Knowledge Management : A new Role for HRD Managers
T V Rao
Chairman, TVRLS and Adjunct Professor IIMA and Trustee, National HRD Network
Bill Gates had put it once, “Our Primary Assets which are our software and software developing skills do not show up on the balance sheet at all. In fact less than 3% of Microsoft Value is accounted for by tangible physical and financial assets”.
Strangely when we calculate the market value of Indian companies like Infosys, TCS, WIPRO etc. more than 95% of their market value is accounted for by what may be called as in-tangible assets or better called as “Intellectual capital” which does not figure out on their balance sheets. Infosys initiated to capture the human asset value by making some calculations of estimated earnings of their employees across a five year period taking into consideration their career progression etc. For most organizations in the modern economy the tangible assets in terms of land, buildings, cash in hand and other tangible assets account for a small part of their market value and “Intellectual Capital” accounts for a major part of their market value. Knowledge capital is one of the important components of this so called Intellectual capital which is not captured on the balance sheet but is captured by the market value of the company.
HRD Managers have a great opportunity contribute to this Intellectual capital much more than any other managers. Unfortunately this is little realised by the MBAs, Managers, CEOs and the HRD managers themselves and our HRD continues to be in a pathetic state by virtue of attracting and developing the right talent.
As Thomas Stewart, Journalist, has put it in Fortune, Intellectual Capital is Intellectual Material- Knowledge, Information, Intellectual Property, and Experience – that can be put to use to create wealth. Managing Talent and Managing Knowledge have become imperatives of the new millennium. It is in this context Knowledge capital becomes a critical factor of Intellectual capital.
Knowledge Capital relates to technology or technical know how in various aspects of business, finance, customers, markets, systems and processes, people and so on any aspect of the organization for its functioning and building competitive edge. It consists of Knowledge coming from new experiences, every day experiences, problem solving, experimentation, new projects, markets, mistakes, Expressed in terms of new services, revised processes, best practices , tacit knowledge like mobilizing Collective Intelligence etc.
Knowledge Management ('KM') comprises a range of practices used by organisations to identify, create, represent, and distribute knowledge for reuse, awareness and learning. It has been an established discipline with a body of university courses and both professional and academic journals dedicated to it. Most large companies across the world have resources dedicated to Knowledge Management, often as a part of 'Information Technology' or 'Human Resource Management' departments, and sometimes reporting directly to the head of the organisation. As effectively managing information is a must in any business, Knowledge Management is a multi-billion dollar world wide market.
Knowledge Management programs are typically tied to organisational objectives and are intended to achieve specific outcomes, such as shared intelligence, improved performance, competitive advantage, or higher levels of innovation.
Knowledge Management always existed in one form or another. When the first dedicated Human Resurces Development was designed by the two IIMA professors at Larsen and Toubro in 1974 the objective of the department was stated as faciltating learning by all categories of employees using multiple sources inlcuding training, job rotation, performacne coaching, review discussions, induction etc.
However in recent times in Information technilogy and Internet era specific adaptations of technology such as knowledge bases, expert systems, and knowledge repositories etc.have been added to faciltate the knowledge transfer. In a organization that ahs high attrition rates there is no substitute to ensuring knwoldge transfer to new employees in the fastest possible way to enable them to contribute in the short time that theya re likley to stay.
Knowledge Management programs attempt to manage the process of creation (or identification), accumulation and application of knowledge across an organization. Knowledge Management, therefore, attempts to bring under one set of practices various strands of thought and practice relating tointellectual capital and the knowledge worker in the knowledge economy the idea of the learning organisation , various enabling organisational practices, such as Communities of Practice and corporate Yellow Page directories for accessing key personnel and expertise, various enabling technologies such as knowledge bases and expert systems, help desks, corporate intranets and extranets, Content Management, wikis and Document Management
Line Managers Perceptions of HRD
In a study by TVRLS perceptions of the HRD function by 162 line managers from different organizations were assessed. These were drawn from 18 companies and included between 3 to 10 line managers from each company. The line managers of each company assessed the extent to which the HRD Departments are performing 87 different activities under eight different functions. The results were compared with the results of a similar study conducted in 1991 on 53 organizations with one line manager drawn from each company. With all the methodological inadequacies this is perhaps one important source of data we have to compare. The 2003 study used the same questionnaire with a four point scale while the 2003 study used a six point scale. For comparison purposes the scores were converted into percentage scores for both the studies.
This study indicated a definite decline in the perceptions of the effectiveness with which the various HRD functions are being performed as perceived by the line managers. First of all the percentage scores all below 50% indicating that the functions are perceived as being performed at a level below the average. Second there was a definite fall in the effectiveness with which these are being performed as compared to a decade ago. This is perhaps an indication of the raising expectation of line managers from the HRD managers. This is also a reflection of the falling standards of performance of various HR Development activities.
