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Name:Lau Wah Yin
Student No :320777772
Lecturer:Dr Juergen Rudolph
Word Count: 2,665 Words
Similarity Index: 13%
Except where I have indicated, the work I am submitting in this assignment is my own work and has not been submitted for assessment in another course.

Knowledge Management……………………………………………………..3
2.1 What is KM?…………………………………………………………………………………..3
2.2 Explicit & Tacit Knowledge……………………………………………..4
HRM Practices in Managing KM……………………………………………5
3.1 Recruitment & Selection…………………………………………………5
3.2 Performance & Reward Management…………………………………..6
3.3 Training & Development…………………………………………………8
Implications of HRM Practices on Innovation Performance……………..9
Challenges Faced…………………………………………………………….11
“Sustainable Performance: The Role of HRM Practices in Managing Knowledge Management”
In today’s business environment, it has become rather more challenging and competitive than in the past due to globalization and technological change. The intensity of competition, arising from globalization, demands innovation, quality and low cost in order to stay competitive CITATION Wan05 l 1033 (Wan, Ong and Lee 2005). To survive in this new era, organizations will need to focus even harder in developing appropriate long-term strategies so as to stay ahead of their competitors.

The use of knowledge management (KM) has been widely recognized as a key organizational asset and a critical source of competitive advantage, particularly with the rise of knowledge economy CITATION Non95 l 1033 (Nonaka and Takeuchi 1995). In order to operate in the knowledge economy, traditional HRM will need to be expand and broaden to managing capabilities, relationships, learning and knowledge within the organization CITATION Len03 l 1033 (Lengnick-Hall 2003). HRM will also be responsible in developing new open culture that highlight the importance of creating, sharing and utilizing of knowledge within the organization.
This paper aims to discuss how KM can be implemented into the organization through the use of HRM practices as well as the implications of HRM practices have on innovation performance.

Knowledge Management
2. 1 What is KM?
There is no universal definition of ‘knowledge management (KM)’. General definitions of KM are often associated with the process of locating, creating, capturing, and using knowledge to enhance organizational performance CITATION Non95 l 1033 (Nonaka and Takeuchi 1995). Hence, it can be best defined as an integrated, systematic approach to identifying, managing, and sharing of both tangible and intangible knowledge resources of an organization CITATION Ile01 l 1033 (Iles, Yolles and Altman 2001). Examples of tangible assets are databases, documents and procedures, whereas intangible assets are the tacit knowledge and expertise embodied in the employees within the organization CITATION Men041 l 1033 (Menkhoff, Chay and Loh 2004).
KM can influence all three levels in the organization, specifically the individual, group and organizational level. At the individual and group level, KM places heavy emphasis on the competencies, education and learning abilities of the organizational members, while at the organizational level, KM is all about the creation, application and development of knowledge resources of an organization CITATION Men041 l 1033 (Menkhoff, Chay and Loh 2004). As a whole, KM plays a crucial role in supporting and fostering innovation, thereby enhancing organizational performance and maintaining competitive advantage CITATION Che091 l 1033 (Chen and Huang 2009).

2.2 Explicit ; Tacit Knowledge
The two common types of knowledge in KM are explicit and tacit knowledge. Explicit knowledge, or sometimes referred to as ‘know-what’, is clearly formulated and codified CITATION Ish10 l 1033 (Ishak, Eze and Lew 2010). This type of knowledge can be easily identified, stored, retrieved, shared and communicated within the organization. Many organizations tend to view explicit knowledge as being less important as it cannot contain the rich experience-based know-how that can create long lasting competitive advantage CITATION Buk99 l 1033 (Bukowitz and Williams 1999). On the other hand, tacit knowledge, known as ‘know-how’, is the unarticulated or experience-based knowledge embodied in the individuals CITATION Ish10 l 1033 (Ishak, Eze and Lew 2010). This type of knowledge is difficult to define, transfer and communicate. Yet, organizations regard tacit knowledge as the most valuable source of knowledge as it promotes organizational innovations and sustains competitive advantage CITATION Til13 l 1033 (Tilchin and Essawi 2013).

Considerable attention has been focused on the tacit knowledge embodied in the individuals. As mentioned earlier, it helps to support organizational innovations and firms need this knowledge to survive in the emerging knowledge economy. Every employee has a wide range of tacit knowledge deeply rooted in their actions and commitment to a particular profession, technology or product market CITATION Mes00 l 1033 (Meso and Smith 2000). In order to acquire the tacit knowledge of employees, organizational culture that encourages KM must be defined and communicated to the employees CITATION Til13 l 1033 (Tilchin and Essawi 2013). This will induce employees’ willingness to create, transfer, share and utilize knowledge.

