Title: When knowledge management meets HR strategy: an exploration of personalization-retention and codification-recruitment configurations
Authors: Boxall, Peter., email@example.com
Subject: Knowledge management
Status: full text
Source: International Journal of Human Resource Management; Nov2005, Vol. 16 Issue 11, p1955-1975
Preparation: Scientific Database Management Journal Articles www.SYSTEM.parsiblog.com
Abstract: The resource-based view and the knowledge-based view are important developments in strategic management theory, and "knowledge management" has exploded in the popular management literature. There is, however, little empirical literature that explores the connections between firms" attempts at knowledge management and their HR strategies. In this paper, we focus particularly on links between knowledge management and staffing practices. High-technology manufacturing was selected as the site of our research, as high-technology firms rely on highly skilled employees to innovate and develop new products and are therefore an ideal environment for exploring the strategies employed for both managing knowledge, and recruiting and retaining employees. Drawing particularly on the work of Hansen et al. (1999), this paper identifies and explores two fits between knowledge management and HR strategy or what we call KM-HR configurations: "personalization-retention" and "codification-recruitment". We argue that there is no one way to manage knowledge and its links to HRM and build a simple framework of potential KM-HR configurations with propositions for future research.
Keywords: Knowledge management; human resource strategy; resource-based view; knowledge-based view; competitive advantage. --Download Article.
Introduction: According to Prahalad and Haniel (1990), the competitive advantages of firms stem from "core" competencies, which are based on the distinctive knowledge created within them over time. Much of this knowledge - though not all of it - is embodied in the firm"s human resources. While these notions are widely accepted, they verge on the trite. There is still little understanding of the ways in which knowledge management and human resource strategy might interact to support competitive advantage (Currie and Kerrin, 2003; Storey and Quintas, 2001). This article explores the connections between firms" attempts at knowledge management and their HR strategies, particularly the characteristic ways in which they try to recruit and retain key knowledge workers. It studies these links at two hightechnology manufacturing organizations, sites where knowledge management is clearly a strategic concern. Recruitment and retention activities were chosen as the focus of the study because they are essential for gaining and maintaining appropriate levels of intellectual capital in "knowledge-intensive" firms (Alvesson, 2000; Horvitz etai, 2003).
The ive of the article is to enhance the links between strategic HRM and knowledge management. These two areas of management interest are hardly discrete concerns in any firm. The article is structured in the normal fashion: it begins with a review of the relevant literature in these fields, describes the research design and methods, outlines the findings and then discusses their implications. Drawing most heavily on the work of Hansen et al. (1999), the case study data reveal two strategic blends of knowledge management and HR strategy, which we label "personalization-retention" and "codification-recruitment". We conclude by building a simple framework and offering propositions for subsequent research.
Literature review: strategic HRM and knowledge management
Strategic human resource management (SHRM) literature over the past lewd years has drawn heavily on the resource-based view (RBV) of the firm to explain how human assets might assist firms to gain sustained competitive advantage (e.g. Boxall, 1996; Mueller, 1996; Wtight et al., 2001). The basic idea behind the RBV is that firms can be conceptualized as bundles of resources, some aspects of which can only be developed internally and which have the potential to positively differentiate the firm (Barney, 1991; Grant, 1991; Penrose, 1959; Peteraf, 1993). If firms seek to build sustained advantage through developing distinctive competencies or capabilities, the question becomes one of how they might erect and maintain barriers to imitation (Reed and DeFillipi, 1990). In this regard, Barney"s (1991) widely cited framework places emphasis on the role of "unique historical conditions" (Barney, 1991: 107), on the way in which valuable, specialized resources are developed over time through opportunities that do not necessarily repeat themselves. As the firm takes up and adapts to these opportunities, it naturally develops a kind of insulating "social complexity" which, in turn, creates some degree of "causal ambiguity" or uncertainty about how exactly it has become so successful (Barney, 1991). The RBV is not without its critics. Criticism has noted, among other things, an overemphasis on resource heterogeneity. Firms actually need a high degree of resource homogeneity if they are to establish a credible identity and secure some legitimacy in their chosen industries and societies (Carroll and Hannan, 1995; Deephouse, 1999: Oliver, 1997). They need "table stakes" (Hamel and Prahalad, 1994) or "enabling capabilities" (Leonard, 1992, 1998), which include a degree of sameness in HR policies and investments (Boxall and Purcell, 2003).
