involving the hiring and selection processes, performance assessment, recognition, and other fields of human resource management, influencing knowledge transfer in every day work. It is outlined what specific changes are necessary in organizational structure, culture and behavior to facilitate KM, or what new roles are required for HRM.

Introduction

There has been a discussion going on about knowledge work, knowledge-intensive firms and the critical role of organizational competencies. Knowledge in organizations is considered to become an increasingly important source of value creation and competitive advantage for them. Therefore the creation, sharing and protection of knowledge are crucial to the success of a modern organization. Especially knowledge-intensive organizations depend upon the generation, utilization and uniqueness of their knowledge base (Donaldson 2001). The

analysis of these issues deserves the attention of researchers, and in these discussions, the necessary attention should be given to the role of HRM in KM.

Organizations nowadays also undergo organizational changes, changes in leadership and employee roles. They use information and communication technologies in order to enable a quick flow of information, and to improve their performance. The growing role of innovation also shows the need for looking at human resource management from the knowledge perspective. Business organizations react differently to the above described challenges of knowledge era. On one hand they open new positions, they form KM teams with representatives from management and knowledge professionals (Wiig 1994), develop formal structures for knowledge management such as CKO, CLO (Skyrme and Amidon 1997) or knowledge managers and Knowledge Management Directors (EMCC 2006b). They also use the knowledge of professional service firms more intensively, which is a sign that knowledge is becoming more influential in the organizational value production process of todays economics. For more than a decade, knowledge-intensive business services (KIBS) have been a popular topic of research (Farkas and Khnel 2002, EMCC 2005, OECD 2006, Toivonen 2004, 2007, Dobrai and Farkas 2007). They are especially popular because of the growing importance of knowledge and innovation. Today even international organizations, such as the EU (EMCC 2005, 2007) or the OECD (OECD 2006), recognize the role these organizations play in the national economies. There are projects in connection with KIBS which are supported by EU or OECD. KIBS are important carriers, sources and enablers of innovations (Hauknes and Antonelli 1999, Miles 2005, Toivonen 2007). KIBS as organizations impact the success of todays economy greatly (Toivonen 2006, Miles 2005). With Miles, we describe these companies as companies which provide knowledge-intensive inputs to the business processes of other organizations knowledge-intensive business services (KIBS) such as computer services, R&D services, legal, accountancy and management services, architecture, engineering and technical services, advertising, and market research (Miles 2005, 39). KIBS are professional firms (professional service organizations) which provide services to other firms or public organizations, so the other organizations get the knowledge they need from outside their own companies (Toivonen 2004, 2007). The main activities of these firms are the creation, sharing and utilization, as well as the selling of knowledge.

Why are professional service organizations the right organizations to be studied in connection with knowledge management and human resource management? The answer can be found in the typical characteristics of professional services. When we try to understand the knowledge development processes, insight is more likely to come from studying knowledge intensive service firms than from traditional firms for they employ mostly people with higher education, and they depend very much on their ability to attract, mobilize, develop and transform the knowledge, and they also depend on the way of the value creation and knowledge delivery by these employees. Services are based on a professional assessment by experts involved and, partners may be personally held legally responsible for potential liability claims. They create value for their clients (Lowendahl et al. 2001).

However, there are several reasons why we should address the same issue not only in business organizations, but also in the public sector and in nonprofit organizations. On one hand, there is a similarity between the tendencies in these sectors if we realize that since the beginning of the 90s, knowledge management has become an important issue in the economy as a whole (Heizmann 2008).

The aim of this paper is to show certain aspects of the relation between knowledge management and HRM theory and practice. In accordance with this aim, this paper highlights different issues, insights and findings which can have significant implications for the management of human resources in organizations in the knowledge era. Focus is on human resource theories and practices, which support learning and knowledge sharing in organizations, involving the hiring and selection processes, performance assessment, recognition, and other fields of human resource management, influencing knowledge transfer in every day work. It is outlined what specific changes are necessary in organizational structure, culture and behavior to facilitate KM, or what new roles are required for HRM. Therefore the paper tries to show the impact of profile changes in the economy on human resource management. First I discuss the issues in connection with the shift towards a growing knowledge demand and in connection with this the changes in work force, in the tasks of human resources.

Knowledge Management and Human Resource Management

The positive attitudes towards knowledge processes have to be factored in when hiring new employees, when considering changing staff profile, recruitment practices, training and development, retention of employees and knowledge. This view is emphasized by Davenport and Prusak, who argue that one of the most important factors of developing a knowledgeoriented culture is the selection of knowledgeable employees (Davenport and Prusak 1999).

