TABLE OF CONTENTExecutive Summary 3
Introduction4
Human Resource Management6
The Knowledge economy 7
HRM Roles and Challenges8
The Leadership Development 8
The line Management8
The globalization 8
The outsourcing 8
HRM priorities in Knowledge Economy9
Human capital steward9
Knowledge facilitator9
Relationship builder10
Rapid deployment specialist10
Knowledge at the firm Level11
Knowledge management12
Strategic knowledge capabilities12
The knowing-learning-doing nexus13
Build knowledge value14
Knowledge risk15
Transforming HRM in the knowledge economy16
Conclusion18
Action plan and recommendation18
References 19
EXECUTIVE SUMMARY
In the knowledge economy, knowledge-based capabilities are the
key to competitive advantage. At the firm level, this places the
enterprises people, their knowledge and innovative capacity at the
heart of strategic potential, and organisations that excel in
attracting, creating, managing and sustaining knowledge
capabilities are advantaged. Human Resource Management (HRM) has
over recent years been exhorted to demonstrate its position as a
strategic partner to executive management: this promise has been
only partially realised.
In this paper, we explore the roles and the challenges of Human
Resource Management in the knowledge economy and the management of
knowledge from an HRM perspective. Commanding a central position in
realising value from knowledge assets is proposed as a strategic
role for HRM. Specifically, HRM must respond to the key challenges
presented by the knowledge economy. We identify four HRM
priorities: becoming expert in identifying and defining strategic
knowledge capabilities; developing and managing knowledge workers
by leveraging the knowing-learning-doing nexus; building knowledge
value as an organisational as well as an individual asset; and
minimising enterprise knowledge risk.
INTRODUCTIONKnowledge management has become a trendy term in
organizations today. We can define knowledge management as the
discipline that promotes an integrated approach to identifying,
capturing, retrieving, sharing, and evaluating an enterprises
information assets. In knowledge-based, attracting, creating,
managing and sustaining knowledge capabilities are the key to
competitive advantage. Human Resource Management (HRM) has over
recent years been exhorted to demonstrate its position as a
strategic partner to executive management: this promise has been
only partly realised.
Many organisations have turned to explicit and systematic
knowledge management processes to develop the firms knowledge
assets. With this, has come a sharpened focus on the practices that
build, apply and deploy knowledge. HRM has the opportunity to make
a fundamental contribution to building intellectual capital at the
firm level. In this paper we propose four opportunities for HRM to
contribute to enterprise achievement in the knowledge economy.
Awareness of the significance of sustainability is growing
rapidly, with particular emphasis on sustainable development as an
area of concern. Issues related to sustainability crosscut many
boundaries, as they are both trans-disciplinary and trans-
organizational in nature. The idea of sustainability operates at
the economic, social and environmental level, and is driven by a
concern for development and growth that is underpinned by a sense
of social responsibility.
In terms of fostering sustainable development in the so-called
knowledge economy, there is a need to consider how best to make
knowledgeable interpretations and recommendations to support
sustainability across a wide range of stakeholders. A commitment to
sustainable development requires enlightenment within organisations
as well as at the government level, appropriate infrastructure as
well as management of uncertainty and risk. Above all, a commitment
to sustainable development requires sound knowledge on which to
base decisions, as well as effective knowledge management
approaches to support crucial processes of knowledge creation,
sharing and dissemination to support sustainability issues. This
includes an understanding of the role of knowledge and information,
and their implicit imperfections (Sage, 1998; Laszlo and Laszlo,
2002)). Knowledge for sustainability highlights the need for new
knowledge, for new ways of managing knowledge, and for new work
practices to support this process. At present it is not well
understood how sustainability knowledge can be effectively brought
together, managed and shared for effective decision making in a
sustainability context (Malone and Yohe, 2002). However, it is
clear that developing management and leadership capabilities to
support a commitment to sustainable development will go a long way
towards improving the present situation. Sustainable development
will require significant change, an increasing awareness of social
and shareholder contexts, and developing a sense of social
responsibility. It will also necessitate major changes in work
practices in many instances. This means that not only do processes
and practices need to change, but so too the driving vision and
management approaches that underpin modern organisations. To be
successful, sustainable development should promote economic, social
and environmental needs, as well as benefits. This means that there
will always be trade-offs as well as synergies involving these
competing needs and benefits. Relevant and appropriate
sustainability knowledge and information is a key aspect of
effective decision making in this regard. This is particularly the
case where multiple perspectives and multiple stakeholders are
concerned. There is a strong imperative to develop strategic
leadership and management capabilities within modern organisations
in order to meet the challenge of working effectively to promote
not only economic, but also social and environmental forms of
sustainable development. This is an area where a linkage between
knowledge management and HRM may prove to be effective.
