Incorporation of Knowledge Management into Human Resource Management

Abstract

To remain competitive in today’s market, companies are trying to find new ways to manage their most important resource, which is their employees. Employees possess enormous amounts of knowledge and information that, if managed and led well, will help the company achieve success in their particular industry.

The knowledge and information available to anyone individual at any given point is enormous and if firms wish to remain competitive, then management needs to look at ways to retain and manage the knowledge that their workers possess. Knowledge management has become increasingly important, as a firm’s workers contain the information and knowledge for their next breakthrough, and retaining those workers becomes a necessity. This paper gives an overview of the current literature that is available to leadership in the area of knowledge management and presents models of how to incorporate it into the current human resource management.

Introduction

One, if not the most important resource a company has is its knowledge, which is comprised of the collective knowledge contained in its employees. How this knowledge is acquired, maintained, and disseminated is the core of Knowledge Management (KM). As Human Resource Management (HRM) is a mechanism of managing employees, it stands to reason that managing the knowledge of those employees would also fall under human resources. For management and leadership, there are several themes that became evident in the literature as important for management to consider. These are: what are the current human resource management practices, how to incorporate knowledge management into human resource management, and the leadership implications.

Human Resource Management (HRM)

Human Resource Management is the administration of a company’s strategies and policies related to the personnel of that company. In the literature, there is a commonality of HRM regarding the view that HRM guides the recruitment, hiring, and training of employees in a company. There are different components to HRM and different strategies of HRM depending on the type of firm and focus of the literature.

Sundiman looked at how human resource management enhances knowledge management. This relationship between HRM and KM will be addressed further in this paper, but Sundiman describes the three main components of HRM in this article. The first component is the governance of human resource management. In other words, do the strategies of the HR management align with the vision of the company’s leadership. This is important to the company’s executive leaders. If leadership’s goals and vision are not supported by the HR management, then the company will not accomplish what leadership desires for it.

The second component of HRM is employee retention. It stands to reason if employees are one of, if not the greatest resource a company has, then that company would want to retain those knowledgeable employees. Tenured workers are usually able to see problems or inefficiencies in the company’s operations before the leadership and can help to resolve those issues. Retainment of employees provides for a more stable and competitive company.

The third component that Sundiman discusses is an employee development and job training. It is in the best interest of company leadership to further their employees’ knowledge and competence in their respective fields, as this drives the operational competence of the company as a whole. Leadership needs to understand that without the continual development of their employees, there will be no competitive advantage over another company that does.

HRM Systems

Workforce Characteristics. Delery and Gupta refer to a set of workforce characteristics that when properly managed, will provide a competitive edge for companies. These characteristics are ability, motivation, and opportunity. They contend that human resource management practices focused on all three, not just one or two, of these characteristics is not only beneficial but essential for increased company performance. Workers may possess the abilities, but they also need the motivation and opportunity to use those abilities.

The authors continue to describe how certain HRM practices can influence all or some of the workforce characteristics listed above. For example, the HRM practice of compensation can influence all three of the workforce characteristics. A firm’s compensation package can attract and retain high-quality employees and in turn, gives those individuals the motivation and opportunity to utilize their skills. They hypothesize that a company’s organizational effectiveness is tied to how HRM practices affect workforce characteristics and tested their framework using a sample of large motor carriers in the United States. Their conclusions were that HRM practices can predict the financial performance of a company, but that those practices need to be consistent to maintain their competitiveness.

Relationship-oriented HR system and High commitment HR system. Kehoe and Collins look at two HR systems and how each system retains and builds relationships with its employees. The High commitment HR system focuses on building long-lasting employee relationships through competitive compensation and investing in their employees’ long-term development. The relationship-oriented human resource management seeks to develop interpersonal relationships between HRM and employees as well as interpersonal relationships between employees and their workgroups or teams. They contend that these relationships should be encouraged and nurtured with the intent of creating knowledge-sharing environments and increasing employees’ commitment to the company.

