The Knowledge-Based Organization: Managing Its Human Resources

The Knowledge-Based (Lerning) Organization: Managing Its Human Resources

Learning Objectives

To understand trends in project/programme purpose related to knowledge workers and intellectual capital.
To learn techniques for recruiting, managing and retaining knowledge workers.

Knowledge-Based Organizations and Knowledge Workers

A Knowledge-Based Organization may be defined as an organization that relies on the ability of individuals to create, obtain and apply knowledge to produce products or services. In such organizations, learning and the continual accumulation of knowledge are vital parts of the organization’s work. action sponsors/beneficiaries select these organizations because of their expertise.

Similarly, learning organizations may be defined as an organization that has developed the continuous capacity to adapt and change. In Learning Organizations, all employees are expected to act as “learning agents” and to apply new knowledge specifically to their own organizations to achieve superior results.

Knowledge-Based Organizations and Knowledge Workers

We can define knowledge workers as employees whose job satisfies objective standards ( adapted from Abraham Flexner’s work on the distinguishing attributes of professions.)

Any employee engaged in work predominantly intellectual and varied in character as opposed to routine mental, manual, mechanical or physical work.
Involving the consistent exercise of discretion and judgment in its performance.
Requiring knowledge that can be communicated through a specialized education.
Focusing on practical applications, rather than merely academic or theoretic.

See Knowledge Workers and Learning Organizations; Computer based Knowledge Management and People

The “Dos” and “Don’ts” of Managing Knowledge Workers

The emphasis on human resource management policies and practices as they relate to knowledge professionals represents a recognition of the strategic importance of knowledge workers in sector of activity. Knowledge workers, by what they do and the products they create, change and define with is meant by cutting-edge innovation.

Many studies have suggested that project/programme purpose organizations, especially large ones, get a poor return on their investment in knowledge workers because of their inability to develop human resource management approaches that foster the innovative and creative behavior for which the professionals were hired in the first place. Hierarchical control systems, bureaucratization, naive understanding of what motivates professionals and an inability to foster loyalty to the organization are among the reasons commonly given for why this situation prevails.

A conflict tends to exist between the goals of knowledge workers and the rules and procedural requirements of bureaucratically managed organizations. The argument goes that creativity does not flourish in an environment where work is closely measured and supervised, and that knowledge workers need autonomy, freedom and individual responsibility.

To understand better the challenges of managing knowledge workers, we have studied three diverse creative environments: universities, entertainment media and high-technology organizations. Our findings can be encompassed in five categories which we call “The Five Rs of Managing Knowledge Workers”: recruiting, rewards, responsibility, resources and relationships.

Rewards: Job Versus Knowledge-Based Pay

Without some positive consequences for creative behaviour built in, it would be difficult to imagine an individual or organization that would keep up a long-term commitment given the effort involved. The traditional compensation system usually assigns a value to a job and assumes that the person performing the job is worth only as much to the organization as the job itself is worth. And the seniority compensation system automatically pays people more for the more years that they work for the same employer.

Since the 1960s, a number of organizations in the United States and Europe have adopted skill-based pay systems in order to be effective employers for knowledge workers. “Knowledge-based pay” considers the skills, knowledge and abilities of individuals and what competitors pay similar individuals. It fosters loyalty from the knowledge workers because they are paid better compared to the external market. They also have organization-specific skill sets, making them more valuable to their own employer than to other organizations.

Knowledge-based pay is appropriate for knowledge workers because individuals are paid according to the number and kind of skills that they have mastered and for the knowledge that they possess. Knowledge-based pay requires organizations to determine what skills and knowledge are needed in specific jobs, how many individuals that it needs with each skill, what policies will govern employee development, and how well a new skill has been mastered. It frequently is wise to combine skill-based pay with pay-for-performance so knowledge workers are compensated for both ongoing performance and knowledge.

Knowledge workers also value other types of rewards in addition to money, although many organizations fail to recognize such as time off, recognition and development. Time off allows employees to attend their children’s events or rejuvenate so they return to work refreshed.

Table 1: Comparison between Reward Structures for Organizational Capabilities

	Lean Manufacturing	Agile Knowledge Work
Skills and Knowledge	Quality, self-management	Technical knowledge, leadership skills
Market Position	At market	High for core knowledge
Hierarchy	Moderate	Minimal

Adapted from Rewarding Excellence: Pay Strategies for the New Economy.

Responsibility

When organizations are asked how they keep their knowledge workers productive, the concept of “freedom” often emerges. In the professional fields, the work environment that is most likely to stimulate creative behavior is one which places a premium on personal responsibility for individual and collaborative achievement. In the final analysis, motivation for high performance must come from within the individual, but certain environments are more conducive to stimulating creativity than other ones. For example, a managerial emphasis on the quality of the contribution rather than on how or where the work gets done should be encouraged. Knowledge workers must feel comfortable undertaking risky projects and their experimentation should be encouraged.

One common denominator of those organizations that effectively promote breakthrough value from knowledge workers seems to be an expectation for hard work on innovative projects. Individuals are given a lot of personal responsibility for individual contribution and are rewarded according to how well they have lived up to those expectations. For example, the entertainment media sector of activity requires notoriously long hours during the periods of time when TV show are being developed, but the executive producers, writers and actors are handsomely rewarded if the show succeeds.