Human Resource Management
Human Resource Management is the strategic and rational approach
to the management of an organization's most valued assets - the
people working there who individually and collectively contribute
to the achievement of the objectives of the business. The terms
"human resource management" and "human resources" (HR) have largely
replaced the term "personnel management" as a description of the
processes involved in managing people in organizations.
The role of the Human Resource Manager is evolving with the
change in competitive market environment and the realization that
Human Resource Management must play a more strategic role in the
success of an organization. Organizations that do not put their
emphasis on attracting and retaining talents may find themselves in
dire consequences, as their competitors may be outplaying them in
the strategic employment of their human resources.
The Human Resources Management (HRM) function includes a variety
of activities, and key among them is deciding what staffing needs
to have and whether to use independent contractors or hire
employees to fill these needs, recruiting and training the best
employees, ensuring they are high performers, dealing with
performance issues, and ensuring your personnel and management
practices conform to various regulations. Activities also include
managing your approach to employee benefits and compensation,
employee records and personnel policies.
In other words, Human Resources Management means employing
people, developing their capacities, utilizing, maintaining and
compensating their services in tune with the job and organizational
requirement.
The Knowledge Economy
The Knowledge economy is a term that refers either to an economy
of knowledge focused on the production and management of knowledge
in the frame of economic constraints, or to a knowledge-based
economy. In the second meaning, more frequently used, it refers to
the use of knowledge technologies to produce economic benefits as
well as job creation. The phrase was popularized by Peter Drucker
as the title of Chapter 12 in his book The Age of Discontinuity,
And, with a footnote in the text, Drucker attributes the phase to
economist Fritz Machlup.
According to Malhotra(2003), Knowledge creation, use, sharing
and retention has always been important. What is new is the
significant shift towards a systematic and strategic approach to
managing the primary assets of the knowledge economy: people,
knowledge processes, and knowledge products. Globally, knowledge
has become the most important factor in economic development and
knowledge assets are considered essential for economic growth,
competitive advantage, human development and quality of human
life.
The essential difference is that in a knowledge economy,
knowledge is a product, while in a knowledge-based economy,
knowledge is a tool. This difference is not yet well distinguished
in the subject matter literature. They both are strongly
interdisciplinary, involving economists, computer scientists,
engineers, mathematicians, chemists and physicists, as well as
cognitivist, psychologists and sociologists.
We define a knowledge based economy as one that is increasingly
dependent for its growth on the input of knowledge as a value-added
input to the economic system. This is reflected in a change in the
basis of competitiveness for economies, organisations and
individuals.
In the knowledge-based economy of the 21st century, employers
must harness the insight and creativity of their workers to compete
in the global marketplace. Human Resource Management in the
Knowledge Economy, just as the nature of doing business is
evolving, so too is the role of human resource managers.
HRM Roles and Challenges
The HRM Function has some strategic challenges, which will
affect the whole organization in the future. The strategic
challenges will change the organization of the HRM Function and its
role in the organization. The current role of the HRM Function is
about providing services to the organization and the managers are
clear clients of the HRM Processes. The main HRM Strategic
Challenges can be defined in four main areas: Leadership
Development; Management Development; Globalization &
Outsourcing. The Leadership Development is one of the biggest HRM
Challenges. The leadership development is the only way to secure
the organization for the future. The supply of the leaders is very
limited and the organization has to focus on the growth of the
potential available inside the organization. The HRM Function has
to take the responsibility for the initiatives to identify and grow
the potential inside the organization and to secure the best
potential to stay in the organization. The leadership development
initiatives are extremely costly, but the organization has to
recognize the need to invest in such initiatives.
The line management is another HRM Challenge. The line
management is the main user and client of the HRM Value Added
processes and they have to be able to use the processes correctly.