Changing Staff Profile

New management roles are being developed in order to make knowledge processes in organizations flow better. These new manager roles aim at the enabling of knowledge flow. Skyrme s Amidon identify four roles for managers: to develop the big picture, to actively support the knowledge program, to oversee the development of knowledge infrastructure, and to enable the building of connections, coordination and communication (Skyrme and Amidon 1997). However changes can also be observed in other fields of activities, for example in professional business organizations (such as lawyers firms) we can see the splitting up the group of lawyers into transactional lawyers (the front line staff who draft and negotiate contracts etc.) and knowledge managers who provide the transactional lawyers with the relevant information, research and resources to carry out their duties effectively. Such a division of work shows a shift from the traditional employment model in firms. The supply of online legal services is a rapidly developing industry, which provides clients with codified material that can be customized according to individual requirements. Organizations also may diversify their fields of activities and expand into new industries; thus new skills and knowledge are needed (EMCC 2006a-c). Recruitment and Selection Competency measurement techniques have clear benefits for recruitment and selection decisions to obtain the most qualified people, place them in the job, and also play an important role in the selection of training and development programs, and also for their dismissal. Accurate competence assessment proves to be highly useful tool in formulating personal development plans, as well as assisting in career management (EMCC 2006b).

Attitudes towards knowledge sharing and learning are a factor to be considered during hiring process. Potential employees must be able to build good working relationships with clients and colleagues, and demonstrate high levels of motivation and ambition in their work. In new recruitment processes, very often psychometric tests and assessments are used. These tests can be provided by professional service organizations (e.g. EMCC 2006a-c). The workforce needs a high level of knowledge in their profession, communication and cooperation skills. Training and Development More and more organizations realize that lifelong learning must become a norm in order to remain competitive in an increasingly competitive environment. Learning can take place formally (for example through training courses) or informally (through learning or development on the job). The necessity of life long learning seems especially important for knowledge-intensive service firms because the use of their service depends mainly on the human talent, knowledge and expertise of organizations members. It helps them provide high quality services and more innovative products to their clients. Continuous learning would result in better job performance, in satisfaction from providing high quality and creative services to clients, potentially of career advancement, and through it an increased commitment to the firm (Burke 1995). There are numerous ways for acquiring and sharing knowledge. Individual learning processes are in tight connection with organizational learning. Staff development trainings, organizational development trainings and learning by doing increase the knowledge base of the organization. At the same time, organizational learning reflects the environmental changes, and reacts to them (single loop learning, double loop learning). Supporting measures also motivate learning (Sonntag 1996). Attending professional and personal development courses can be helpful as motivator for future knowledge transfers, in which case incentives lead to a self-perpetuating process. Managers must also pay attention to the organizational and national cultures in which they work (Gammelgaard 2007). Knowledge, Skills, Competencies, Expertise Employees can carry out their tasks only if they possess the necessary knowledge, skills and competencies. This is why one of the obvious tendencies in HRM is competency development and management. Knowledge, skills, expertise are major factors to be considered at the hiring

process, career development and annual performance evaluation. The demand also increases the recruitment of staff which reflects the consumer and client base of the organization (e.g. diversity).

Organizational Framework to Support Knowledge Management

In organizations which have no separate unit for knowledge management in the organization, we usually find three organizational units which are responsible for the coordination of KM efforts and activities. These units are the HRM-department, the library and the IT-department. They can work together well if their responsibilities are clearly stated. Obtaining and storing knowledge is the responsibility of the library. For employees to have access to knowledge the right technological background must be provided, which is the task of the IT department. The HR leadership provides the human factor required for knowledge creation and sharing (Table 1).

Organizational unit HR department

Function Provides the human factor and organizes the intellectual capacity

Tasks Hiring process, psychological tests, evaluating annual performance, career management program, competency management Assuring internal and external communication, providing dataflow between departments, between the organization and other organizations, providing technology for the storage of documents Supplying information, gathering and analyzing data, special training