HRM Practices in Managing KM
HRM plays an equally significant role in managing effective KM in the organization. To keep up in the knowledge economy, HRM should divert from ‘managing people’ to managing the knowledge and expertise that people own and the relationship that people develop CITATION Len03 l 1033 (Lengnick-Hall 2003). The benefits of using HRM practices in managing KM help to reduce employee turnover and enhance performance through the impact on employee development and motivation CITATION Jha11 l 1033 (Jha 2011).

Source: CITATION Jha11 l 1033 (Jha 2011).

Before implementing KM through HRM practices, it is essential for HR managers to develop an open culture in which the values and norms highlight the importance of knowledge creation and sharing at all levels within the organization CITATION Til13 l 1033 (Tilchin and Essawi 2013).
3.1 Recruitment & Selection
With the emergence of knowledge economy, the acquisition of knowledgeable and competent human capital has become one of the top priorities for many firms today CITATION Cho10 l 1033 (Chowdhury 2010). Traditional recruitment and selection practices, such as matching ‘people-skills’ to specific job requirement or selecting candidates through assessment centres that are functionally focused, can hinder knowledge sharing between groups or departments CITATION Edv08 l 1033 (Edvardsson 2008). Hence, old practices will need to be changed or modified in order to transform ‘person-job fit’ into ‘person-organization fit’, to promote knowledge sharing and application within the organization, and to develop a set of policies that harness knowledge to meet strategic goals and objectives CITATION Chi08 l 1033 (Chivu and Popescu 2008).

Human capital, together with their knowledge, expertise and skills, is a valuable resource of firms. By leveraging on their knowledge and expertise, it helps to create values and attain competitive advantage for firms CITATION Sca03 l 1033 (Scarbrough 2003). Therefore, it is crucial for HR managers to design and develop new system to attract, recruit and select high-calibre candidates, with the core ‘future skills’ required to sustain competitive advantage for the organizations. The set of skills, knowledge and competencies must be aligned with organizational culture, goals and objectives. Organizations can adopt a competency-based recruitment approach to assess whether candidates have the required competencies to undertake the job CITATION Cho10 l 1033 (Chowdhury 2010).

Through effective staffing system, candidates with the required knowledge and expertise are selected for firms to operate KM activities and to integrate them effectively for the development of KM capacity CITATION Che091 l 1033 (Chen and Huang 2009). In addition, firm must design and develop appropriate compensation systems to retain and motivate employees to prevent them from leaving the organization. Losing one employee will mean losing the tacit knowledge embodied in that employee. Revisiting the knowledge of the employee who has left can be a very taxing and costly process CITATION Ish10 l 1033 (Ishak, Eze and Lew 2010).

3.2 Performance & Reward Management
A more salient aspect of HRM and business imperative is the implementation of both performance appraisal and compensation systems. They serve an important role in influencing employees’ behaviors in the desired strategic direction of the organization. In terms of performance appraisal, it refers to a systematic process designed to evaluate an individual’s job performance with respect to certain pre-established criteria, business strategy and objectives CITATION Kra13 l 1033 (Kramar, et al. 2013). Another key component in the performance management system is the performance feedback. It is the process of providing useful information to the employees regarding their performance effectiveness CITATION Kra13 l 1033 (Kramar, et al. 2013). Performance feedback is designed to enhance the ‘fit’ between organizational requirements and employee aspirations. As a whole, performance management is central to gaining competitive advantage and organizational effectiveness.
It is necessary for organizations in the knowledge economy to develop and implement systems and policies that support KM activities; especially knowledge sharing at all levels. However, employees are unlikely and unwilling to perform these activities due to the divergent objectives set out for them in the performance agreements CITATION Cur03 l 1033 (Currie and Kerrin 2003). It is essential for firms to consider ‘knowledge’ component as one of the appraisal criteria, linking employees’ performance with their involvements in knowledge sharing and application in the tasks CITATION Che091 l 1033 (Chen and Huang 2009). A ‘balance scorecard’ approach is strongly recommended for identifying performance measures from a holistic, long-term perspective. Moreover, providing 360º feedbacks on such behavior can aid in improving knowledge sharing behavior within the organization CITATION Jha11 l 1033 (Jha 2011). As a result, it can help to enhance employees’ motivation to engage in KM activities in the long run.