The HRM Function can be seen as the enemy, but the HRM Challenge is
to develop and train the line management in the daily usage of the
value added HRM Processes to make the organization more
efficient.
The globalization is another HRM Challenge. The HRM Function has
to make its policies, procedures and processes to work on the
global level. Currently, most of the HRM Policies is focused on the
concrete country, but the employees have to start to move from the
country to another country and the HRM Processes have to be able to
support such a need in the organization. The globalization has a
huge impact on the HRM Function and the it is usually not ready to
take more responsibility in the movement of the workforce around
the Globe.
The outsourcing is the main issue for the HRM Function. The HRM
Function has to be able to outsource its non-core services for the
organization and it has to be able to keep the service level for
the organization. The outsourcing HRM Challenge is pretty huge as
it requests a lot of standardization and practice from the HRM
Function.
HRM priorities in Knowledge Economy
In the knowledge economy, HRM work will not be confined to
conventional functions of staffing, training and development,
performance management, and so on. Human resource management work
in the knowledge economy includes both activities that overlap with
other traditional business functions and some that are
nontraditional. For this reason, HRM is no longer simply focused on
"managing people' in the conventional meaning of the phrase. Human
resource management is now responsible for an aging the
capabilities that people create and the relationships that people
must develop.
To effective compete in the knowledge economy, organizations
will need HRM that is roles-based and contributes directly to the
creation on organizational capabilities: human capital steward,
knowledge facilitator, relationship builder and rapid deployment
specialist. There are four new roles human resource practitioners
should adopt:
Human capital steward. HR has long understood "human capital" to
be the collective knowledge, skills and abilities of an
organization's workers. But the role of "steward" of these
resources is a new one. Unlike raw materials or equipment, Thurman
capital cannot be simply bought and used," the authors write.
"Human capital must be contributed by the employee voluntarily,"
and the role of HR is to create an atmosphere in which employees
can contribute their skills, ideas and energy. This is achieved by
"facilitating employees without controlling them."
Knowledge facilitator. Knowledge is recognised as important to
organisations and is acknowledged as critical to organisational
success. Globalisation, rapid change, and competition in a global
market of increasingly sophisticated consumers have led
organisations to seek a sustainable advantage that distinguishes
them in their business environments (Davenport and Prusak 1998). In
this role, HR helps the organization acquire and disseminate
knowledge and use it to create a competitive advantage.
Transforming tacit knowledge into explicit knowledge can help build
employee skills, competencies and careers. This transformation
comes about when knowledge sharing is valued. "Teaching must become
part of everyone's job."
Relationship builder. HR must facilitate cross-functional
teamwork, the authors write. According to Klemp, Relationships
amongst employees are more complex (Klemp 2001). New types of
business-to-business relationships require everyone to develop
skills that emphasise interdependence, communication, and the
ability to build and maintain strong work relationships.
Virtualisation has changed the ways that humans interact, and the
need for physical contact has been reduced or in some cases
eliminated. HRM must build networks and shared people communities
around the strategic objectives of the business to ensure
competitiveness.
Rapid deployment specialist. The global economy moves quickly,
requiring HR to anticipate and implement any staffing adjustments
that evolving markets and business strategies will require. This
will necessitate a versatile, flexible HR architecture. In Human
Resource Management in the Knowledge Economy, adopting a new
approach to HR is a formidable challenge
Taken together, these characteristics change the landscape in
which HRM operates and herald the opportunity for new
contributions. Further impetus for a revised role is provided by
knowledge-related changes at the firm level.
Knowledge at The Firm Level
For organisations, capability based on knowledge-based resources
is critical to sustained competitive advantage. However, simply
possessing knowledge based resources will not itself achieve
competitive advantage these resources must be managed in ways that
allow the organisation to leverage them for strategic advantage
(DeNisi, Hitt and Jackson 2003).
Knowledge management is the discipline that formalises
approaches to understanding and benefiting from knowledge assets at
the firm level. The intellectual antecedents of knowledge
management include economics, sociology, philosophy and psychology
(Prusak 2001). Reflecting this, knowledge management is best
thought of as a framework rather than as a single approach a
collection of elements that work together in varying combinations
to accomplish the goal of leveraging an organisations knowledge
capital (Saint-Onge and Wallace 2003).