The authors collected data from 128 different units that consist of scientists who work for a large hydroelectric corporation. They found that the high commitment system produced employees committed to the organization due to the overinvestment by the company into the employees. It also showed that the relationship-oriented HR system encouraged increased knowledge-sharing and access to knowledge within the organization and outside the organization. Thus, the authors conclude that incorporating the two systems together can guide leadership in helping the company increase employee engagement and knowledge-sharing, thereby increasing performance.

Human Capital

The previous section briefly looked at the literature regarding HRM, which involves the management of a firm’s workers. This section will look at the concept of human capital and what that means for companies’ HRM and KM. Human capital is defined as the resources a company has in its employees and the knowledge they possess, which helps to ensure sustainability. A company’s “human capital advantage” refers to the tacit knowledge its employees hold. The “human process advantage” refers to the management of the knowledge implicit to the company’s operations. In other words, what determines a company’s competitive advantage is going to be how it manages the human capital that is available to it.

Hollenbeck and Jamieson look at using social network analysis to help management leverage the flow of information through an organization. It also helps management evaluate their personnel, and the interpersonal and social relationships between its employees in order to enhance work teams and maximize human capital. Social network analysis can also help leadership identify key employees that possess certain attributes important to the company such as integrity and trust, as well as identify employees that overlap with several information networks.

Figueiredo and Paris define intellectual capital as the sum of a company’s human capital, relational capital, and its structural capital. Human capital is employees’ knowledge and structural capital is the mechanism by which that knowledge is managed. A company’s relational capital refers to the relationship a company has with outside stakeholders, customers, and suppliers.

Kianto, Saenz, and Aramburu refer to intellectual capital as the knowledge, experience, technology, and relationships a company possesses or “the sum of all of the intangible and knowledge-related resources an organization uses to create value”. Their study confirms that human capital is foundational to the development of structural capital and relational capital in a company and the company’s ability for innovation. Since human capital refers to employees’ knowledge base, the management of that knowledge contributes directly to a firm’s innovation and competitiveness.

Knowledge Management (KM)

Knowledge Management is a firm’s ability to utilize the firm’s knowledge to promote innovation and a competitive advantage for the firm and refers to the processes a firm utilizes to move their information through the organization. Knowledge management has become an area of interest for management in recent years, particularly how a company captures and manages the knowledge and information generated by its products and employees.

Hussinski, Kianto, Vanhala, and Ritala identify ten KM practices and study these practices across four different countries to determine which practices are universal and which are culturally specific. The practices identified were supervisory work, strategic knowledge management, knowledge protection, learning mechanisms, information technology practices, organizing work, and the human resource management practices of recruitment, training, compensation, and performance evaluation. Their study found that knowledge management itself was universal but the implementation of the ten practices was dependent on the circumstance or setting.

Knowledge Sharing is an important concept as a firm is not sustainable nor competitive without it, and the employees are the source of that advantage. KM practices include avenues and methods for sharing information across companies and across industries. Information and communication technologies (ICTs) provide the means to collect and share this information and knowledge. Examples of these ICTs include social networking tools, collaborative platforms, and internal blogging. Big Data and IT systems that align with a company’s processes can help a firm store and utilize its knowledge more effectively and provide for better collaboration.

For example, a company can use an internal intranet to communicate to its employees and gives employees a platform to share their ideas. These tools can be categorized as the “social web”. As with any social information platform, misinformation can also be spread or proprietary information leaked, which is why leadership needs to ensure safeguards and controls are in place for knowledge protection.

Incorporating KM into HRM

The total strategy to linking HRM and KM will need to address the values of the company, the type of leadership, and the organizational culture. In addition, developing a human resource management system that incorporates and supports knowledge management will require leadership buy-in and a change in the organizational culture.

There are several positive effects of incorporating knowledge management into human resource management. A change in HRM that strengthens the relationship between KM and human capital management creates a competitive edge for a company. In addition, maximation of a firm’s knowledge and thus, its assets, is facilitated HRM’s ability to and position to develop and train a firm’s workforce.

Farhadi and Rezaee looked at the relationship between knowledge management and human resource management through the lens of corporate social responsibility. They argue that human resources typically has referred to the individuals in an organization but really should be viewed as the resources those individuals hold internally. Companies that focus on employees, knowledge management, and social responsibilities create a new culture that can positively affect a company’s performance.