IT department

Facilitates communication

Library

Functions a knowledge source

Table 1: Organizational units supporting knowledge management

Organizational Culture as Enabler of Knowledge Processes A supportive, collaborative organizational culture is important from the perspective of knowledge creation and sharing (Iles et al. 2001, Dobrai 2004). Characteristics of this culture are change, innovation, openness and trust (Skyrme and Amidon 1997). If we look at the organizational culture the starting point should be the value system of the organization because knowledge-oriented organizational culture is a value-based culture. The main values which have an impact on the development and are critical elements of a knowledge-oriented organizational culture, are: quality, knowledge, skills, competencies, expertise, knowledge sharing, and innovation. The successful utilization of employee competencies is the base of an organizations quality performance, which is why personal competencies also play an important role in the value system of an organization with knowledge-friendly culture. In connection with this, we have to consider people, processes, technologies and supporting structures (Baker and Barker 1997). It depends on several factors, how important knowledge, or learning in the organization is, or if the organization has a learning culture. These factors are the following: defining the place of learning and knowledge in the organization, the way individuals and the organization as a whole learn, and the facilitation of learning in the organization (Figure 1). This means that the organization has to have appropriate philosophy, knowledge-oriented mission. In the organizational philosophy learning, and organizational knowledge creation they must have the place they deserve, which leads to the individual improvement of employees, and at the same time contributes to the fulfillment of organizational objectives (Sonntag 1996).

A similar approach to knowledge processes can be seen at Stonehouse who stresses the role of the value system of the organization among the characteristics of a learning culture, attitudes, motivation (learning has great importance, empowerment of the individuals enhances challenging existing systems and facilitates experiments, and trust is a base for improving knowledge). Mutual trust is a background for employees to openly formulate their ideas in front of their colleagues, and to try those out (Stonehouse 1999). A key to successful knowledge management is that the most successful organizations develop their knowledgeoriented culture not by changing the existing organizational culture, but by adjusting their

knowledge management projects to the existing organizational culture (Davenport et al. 1998).

Mission I. III. Supporting measures

II.

Individual learning Training

Organizational learning Learning on he job Organization

Staff

Personal development

Organizational development

Resources Figure1: Characteristics and framework of a learning culture (Source: Sonntag 1996, 42) Skyrme and Amidon present a model for knowledge sharing organizational culture, presenting three organization levels: organization (enterprise) level, work group (team level), and the individual (Figure 2.). Organizational enablers are the framework, which have been created by the top management with the aim of knowledge creation and knowledge sharing. From these elements, culture seems to be most important, however is tightly connected to efficient knowledge leadership. Another important factor is organizational structure: knowledge sharing functions better if organizational structures are more informal and more flexible (Skyrme and Amidon 1997).

Organizational Enablers Leadership Structures Cultures Levers for Effective Knowledge Sharing

Connecting

Teaming

Physical settings

HRpolicies

Foundations for Capability Roles Skills Learning Figure 2. Factors of the development of a knowledge culture (Source: Skyrme and Amidon 1997, 262 )

The success of changes depends on the effectiveness of the four pillars (building connections, team building, physical setting, and HR policies). For a successful knowledge management the knowledge of individuals, the members of an organization is crucial, so this gives the basics of the model. Individual and organizational learning can be faster and can be facilitated by information and knowledge sharing, if openness and trust are characteristics of organizational culture. Thus challenging, discussing and improving the present practice and processes are supported. If we want to have people working for an organization who are ready to share their knowledge with other organization members they have to be motivated, and this again can be supported by an organizational culture, which acknowledges risk taking, and which does not take mistakes for a failure but as a chance to learn something. Knowledge-based activities need employees with commitment to knowledge-related activities.

The Role of the Human Factor in Knowledge Processes Although in successful knowledge management an important precondition is the abolishment of organizational hierarchy; and although supporting structures help carry out a successful knowledge management, it is the human factor which plays the major role because knowledge management is basically a human-intensive activity (Dobrai 2004). Knowledge Workers Knowledge work means the creation, transfer, transmission and utilization of knowledge. Between these processes there is a permanent relationship. A tight cooperation between the different units of an organization supports the creation of new knowledge. In connection with knowledge work, in the field of knowledge management a trend can be observed. In earlier history of knowledge management organizations treated their knowledge assets like their physical assets, and placed them in knowledge repositories. This huge amount of knowledge requires professional improvement of knowledge work. For this, creative knowledge workers are needed (Davenport 1999). This suggests that in the future the role of knowledge work and knowledge workers and also that of technologies, which are used by knowledge workers in their carrying out tasks, will grow. Who is a knowledge worker? Knowledge workers are people, who as a primary aspect of their work create knowledge, share it with other people or use it to make decisions or to act. To this category of the labor force belong 30% of all employees (research scientists, ITengineers, strategic planners, doctors, lawyers etc.) (Davenport 2003). Owners of the knowledge are experts, and they are good qualified people with a lot of experience. Their most important power base is their expertise. Their power position is especially strong if they are the owners of knowledge which is important for the organization, and which is not substitutable knowledge. These factors have an impact on their behavior, often in contrast to the aims of knowledge management and of the organization. North identifies five categories of people working in a knowledge-based organization (Figure 2). The first group is the group of the so called professional staff, the experts, who carry out professional assignments under the leadership of middle level leaders, and at the same time they learn continuously themselves. They play an important role in shaping the image of the organization, and they have an impact on the customer satisfaction. It happens often that many knowledge workers are employed by the same employer for example by an accountancy

firm. All these knowledge workers use their own knowledge, skills and experience. At the same time, however, they also use the synergy which is the result of the cooperation between them and their colleagues, the complex processes and procedures which have been developed by the firm, and the collective knowledge within the firm. These people could be selfemployed knowledge workers, but they decide to work together with other people as part of a larger organization as employees (Bowman and Swart 2007).