Notwithstanding this important qualification, the literature on SHRM suggests four conditions must hold if human resources are to offer a basis for distinctive competence and, thus, sustained advantage. First, the firm must be capable of recruiting and retaining the necessary human capital: a pool of employees whose knowledge and skills are valuable and rare (Barney, 1991; Boxall, 1996; Coff, 1997, 1999; Wright et al., 1994). Second, the firm needs to develop ways of gaining superior performance from this pool of employees (through, for example, a superior ability to motivate teams and encourage employee learning), defined by Boxall (1998) as "organizational process advantage". Third, the firm must be able to appropriate a reasonable share of the superior profits or "rents" created as a result of this performance (Boxall, 2003; Coff, 1997, 1999; Kamoche and Mueller, 1998). Employee bargaining power or resistance to control (Coff, 1997, 1999; Currie and Kerrin, 2003), the difficulty of attributing value to individual employees in the case of team production (Wright et al., 1994), and the difficulty of differentiating the value created by human resources from that of other resources (Amit and Schoemaker, 1993; Grant, 1991) are all confounding factors in rent appropriation. Fourth, a firm must be able to prevent competitors imitating or outfianking its advantages through resource mobility barriers (Boxall, 2003; Mueller, 1996; Wright et al., 1994).
This last condition applies to any form of resource advantage - human or otherwise (Barney, 1991; Reed and DeFillipi, 1990). As this discussion makes apparent, employee know-how is potentially a strategic resource and the knowledge-based view (KBV) of the firm (e.g. Grant, 1996) must therefore be seen as an extension of the resource-based view (Eisenhardt and Santos, 2000: 159). Like the RBV, the KBV proceeds from a self-evident assertion: firms are
dependent to some extent on an ability to internally create the knowledge required to adapt to their environments. The argument generally runs as follows: formal repositories and documentation are effective for capturing knowledge that can be easily communicated, but are unable to capture critical "tacit" knowledge (Polanyi, 1966), which resides in key employees (Storey and Quintas, 2001). The effective dissemination of tacit knowledge within a firm is thus largely reliant on employee retention and on the process of embedding employee know-how within a firm"s generally accepted ways of operating or organizational culture (Blackler, 1995; Mueller, 1996; Swart and Kinnie, 2003; Tsoukas and Vladimirou, 2001). Walsh and Ungson (1991) refer to knowledge contained in the deeply embedded history and routines of organizational life as existing in the "organizational memory" of a firm. Employees are an integral part of an organization"s memory system as they form the social networks required for the creation and transferof tacit knowledge and skills (Currie and Kerrin, 2003; Olivera, 2000; Storey and Quinta.s, 2001; Swart and Kinnie, 2003; Tsoukas and Vladimirou, 2001). If enough key people or teams leave, significant, if not irretrievable damage can be done to organizational memory (Alvesson, 2000).
The literature on knowledge management has, inevitably, lent itself to superficial assertions and premature preions, which are rightly criticized on the grounds that they misunderstand the nature of knowledge and underestimate the difficulty of its management (Alvesson and Karreman, 2001; Currie and Kerrin, 2003; Storey and Quintas, 2001; Swan and Scarborough, 2001; Tsoukas and Vladimirou, 2001). Without falling into these obvious traps, we need, however, to examine frameworks in the literature that enable us to explore the links between knowledge management and HRM in a constructive way.
In one well-cited framework, Leonard (1992) defines core capabilities as those knowledge sets that provide a competitive advantage. She argues that the intellectual capital within a core capability is comprised of four integrated dimensions. The first two dimensions (employee knowledge and skills, and technical systems) refer to knowledge content, and the third and fourth dimensions (managerial systems, and values and norms) refer to the processes surrounding knowledge creation and control within the organization. Popular writings in recent years on the subject of intellectual capital have defined human capital as one category of intellectual capital (in addition to structural capital and customer capital) (Brooking, 1996; Dess and Picken, 1999; Edvinsson and Malone, 1997; Stewart, 1997). However, much of the literature on intellectual capital has not captured the dynamic nature of organizational capabilities and knowledge creation, focusing more on intellectual capital as a .stock of knowledge, rather than a dynamic process. Leonard (1992, 1998) argues that while core capabilities have the potential to assist with innovation and learning, they also have the potential to become "core rigidities", given the pervasive nature of the values and norms dimension.