Successful organizations also provide opportunities for participation in power sharing, especially in matters of direct interest to knowledge workers. Participative decision making tends to improve the ability and motivation of knowledge workers. Their ability improves through information sharing, which makes them more informed and better able to contribute creative ideas. They also are motivated because research shows the employees tend to set higher goals through participative decision making than when they are unilaterally set. Therefore, knowledge workers should feel included in setting goals for the organizational unit itself. They also should be offered ample opportunities to build their intellectual capital through seminars and other venues where they can exchange ideas.

Resources

Innovation and high performance rarely occur as abstract activities. Knowledge workers need resources to support their endeavors in the organization. The most successful organizations foster creativity and innovation by making time and money (though often modest amounts) available to individuals for creative pursuits and by encouraging internal competition for the limited resources available.

Providing resources does not necessarily mean that organizations must spend large sums. The resources essential for productive behavior may be as simples as having adequate space, time, alternative work schedules or opportunities for interaction with colleagues. For example, 3M developed a formal policy that allowed employees to “bootleg” 15% of their time to work on pet projects. Of course, knowledge workers also might need equipment or administrative support. A logical relationship must exist between the resources provided and the nature of the creative tasks to be performed. Otherwise, the process will seem arbitrary and generate ill will from peers.

Many organizations hope to foster inquiry and the development of new knowledge by making time and money available for such pursuits. The following list is indicative of the most common practices for doing so.

(1) Allow employees to use work time to take formal coursework at higher-learning institutions and reimburse their expenses for doing so. Encourage employees to pursue advance degrees.

(2) Award sabbaticals to key employees so they can develop new skills or work on projects of interest to the individual and the organization.

(3) Provide employees free time to work on “pet projects”. Provide small grants or supplies and other support to these projects.

(4) Allow employees to check out equipment to be used during spare time at home.

(5) Offer in-house seminars on subjects of special interest.

Relationships

The traditional employee-employer situation, where an individual reports to a single boss, quickly is being replaced in many knowledge-based organizations by self-managing work teams. In this new system, groups of peers are responsible for a particular area or task. More than 40% of U.S. workers are in some variation of a team environment, according to research. This trends places unprecedented importance on fostering collaborative relationships. Our research indicates that organizations that encourage managerial behavior on the part of their knowledge workers offer critical support from the hierarchy and mobilize peers to work together on innovative projects.

In organizations with traditional structures, we have found similarities in the constellation of relationships between knowledge workers and their supervisors. The relationships include flat hierarchies and positive synergistic team/peer relationships.

Less experienced knowledge workers will benefit from defined mentor-mentee relationships. Some employers offer official mentoring programs where they pair young high-potential managers with older, more senior managers. organization-initiated mentoring programs also help integrate knowledge workers from underrepresented groups into the organization.

Even organizations that lack formal mentoring programs should ensure that less experience knowledge workers have opportunities to work with experienced peers. Managers must promote interaction and access among peers to encourage collaboration. The best executives manage by giving the impression of staying out of the way, even while they put each knowledge worker in touch with others who can move his or her project forward. Employers also should provide an open and non-threatening environment in which employees can ask questions and challenge existing policy, have access to top management and interact up and down the hierarchy on problems of interest.

HR Policies for Knowledge-Based Organizations

Human Resource policies and practices in knowledge-based organizations should reflect the importance of information to organizational success. HR professionals should be integral participants in developing the organization’s strategy; HR policies should protect the intellectual capital that lies at the core of the organization’s success.

In knowledge-based organizations, the effective human resource professional is one who is fully knowledgeable about the project/programme purpose strategy of the organization – indeed, who participates in its formulation. Such a person can make a distinctive contribution by helping line management plan for and acquire the necessary staff and develop the particular human resource practices that hold the greatest likelihood of keeping the knowledge workers productive and content.

The intellectual capital of organizations has gained protections in recent years because information is the core effective advantage of many organizations in the knowledge-based economy. To prevent competitors from stealing their talented knowledge workers, some of these organizations require all employees to sign noncompete agreements that limit their ability to work for a competitor if they were to leave the organization. Several U.S. organizations have taken employees to court who violated noncompete clauses by joining competitors. In Europe, Volkswagen AG and General Motors Corp. have been in a decade-old fight over a former auto-sector of activity executive charged with giving confidential GM documents to rival Volkswagen.

Even organizations that never had employees sign noncompete agreements may be able to prevent former employees from joining competitors. Judges in more than a dozen of U.S. states have prohibited employees from holding positions with competitors until a certain amount of time passes, even if they never signed non-compete clauses. The decisions by these judges reflect the “inevitable disclosure” doctrine, recognizing that knowledge workers retain proprietary information that they may inevitably – perhaps inadvertently – disclose if hired by a competitor.

Many organizations also use nondisclosure agreements, a legal document in which employees promise not to divulge certain information about a organization, product or service. In today's knowledge-based economy, ideas often are a organization's most valuable asset. They ask potential investors, vendors, beneficiaries and job applicants to sign a legally binding nondisclosure agreements.

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