Some of the other results of this study reported are:
Among a the various roles performed well in some of the companies the top scoring roles are those dealing with influencing personnel policies, ensuring the alignment of HRD with business goals and strategies and other systems, articulating HR philosophy and liaising with top management.
Monitoring HRD implementation and conducting Human process research are the two poorly performed functions across most organizations.
Creating a development motivation among line managers by organizing visits to other organizations for them is one of the least attended activities
OD and self renewal activities are also among the least effectively performed activities
On the basis of the results the study concluded the following:
HRD Managers need to recognize the stake holder expectations and understand the overall business and strategic context of their function. As the expectations from HRD function are changing and they are expected to perform more value adding functions and activities.
The HRD function should focus on intellectual capital generation activities and at the same time ensure a good ROI on training and other interventions rather than merely facilitating in-house training activities
The HRD practitioners need to equip themselves with capacity and competencies needed to build the HRD function as hands on, proactive strategic partner with practical contributions to organizational goals and performance effectiveness.
The HRD practitioners need to strengthen their partnership and credibility with their stake holders by involving them in policy making and communicating constantly.
HRD (Human resources development) Managers and HRD Departments were created in this country essentially to promote a learning culture. In the consulting report that created the first HRD department in India at Larsen & Toubro in the year 1975 the IIMA Consultants have outlined the following roles to the HRD function and to the HRD Managers:
• Developing enabling capabilities in individuals and the system
• Integrating the development of the people with Organizational development
• Maximizing the learning opportunities of Individuals in organizations through various mechanisms, autonomy and responsibility
• Decentralization, delegation and shared responsibility
• Balancing change and adaptation
• Building feedback and reinforcement mechanisms etc.
The HRD Function was differentiated from the Personnel Function based on the finding in L&T that creation of a learning environment through HRD tools suffers if the same group of people are to look after personnel (essentially monitoring, control, and maintenance roles) and development functions. It was integrated also into the HR function along with differentiation as a lot of development issues depended on personnel policies and both functions were required to work hand in hand. Since the time India had the first dedicated HRD Manager (L&T appointed Dr. D F Pereira as DGM HRD) in the year 1975, the population of HRD Managers has grown in the country. Perhaps HRD is one area where such designations came in the US much after India had them. India took the lead. Unfortunately the growth of the role is not in proportion to the needs in this area. If any, the role of HRD Managers over a period of time has shrunk tremendously.
Today most organizations seem to use the HRD Managers for people maintenance and control roles rather than development roles. HRD roles are supposed to derive their power from their expert knowledge, networking and facilitation skills, and from the employee they serve. The HR Manager (new name for the traditional Personnel Manager popularized in mid eighties to keep up with times) derives his power from his association with policy making, implementation, and closeness to CEO. In spite of the need for competency building in a globally competitive environment real Human Resources Development has not got the attention it deserved. HRD Audit by the author of over a dozen Indian companies in the recent past has revealed that the real HRD Managers envisaged two decades ago are getting practically extinct. The HRD roles are being reduced gradually to recruitment and retention roles essentially involving salary revisions, ESOPs, performance Appraisal and reward systems. There is very little effort made or time left for competency building, creation of learning environment and to aligning HRD with business strategies. Dave Ulrich's books indicating the changes needed in HRD roles are widely read and quoted but very little of it is followed.
It is in this context worth examining if creating a new Role called Chief Learning Manager or Chief Knowledge Manager like other countries have done will help Indian corporate sector.
CLMs and CKMS
The Davos World Economy Forum conducted a survey of how the US CEOs look at the future. The survey revealed that 94% of the CEOs mentioned that globalization as a priority area, 88% mentioned knowledge Management as a priority area, 79% stated that reducing costs is a priority area, 78% mentioned that creating global supply chains us a priority area and 76% mentioned cross country optimization of manufacturing as a priority.
Knowledge Management is defined by Anderson Consulting as "The systematic process of acquiring, creating, capturing, synthesizing, learning and using information, insights, and experience to enable performance". In this way, knowledge management is the engine that transforms ideas into business value.
In another definition, KM is defined as the new discipline of enabling individuals, teams and the entire organization to collectively and systematically create, share, and apply knowledge to better achieve the business objectives.
According to some authors KM is not a HR, IT or other domain but a strategic business development issue.
Organizational learning is a parallel process: a continuous and strategically used process. A learning organization is an organization that learns continuously and thus transforms itself. There are no universally accepted definitions of these terms.