In another widely-cited framework, Nonaka and Takeuchi (1995) propose the concept of the "knowledge spiral", built around the notion of knowledge transformations between tacit and explicit states within and between individuals, and at different levels within the firm. There are four modes of knowledge transfer: socialization (tacit to tacit), externalization (tacit to explicit), combination (explicit to explicit) and intemalization (explicit to tacit). According to Nonaka (1994), knowledge creation within organizations begins first with individuals enlarging their own knowledge, in particular tacit knowledge, which he argues is central to the knowledge creation process. Second, individual knowledge is shared within work teams through socialization (tacit to tacit) and combination (explicit to explicit), resulting in the formation of a common implicit perspective. This common perspective is then articulated predominantly through the externalization mode (tacit to explicit), through dialogue and often the use of metaphors. The next phase in the process is the crystallization of the knowledge into a concrete form such as a product, system or process, achieved predominantly through the intemalization mode of knowledge transfer (explicit to tacit). Finally, the knowledge created as an outcome of this process is judged for quality and "truthfulness". Nonaka and Takeuchi (1995) see this as an ongoing process eventually resulting in new knowledge becoming integrated into the knowledge-base of the organization.
Hansen et al. (1999) have developed a crisper approach to explaining organizational strategies for managing knowledge that may offer a simpler way of envisaging links between knowledge management and HRM. They propose that organizations focus to varying degrees on the "personalization" and "codification" of knowledge. These are ot mutually exclusive categories but managers tend to favour one over the other (perhaps as much as an "80-20 split" - Hansen et ai, 1999: 112). Personalization strategies are evident at firms where knowledge remains closely tied to the individuals who create it, and is communicated predominantly through person-to-person contact. This is akin to Mueller"s (1996) concept of "social architecture", which is defined as the complex system of learning and social interaction within a firm. In contrast, codification strategies are evident in firms that predominantly try to record knowledge in databases or knowledge repositories that are accessible by most people in the firm. The argument is that personalization strategies enable an organization more effectively to disseminate unique, valuable, difficult-to-imitate knowledge, whereas codification strategies focus more heavily on capturing explicit data and information. Hansen et al.
(1999: 109) argue that the approach a firm takes to knowledge management "should reflect its competitive strategy: how it creates value for customers, how that value supports an economic model, and how the company"s people deliver on the value and economies". Arguably, codification suits firms with mature products or a high emphasis on stable, repeat business while personalization suits innovative or highly customized strategies.
Like Hansen et al. (1999), our interest lies in exploring the strategic conflagrations in which knowledge management strategies are nested, particularly the ways firms might link their knowledge strategies to their strategies for managing people. Coff (1997, 1999) underlines the threat to sustained competitive advantage posed by employee turnover, particularly in the case of employees who possess high levels of firm-specific skills and knowledge. Given the difficulty of "binding" human resources to the firm, a certain degree of employee mobility is inevitable. A firm can effectively lessen the risk of strategic knowledge loss by complementing knowledge management strategies with appropriate HR strategies (Hansen et al., 1999). It would seem, then, that strategies for managing knowledge in organizations should be closely aligned, amongst other things, with those for recruiting and retaining employees (Figure 1).
There is so far very little in-depth, non-survey-based empirical work on this connection in either the knowledge management or human resource management literatures. Exceptions include Currie and Kerrin"s (2003) study of problems of knowledge-sharing across functional boundaries in a pharmaceutical firm, which indicates the difficulties and perversities that can arise when HR practices, including the firm"s performance management system, are not well aligned with aspirations to knowledge management. In contrast, a study by Swart and Kinnie (2003) of the relationship between knowledge-sharing and HR strategies in a small software house found that the management team had consciously worked to link knowledge-sharing practices with HR practices, placing emphasis on providing highly autonomous, challenging work and extensive opportunities for participation in a relatively nonhierarchical structure. Both studies underline the centrality of key HR practices in any credible attempt to enhance knowledge-sharing in firms.