Knowledge Management
Knowledge management has been described as involving the design,
review and implementation of both social and technological
processes to improve the application of knowledge, in the
collective interest of stakeholders (Standards Australia 2003, 3).
Following from this, whilst information technology contributes to
effective knowledge management, it alone does not fulfil the
promises of knowledge management. Attention to four elements -
People, Process, Technology and Content - is essential to optimise
results from knowledge.
Knowledge Management (KM) also refers to a multi-disciplined
approach to achieving organizational objectives by making the best
use of knowledge. KM focuses on processes such as acquiring,
creating and sharing knowledge and the cultural and technical
foundations that support them.
The nature and characteristics of work in the knowledge economy
herald new opportunities for HRM. To maximise benefit from
knowledge assets, a fourfold contribution from HRM is proposed. In
the knowledge economy, HRM must:
1. Provide expertise in understanding and defining firm-level
strategic knowledge capabilities;2. Develop and manage knowledge
workers by leveraging the knowing-learning-doing nexus;3. Build
knowledge value as an organisational as well as an individual
asset; and4. Minimise the organisations knowledge risk (Andrews
2003a) associated with loss of requisite capability and
knowledge.
Strategic knowledge capabilitiesThe most significant
contribution that HRM can make is strategic. We have seen that
knowledge capabilities underpin strategy in the knowledge economy,
and HRM practitioners are well placed to understand and define the
organisations strategic knowledge capabilities. Strategic knowledge
capabilities comprise the core competence (Ulrich and Smallwood
2003) of the organisation and emerging capabilities to sustain
future performance. As such they comprise knowledge and skill areas
that contribute value to the organisation, offer real or potential
competitive advantage, and are hard to replace.
Understanding strategic knowledge capabilities is at the hub of
HRM in the knowledge era. For example, the aim of recruitment and
selection in the knowledge economy is to source high calibre talent
possessing a range of skills and capabilities related to the
strategic knowledge areas. A key challenge is selecting employees
who are capable of contributing to the organisation in a variety of
ways now and in the future, rather than simply filling the current
vacancy. This requires long-term planning with senior management
and the flexibility to hire when the talent is available. The focus
is a flexible and agile workforce. Partnering with external
organisations for specialist knowledge when required will become
more commonplace.
The knowing-learning-doing nexusGiven that the competitive
advantage of an organisation resides in the abilities of its
employees, knowledge workers and the capacity they contribute are
fundamental to success. Peter Drucker introduced the terms
knowledge work and knowledge worker in the early 1960s (see Drucker
1993). However, what would have then been described as a rare type
of work is now increasing in prevalence and economic significance
(Andrews 2000; Andrews and Delahaye 2000). Knowledge workers
identify and solve challenging and complex problems, relying on
imagination and creativity and high levels of education and skills.
Importantly, they move beyond applying existing codified knowledge
to working with inferences from the body of knowledge (Lockett and
Legge 1993). Knowledge work is characterised by ambiguity,
complexity, and long feedback cycles. Thus, knowledge workers are
employed for their ability to think for themselves and their work
involves a high degree of autonomy. Collaboration is also a key
element of knowledge work and involves building and maintaining
relationships both inside and outside the organisation.
The characteristics of knowledge work throw the spotlight on HRM
and its management of the knowledge workforce. In todays economy,
performance management must be re-conceptualised with knowledge
work in mind. The process by which people obtain results becomes
much less significant and the focus shifts to managing outcomes,
many of which are long-term and difficult to attribute to
individuals. For HRM professionals, the key switch is from one of
performance management to performance support or performance
facilitation.
In addition, HRM must tap into the intrinsic motivations of
knowledge workers. Knowledge workers are self-motivated, curious
and passionate about learning, and have a strong desire for
exposure to new ideas and perspectives from both inside and outside
their primary knowledge discipline. HRM has a key role to play in
creating rich work opportunities. A specific example relevant here
is provided by Sveiby and Simons (2002) who noted that after 15
years working in the same field for the same company, professionals
experience anger, frustration and burnout. The career plateau
(Sveiby 2002) transcends professions and creative workers are
thought to be particularly vulnerable. Obviating or minimising the
impact of professional burnout is a worthwhile area of focus for
HRM.It is noteworthy that whilst technical discipline based
knowledge has traditionally defined professional work, additional
generic capabilities (abilities to adapt, learn, collaborate and
share knowledge) are essential attributes of knowledge work. For
knowledge workers, learning and work are intimately connected.