Market potentials Information + communication experts Managers of information infrastructure Realize trends External knowledge sources Integration into professional communities Professional development Realize possibilities Nurture relationships Transplant chances into customer solutions Professionally fulfill assignments

Upper level leadership Context shaping Middle level leadership knowledge engineers and entrepreneurs Professional colleagues experts

Customers

Supporting staff

Hire the best

Market of knowledge carriers

Figure 1: Actors of a knowledge-oriented organization (Source: North 2002, 134)

Knowledge workers and knowledge entrepreneurs are middle level leaders, who know market potentials and solve customers problems. Middle level leaders play a key role in the knowledge transfer, for they usually have been working for the company or organization for a longer period of time, and they enjoy the trust of their superiors (upper level managers) and also that of their colleagues. They have connections to the customers, and are motivated to

changes and to initiate new things (North 2002). They play a central role in synthesizing the tacit knowledge of professionals and that of upper management and in making it explicit. They integrate it into technologies, products and systems, and take care of knowledge conversion (Nonaka / Takeuchi 1995). Upper managers are visionaries and context builders, who recognize market chances and build knowledge supporting framework, particularly through supporting systems. They facilitate knowledge development and knowledge transfer. They are a pattern for other people. Professionals, who carry out their activities in the fields of information and communication, are information brokers and infrastructure managers. Since knowledge workers use and produce information, the quality of their work is influenced by the accessibility of information sources that they need, or the relevant information. It also depends on how fast they can get the information they need. In this situation it is the supporting employees who can help. They work in secretarial offices, telephone centers, or in Back Office and support the work of other colleagues (North 2002). The organizational framework and other supporting features enhance that organization members take part in the knowledge processes, so everybody can contribute to common success. Each group of knowledge workers shall well defined tasks (upper management, middle management, ITworkers, supporting workers, experts); if they are loyal to the company, they strive for its best. Role of the Leadership In the knowledge transfer of an organization, leadership plays the most important role through motivating knowledge sharing in the organization. This often concerns the motivation of employees to transfer knowledge. In order to build trust and to decrease tension within the organization colleagues need to have space for their activities. Most of all in creative processes they should be allowed to make mistakes (Miller 1999), because it is a chance to learn at the same time, to learn from failure. Measures aimed at trust building, a higher degree of freedom, and people with diverse professional background make an ideal base for team work. Task of the leadership is not only to ensure the framework for a knowledge-friendly organizational culture, but to take part in knowledge processes as well. Knowledge workers not only need good processes and technology, but also an organizational structure which does not impede them.

Knowledge Communities An important aspect of a knowledge oriented culture is where everyone thinks together for improvement and better performances. This can be achieved through successful team-work, as teams give the right framework for people to concentrate on the problems they have to solve. Knowledge and learning are a crucial part of the success of organizations. A variety of information and communication technology can be used to support learning in knowledge communities. For the actions in this field, the involvement of management is necessary, because the support of effective learning and knowledge sharing in and between communities involves everyone in all job roles (Barrett et al. 2004, 10). Knowledge communities are connected by common interests and goals and work on achieving a common performance. The term knowledge communities is used, on one hand, for learning in communities with voluntary participation, and learning in communities with a more managed membership and, on the other hand, for learning within the same community and between communities. They work together and use their knowledge for the goal of developing and selling a new product or improved service. Because there are people together from different organizational units they play an important role not only in the creation of new knowledge but also in the organization-wide knowledge communication.