Research design and methods
High-technology manufacturing was selected as the focus of our research. As high technology firms rely on highly skilled employees to innovate and develop new products, they are an ideal environment for exploring the strategies employed for both managing knowledge and recruiting and retaining employees. The ive was to understand both knowledge management and human resource strategies within the context of each company"s history and strategic orientations, taking into account the views of both managers and employees. Like Swart and Kinnie (2003), we adopted a very grounded, case-based design. This did not involve imposing a definition of knowledge management or a particular framework but, rather, asking managers about the practices they used to manage knowledge. Nor did it involve imposing a definition of HR strategy, which is also difficult to encapsulate in a simple set of constructs. However, it did involve asking managers about recruitment and retention strategies, which are a critical part of HR strategy in knowledge-intensive firms, and are more
Each case organization was selected to fit with the following criteria:
1 Involvement in elaborately transformed manufacturing (ETM) (chemicals, machinery, electronics, communication goods and instruments) using high technology.
2 Involvement in research and development (R&D) work, including being a major employer of R&D engineers.
3 Clear evidence of competing with other organizations for talented R&D engineers.
4 Involvement in export activities and international competition.
5 Permission to collect data from management and from R&D engineers themselves.
Data gathering took place during the year 2000. Structured interviews lasting approximately 1 to 1.5 hours were conducted with the HR manager and all engineering managers at each organization (six interviews in both firms). The intention was to interview all managers directly involved in R&D operations and the related human resource activities. The data sought through the interviews related to company history, markets, strategic orientations, knowledge management practices, the perceived value of R&D engineers, strategies for recruitment and retention, and the impact of employee turnover on the organization.
In addition to the qualitative data collected through the managerial interviews, a selfcompletion questionnaire was sent to the entire population of R&D engineers at AlphaCo and to a convenience sample of engineers at BetaCo. The questionnaire asked engineers to rank their organization"s ability to meet their expectations on various facets of job satisfaction, based on the very well-established Job Deive Index (JDI) (Smith et al., 1969; Cranny etal., 1992). Ranking data were collected to determine which facets of job satisfaction were most important to the engineers when selecting an employer or deciding whether to terminate employment with an organization. The questionnaire also collected a small amount of qualitative data regarding engineers" perceptions of what would make their employer more effective at recruiting and retaining R&D engineers. The number of replies to questionnaires distributed at each organization totalled 24 in one case and 27 in the other. Deive statistics (counts, means and percentages) were used to summarize and analyse the data collected through the questionnaires. Case analysis and writing-up was undertaken in 2001 and this paper was developed in 2003. The specific details of the main technologies and products of the companies have not been included in the paper given the relative ease with which the companies can be identified in a small country like New Zealand. The case study companies were then contacted in early 2004 through the key HR managers who had facilitated access. They were invited to correct any errors of fact, to respond to the case interpretations, and to update us on developments since the original data were collected. This cannot be portrayed as a longitudinal research design but did allow for a dialogue around dynamic trends in the case study companies.
This section outlines the results of the data collection in each case study firm.
History, markets and strategic orientation AlphaCo is one division of a large, established, high-technology manufacturing organization based in New Zealand, which began trading approximately 70 years ago. For the first few decades of its existence, AlphaCo was a privately-owned organization, heavily influenced by the founding family. but is now a publicly listed company. The firm is built on a blend of engineering and entrepreneurial values. AlphaCo is large by New Zealand standards, but relatively free from the constraints of excessive bureaucracy and coiporate structure. Approximately 470 people were employed in the division at the time of this study, 34 of whom were R&D engineers. AlphaCo produces high technology electronic goods for the New Zealand market and for export, using technology that has been created in-house. At the time of the study, approximately 75 per cent of the organization"s operating revenue was derived from export markets. The company is a "first-mover" in the development and delivery to market of certain products: it is not an imitator. On the world stage, given its comparatively small size in relation to other global firms, AlphaCo has adopted a niche strategy, marketing to certain groups interested in the unique features offered…. --Download Article
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