Current approaches to training and development that view
professional development as on-top-of, or supplementing an
employees work are challenged. Learning and professional
development is relevant to knowledge workers to the extent that it
is intimately connected with the context of their ongoing work.
Learning and development that is just-in-time to support the
current context of the knowledge work will be more common. HRM
professionals have a key role to play in supporting the ongoing
development of knowledge workers, but many of the current ways in
which that support is provided may be revised.
Build knowledge valueThe essence of managing knowledge is to
build knowledge value for the organisation and leverage that value
for competitive advantage. The value for the organisation is not
derived from simply providing access to information. People create
value from information by doing something with it (Andrews 2003b).
Specifically, applying knowledge to real life opportunities is the
source of value creation: leverage comes from making knowledge and
expertise available firm wide. For example, an emphasis on sharing
knowledge and expertise across the enterprise is likely to improve
both efficiency and innovation.
Thus, the important shift for HRM is to build knowledge value as
an organisational as well as an individual asset. The focus for HRM
is the whole organisation as a system, rather than the sum of its
parts. In addition to supporting the management of knowledge, HRM
practitioners as knowledge brokers have a vital role in terms of
knowing what the strategic knowledge capabilities of the
organisation are and where the pockets of skill and expertise lie
(both inside and outside the organisation). HRM is uniquely
positioned as the facilitator of knowledge and value creation.
Building knowledge value spans the breadth of HRM activities. A
primary function is the rapid deployment of skill and knowledge.
This emphasis must shift to developing the strategic knowledge
capabilities of the organisation in such a way that they may be
rapidly developed and deployed. The challenge for HRM is to offer
personalised development opportunities to underpin the
organisations needs for responsiveness and agility.
Facilitating knowledge transfer between individuals, groups, and
from outside to inside the organisation (and vice versa) becomes
critical to building organisational capability. Ideally, HRM has
established relationships across the organisation based on
understanding of business needs. This pivotal role will assist HR
to anticipate and plan for emerging knowledge needs.
Knowledge riskIn addition to leveraging organisational
knowledge, a new focus for HRM is to minimise knowledge
risk.Knowledge risk refers to the real or potential loss of
knowledge either through under-utilisation or loss of valuable hard
to replace knowledge when people leave the firm (Andrews
2003a).
Management of this risk begins with an assessment and the
development of strategies to mitigate the impact of potential
knowledge risk. Traditional approaches to workforce planning in
many organisations tend to address current and short-term resource
needs for organisational units individually, by developing
employees skills and knowledge through training and development, or
acquiring skills and knowledge with recruitment. The current
approach emphasises head count. From a knowledge management
perspective, HRM must focus on head contents instead. In the
knowledge economy forecasting future knowledge requirements for the
whole organisation in the medium and long-term is of primary
importance. In particular, the focus becomes one of identifying
where the knowledge risk is. Workforce planning involves mitigating
this risk. This requires an intimate knowledge of the strategic
knowledge capabilities and how they are supported.Transforming HRM
in The Knowledge Economy
The idea that people and the knowledge they possess is the
organisations most valuable asset is not new. The shift in the
terminology from over 20 years ago from Personnel Management to
Human Resources Management signaled what some claimed was a
metamorphosis for the profession. This altered the
conceptualisation and practice of HR from a series of ad hoc
functions, and evolved it into its role of corporate strategist
(Kramar, McGraw and Schuler 1997). The transition was a significant
one for the profession of HRM, because it was different from
personnel management: it promised strategic contribution through
integrated activities that confirmed employees as assets to be
nurtured and developed. Today, the central role of individual and
organisational capabilities is significantly amplified with the
advent of the knowledge economy. Commanding a central role in
realising value from knowledge assets is proposed as the new
strategic role for HRM.What is the nature of the transition
proposed for HRM? How does this translate to the functional areas
of HRM? Table 1 presents a summary of the traditional approaches to
HRM and the shift required in the knowledge economy. The areas
represent the elements of HRM that offer the greatest opportunity
to acquire, build and retain organisational capability.Knowledge