According to one estimate made by Dr. Dede Bonner, President New Century management Inc, USA there are likely to be anywhere between 50 to 250 Chief learning Officers and Chief Knowledge Officers in the world. This is growing. Some of the organizations having such titles include:
• Bank Boston
• Ernest & Young
• Ford Motor Company
• General Electric
• Prudential Insurance Company
• Sun Microsystems
• US West
• Pillsbury Xerox Corporation
• US CIA
• British Petroleum
Other titles like Managing Partner of Knowledge Management (Anderson Consulting); Director of Knowledge Management, Knowledge Coordinator, Knowledge facilitator, Knowledge leader, KM Consultant, Senior Knowledge librarian, Learning Coordinator, Learning specialist, Organizational Architect, Director of Organizational Effectiveness. Vice President Knowledge Management is also known to exist. They draw between $80,000 to $ 750,000 a year in terms of salary.
Chief Knowledge Officers (CKOs) are the focal points to leverage the organizations' knowledge into tangible business results and to gain competitive market advantage.
Chief Learning Officers are the focal points to leverage an organization's learning into tangible business results to gain competitive market advantage.
These positions are new, the responsibilities are evolving gradually and duties vary among different companies.
Sample of responsibilities for CKOs and CLOs include:
• Strategic planning at the highest levels of the company
• Ability to integrate diverse groups and work across all functions; develop the culture; build awareness of knowledge management or organizational learning.
• Design and implement a knowledge and or learning infrastructure to tie together corporate databases, employees' tacit knowledge and paper files.
• Consulting activities, organizational effectiveness
• Work closely with CEOs
Dave Ulrich and team in their book on "Leadership for results" have outlined the following four skills for the CLOs:
1. The CLO knows appreciates and influences business strategy including customer relationships and financial performance
2. Understands the nuances of making change and applies the change
3. Understands the essence of information and knowledge management and creates an organization in which learning occurs
4. Maintains focus on training and development but is sensitive the entire array of HR practices.
Responsibility for building the next generation Leaders rests with the CLOs CKOs.
The CLOs and CKOs perform multiple roles like that of a Consultant, Entrepreneur, Technologist, Environmentalist, and a Champion of knowledge and Learning. The roles and responsibilities are gradually evolving. It is in many cases a strategic as well as a possible informal role for the HRD professionals. This role represents a unique and historical opportunity for HRD managers to influence senior managers, impact the company's bottom line and build professional credibility.
Competencies required include:
• Visionary outlook;
• Strong people orientation and interpersonal skills,
• Familiarity with technology and best practice studies'
• Experience or capability in strategic thinking'
• Familiarity with knowledge management tools or the newest learning methodologies
• Strong customer service orientation
• High level of flexibility
The conditions for the success of these roles fall into two categories: organizational values ad organizational systems and structures. On the values front, supportive senior management, rapid expansion mind set, culture of high trust, belief that knowledge and learning offer competitive advantage and customer orientation. The organizational systems and structures include good IT systems, integrated HR, IT and business units, strategic planning systems, measurement tools and standards.
It is estimated that KM is a 7.2 Billion-Dollar market in the US (Dataquest).
KM involves getting people to disseminate best practices, measuring results. 2 out f three are people issues and KM deals with these.
Performance Technology (PT) Knowledge management and HR professionals seem to be synergistic roles.
It is high time probably to give a new life to HRD, at least in some organizations, by abolishing the old HRD roles of Personnel Management, Industrial relations, Transportation, Leave management, Provident Fund management, salary and benefits management etc. and creating a new agenda for change and competence building through CLOs and CKMs. The hope is that at least through title changes the lost focus on learning can be brought back. This of course need not apply to those HRD Managers who are doing excellent job already in promoting learning and competence building.
How HRD managers can contribute
• Creating a knwoledge sharing culture, problem solving cuslture, learning culture and turning organizations into learning palces.
• Creating in-house lerning networks.
• Reinterpreting various HR fpractices and re-focusiing on their potential as knowledge managemnt tools. For example the author has been promoting Performacne Review Discussiona s a tool for seniors to learn from juniors, and as learning faciltiaton tool to learn about customers,a dn their expectaiotns from their juniors.
• Using modern HRD tools like 360 degree feedback as an leadership building tool and Assessment centers as competency building tools etc.
• Conductign motivational climet surveys that help managers understand and develop their learning capabilites like achievement motivation training, understanding and using power dynamics for facilitating learning
• Using ‘post-training’ assignments to bring people together after the training to share their successes or otherwise of putting the learning inouts into practice.
• Using ‘virtual discussion groups’ or using organisational intranets setting up for a special purpose task forcesor action learning groups