Commitment and Motivation A major challenge nowadays involves the ability of an organization to collect as much explicit knowledge as possible. However, there can be a discrepancy between what is rational at organizational level (contributing to the shared knowledge) and what is rational at the individual level. Flexibility of general knowledge and skills is important both to the employer and the employee. Management consulting firms, for example, often emphasize the importance of developing specific models and approaches which cannot easily be used in other firms (Lowendahl et al. 2001). It is important that a knowledge worker likes his job, because otherwise, if he leaves the organization, it will not be easy to replace him. Particularly the creativity of colleagues in key positions can have a positive impact on the organization (Davenport 2003). This is why managers motivate their employees to share knowledge by implementing knowledge management systems and incentives structures. However research demonstrates, that employees are mostly intrinsically motivated and they prefer incentives like

acknowledgements and personal development over higher salary. The kind of knowledge management system used by the organization, also affects preferences for the intrinsicallymotivated incentives. Rewards which encourage individual knowledge sharing, are: salary increase, promotion, acknowledgment of contribution, increased reputation in the organization, gaining status as an expert, professional and personal development. Neither the extrinsically motivated incentives nor the kinds of incentives which are usually assumed to be effective, work at motivating knowledge sharing. People prefer intrinsically-motivated incentives, such as colleagues acknowledgment and respect, improved reputation, and the possibility of professional or personal development. These findings make sense, for an employee can increase his or her value by being positively positioned as a trustworthy source of knowledge in the organizations (Gammelgaard 2007). One of the most important characteristics of the knowledge worker is effective communication. Well documented and organized information carries less impact if there is diminished communication involved. In order to accomplish communication skill building, among others the following solutions should be considered: Closely mentoring individuals that struggle to communicate effectively but show promise as effective knowledge managers, or ensuring strong formal education for those individuals involved in knowledge management. Effective communicators should be put in positions where they manage knowledge. Moving knowledge from tacit to explicit has a synergistic effect on the organizational communication the more people create, the more can be shared among knowledge workers (Crawford and Strohkirch 2006).

Fairness and Commitment In connection with commitment and motivation the issue of fairness has to be addressed. It has been a highly discussed issue in law and society for a long time. Nowadays it has become a popular topic in organization theories as well. There are several fields in human resource management where these issues arise over and over again: fairness practiced during recruitment, the distribution of work among employees, fairness of remuneration, bonuses, or of advancement. Fair process is very important in the knowledge-based organizations the success of which is highly dependent on the trust, ideas and commitment of colleagues. The problem is that most of the organizations declare that they want to support creativity and innovation processes, but they forget to apply fair process to reach this goal (Brockner 2006).

The reason can be that leaders find it a threat, because delegation of competencies might diminish their authority. Procedural justice is not a decision based on consensus or democracy in the work place. It means the engagement of employees by asking for their input and using it during decision making processes (Kim and Mauborgne 1997, Brockner 2006). Engagement is a good way to communicate the respect of management towards employees and towards the ideas of employees. Fair process also means explanation. Management has to make clear what considerations lead to a certain decision. Explanation also assures people that their ideas, their input into the decision have been heard and considered by leaders; and employees trust the management even if their ideas have not been accepted. Fairness also depends on the formulation of clear expectations: people have to know, how they can contribute to the performance of the organization, and vice versa; if employees dont trust their leaders, they can be obstacles to the performance of the organization. Nowadays this issue is even more important than earlier because knowledge-based organizations depend more than traditional companies on the commitment of their employees. A challenge for todays organizations is that an organizational climate is to be developed which helps people offer their creativity and expertise to the organization (Kim and Mauborgne 1997), and this is a precondition for a fair process. Davenport (2007) draws attention to the necessity of fair process towards knowledge workers, in connection with performance evaluation: knowledge workers are sensitive if it is about their own performance, it concerns them less what the outcome is, it is more important for them that they are treated fairly. We can say that fair process practice must begin on the upper level of the organization. With explanation of decisions, by developing a supporting communication system, getting colleagues involved in decision making or change processes, treating people with respect, management can positively affect the attitudes of employees towards knowledge processes in the organization.

Conclusion The aim of this article was to describe some aspects of knowledge managements elements and HR. Focus was on human resource issues, which are relevant from the perspective of supporting learning and knowledge sharing in organizations, involving the hiring and

selection processes, performance assessment, recognition, and other fields of human resource management. It was outlined that specific organizational structure, culture and behavior facilitate KM, and that new roles are required for HRM. We can say, that basic cultural values influence the way in which an organization treats knowledge and the way it cares for the learning processes, how organizations members communicate knowledge, how they transfer it internally and externally. We are certain that effective learning and effective knowledge transfer are beneficial for all those involved, because it can result in a competitive advantage for the organization. Forming the necessary framework is the task of upper management and the leaders in the different organizational units, especially through ensuring a climate that allows effective knowledge transfer in the organization. Not only the actors of the knowledge processes (different groups of knowledge workers, communities, management and employees), but also the basic value elements of a knowledge based culture, such as, knowledge, knowledge sharing, innovation, quality, and their connection to KM play a role in how knowledge processes are managed in an organization.

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