management presents HRM with the opportunity to become keyl to the
strategic management of the organisation and a catalyst for
knowledge creation and building value. This involves more than just
re- labeling Human Resources - it is a fundamental paradigmatic
shift for HRM and senior management. The transformation begins with
viewing HRM through a knowledge lens and repositioning the
functions in relation to strategic knowledge capabilities. Managing
knowledge workers, building value from knowledge, and assessing
knowledge risk are also new requirements of HRM in the knowledge
economy. Page | 18
Table1. HRM in the Knowledge Economy (Dr Kate Andrews)HRM
FocusTraditional HRMHRM in the Knowledge Economy
StrategyDevelops HR strategy to align with business strategyHRM
contributes to business strategy development as the expert on
strategic knowledge capabilities Knowledge acquisition, creation,
and utilisation is definitional to business strategy
Recruitment and SelectionSeek and select resources Describe job
requirements and fill vacancies Select from pool of applicants
available at the time the vacancy is identifiedIdentify, attract
and sustain talentSeek out high calibre talentFocus is on a
flexible, agile workforcePartner with external providers of
knowledgeIdentify alternative forms of remuneration
Training and DevelopmentDevelop individual skills and
competencies Plan and coordinate training programs Provide and
monitor professional development programs Focus is on individual
skill acquisitionDevelop individual and organizational
capabilityRecognise the nexus between learning, knowing and doing
focus is on personalised capability development embedded in
workBuild time-to-capability by accelerating learningIdentify and
share excellent practices Facilitate knowledge networksBuild
organisational capability by facilitating knowledge transfer
Workforce PlanningA focus on head count address current and
short-term resource needs by organisational unit Identify current
and short-term resource needs Develop skills to meet needs via
training and developmentA focus on head contents manage knowledge
value and risk for the whole organisation Forecast knowledge
required in strategic knowledge domains for the medium and long
term Rapidly develop and deploy knowledge sets of employees
(individuals and teams)
Performance ManagementMonitor and modify individual performance
Reduce or eliminate undesirable behaviours and set desired
behaviours to enhanceindividual performance Reinforce
organisational culture Monitor adequate compliance with policies
and proceduresKnowledge worker productivity Manage outcomes
characterised by long feedback cycles Retain skilled knowledge
workers and key knowledge in strategic knowledge domains Tap into
knowledge worker intrinsic motivations Enhance team/business unit
performance
Conclusion
Knowledge management, from the HRM perspective, is more than
just the management of information systems, more than just the
management of the interface between people and those systems.
Effective knowledge management facilitates the acquisition of
knowledge by individuals. It encourages them to apply their
knowledge for the benefit of the organization so that competitive
advantage and service excellent are achieved.
In this context, the direction of traveler for HRM is towards
policies that respect and regconise the requirement of knowledge
workers as individuals. Typically, HRM attempt to meet expectation
of knowledge worker through policies designed to facilitate
differing lifestyle choices through actively articulating the
organizational values, supporting involvement and respecting
diversity. Success will be seen in creating a culture that support
the sharing of knowledge and information, creates fluid
organizational boundaries and focuses, in the public sector, on
bringing recourses together creatively to deliver social
outcomes.
Action plan and recommendation
Economic growth in the future is based on the new economy or
k-economy. The new economy is born of the knowledge-based economy
changes from p-economy to a k-economy. The main goal of this
discussion is to build human resource development (HRD) in the face
of challenges to the new economy. The challenge is facing the
current challenges and future. These challenges consist of the
supply of skilled labor force and k-workers. While the challenges
of the future of every country must face is exposed to global
competition or a world without boundaries, known as the influence
of globalization. HRM in itself should equip them with the
knowledge in the k-economy in preparation for the challenges
brought by the k-economy. As a recommendation, HRM must respond to
the key challenges presented by the knowledge economy and command a
central position in realising value from knowledge assets as a
strategic role for HRM. It is also suggested that joint action is
taken in the face of future growth for the relevance of HRM with
changing global economy. And perhaps the time has come that HRM
have to prepare a step forward to provide them selves with
knowledge in e-HRM.
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