Another positive effect of linking HRM with KM is firm innovation. By emphasizing knowledge-based HR practices, knowledge creation and sharing are stimulated amongst the firm’s employees. This enhances innovation as knowledge is shared and elaborated and new ideas are enabled. Leadership can promote innovation by creating and enhancing management systems that incorporate knowledge and information sharing. In addition, when HRM is incorporated into a firm’s KM, employees feel valued and invested in the firm, thereby increasing employee retainment.

The implementation of KM and HRM can be a difficult undertaking. To successfully and effectively implement such a merger, executive leadership and management must be on board. Alignment with the company’s mission and value is key. Leaders need to create and support a climate where knowledge acquisition, creation, and generation is welcomed and encouraged. Leaders should encourage cooperation and not competition, as this can lead to “knowledge hoarding”.

Donate and Sanchez de Pablo looked at the role leadership plays in developing HRM and KM practices, specifically knowledge-oriented leadership. What they found was that knowledge-oriented leaders had a direct, positive effect on a company’s knowledge management system and knowledge creation. It also showed that it had a direct, positive impact on a company’s innovation performance.

Sohrabi and Naghavi looked at HRM in the context of managing knowledge workers. These individuals held positions that required highly technical requiring excessive training. These workers often are more knowledgeable about their jobs than their managers. As these individuals are an important asset to the company, ensuring their retainment and longevity is a priority. What they found was that in firms that employed knowledge workers, personalization was the key strategy for knowledge-based HRM. One-on-one training versus group training, for example, was more effective. They also noted that when developing an HRM system, leadership needs to keep in mind the occupations and the workers involved and to understand the difference. Therefore, the HRM and KM practices initiated should match the workforce employed.

There are many roles a leader fills in an organization and many responsibilities such as day-to-day operations and decision making. Leaders are also tasked with developing other leaders and encouraging and motivating employees. Miloloza looked at a group of small to medium-sized Croatian companies to evaluate how leadership styles can affect HRM and KM. The leadership styles this author looked at were autocratic, democratic, and laissez-faire. The author found that the smaller companies that had democratic leadership were more successful in the area of knowledge management.

Organizational Culture

As previously stated several times, employees of a company are a source of knowledge and expertise and are a company’s greatest resource. Investing in developing employees’ expertise and knowledge is imperative if a company is to remain competitive. As a result, it is the leadership’s responsibility to support Human Resource Management in honing in on and determining the variables that affect this knowledge and support its development. This includes developing an organizational culture where HRM and employees are empowered to seek out knowledge.

The authors of this article studied the human resource management at a water and waste plant in Iran with these objectives in mind. They found that employees empowered by a culture of knowledge management made several contributions. They contributed to decision making, eliminating waste and costs, as well as saving time and recognizing innovative staffing practices. This article is helpful in that it provides further insight into management’s role of supporting Knowledge Management (KM) and empowering HRM. It is useful for leadership as it acknowledges organizational culture as important in the integration of KM with HRM.

Conclusion

Common themes throughout the literature included concepts like knowledge sharing, collaboration, human capital, and empowering human resource management. In an era where information is available twenty-four hours a day, seven days a week, and in a society where technological breakthroughs occur with increased frequency, a company needs to be able to harness the knowledge contained in the firm and its employees. It also needs to encourage collaboration as this is paramount to remaining competitive and relevant to the marketplace. Since HRM is the umbrella that covers employee relations, it follows that this is where the knowledge of those employees should be sought out, protected, and shared. That is the essence of knowledge management.

The studies in this paper each look at concepts and models of HRM and KM from different angles. This is important, as not all companies are the same. The weaknesses found in the literature is that a vast majority of the literature were studied not done in the United States or were performed on single entity firms which makes generalization difficult. On the other hand, no two companies are alike, so the variance of the studies covers an array of firm types. As the United States is a large country with its own culture, more studies of companies in the U.S. would make for a more complete picture.

References

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