Effective performance management system requires communication of organizational requirements and expectations as well as careful identification of performance indicators CITATION Kra13 l 1033 (Kramar, et al. 2013). This is to ensure that all employees are clear about the behaviors they need to exhibit. Furthermore, performance feedback offers a great opportunity for managers to set improvement goals and communicate what the organization values for instance knowledge sharing, thus enhancing the development of the sharing norms CITATION Jha11 l 1033 (Jha 2011).

Compensation systems, on the other hand, help to shape an individual’s behavior by rewarding them either with intrinsic or extrinsic rewards CITATION Edv08 l 1033 (Edvardsson 2008). Firms should reward employees based on creativity, risk-taking attitude and problem-solving ability so as to promote knowledge diffusion and sharing within the organization CITATION Che091 l 1033 (Chen and Huang 2009). In the knowledge economy, group achievements are often encouraged as it involves group cooperation, information dissemination, sharing, transfer, and application of knowledge among group members. In this case, it is relevant to include ‘teamwork’ component in the appraisal criteria and compensate them based on group rewards instead of individual. Examples of rewards include equity-based rewards, profit sharing and work flexibility.

Conversely, research has indicated that knowledge workers tend to have high needs for autonomy, significant drives for achievement and a greater sense of self-direction CITATION Ish10 l 1033 (Ishak, Eze and Lew 2010). This implies that non-monetary rewards, such as professional recognition and award ceremonies, have become critical as knowledge workers are potentially more intrinsically motivated. Take General Motors for example; the company has sponsored the ‘Kettering Awards’ which recognize employees’ outstanding achievements. This will, in turn, help to reduce knowledge worker turnover, whereby non-monetary strategies have a positive relationship with lower turnover CITATION Hor03 l 1033 (Horwitz, Chan and Quazi 2003).
3.3 Training & Development
One key aspect of life in the knowledge economy is the need for learning. Organizations view this aspect to be significant and invest heavily in human capital by providing training and development programs CITATION Ish10 l 1033 (Ishak, Eze and Lew 2010). It provides the necessary education, facilitation and support to the KM process. In terms of training, it refers to a planned process that aims to modify an individual’s behavior and knowledge through a learning experience CITATION Jas11 l 1033 (Jashapara 2011). Training needs must be aligned closely with organizational goals and objectives. It is vital for firms to offer both internal and external training opportunities to develop and nurture required knowledge and expertise of employees. Exposure to diverse training programs can foster employees to acquire new knowledge and skills, broaden their insights, and equip them with innovative capabilities essential for performing their tasks CITATION Non95 l 1033 (Nonaka and Takeuchi 1995). Moreover, it helps to stimulate employees in knowledge sharing and transfer within the organization as well as knowledge application in their works.
Development is associated with an individual’s maturity and growth and it is usually long-term CITATION Jas11 l 1033 (Jashapara 2011). Knowledge workers view continuous development to be important and it can be best developed through the use of coaching and mentoring. The difference between coaching and mentoring is shown in the diagram below.

Source: CITATION Cun03 l 1033 (Cunningham, Cunningham and Fatelnig 2003).

Coaching promotes a learning style directed toward the ‘know-how’. It can be either hands-on for inexperienced learners or hands-off for experienced learners CITATION Jas11 l 1033 (Jashapara 2011). In contrast, mentoring is geared toward personal and professional development where it encourages problem-solving skill CITATION Jas11 l 1033 (Jashapara 2011). Both actions are central to fostering a climate of trust and stimulating knowledge sharing CITATION Cun03 l 1033 (Cunningham, Cunningham and Fatelnig 2003).

Implications of HRM Practices on Innovation Performance
Organizational innovation is widely recognized and has been regarded as a critical source of sustainable competitive advantage, particularly with today’s emerging knowledge economy. The development of new products or services involves acquiring, disseminating and applying of new and existing knowledge during the innovation process CITATION Che091 l 1033 (Chen and Huang 2009). An organization’s innovativeness depends heavily on KM and its knowledge workers to create values, enhance organizational effectiveness and most importantly, to sustain competitive advantage CITATION Sca03 l 1033 (Scarbrough 2003). This indicates that KM relates positively to innovation performance. Likewise, with the implementation of KM, the relationship between HRM practices and innovation performance will be positively related as well.

The knowledge, expertise and skills embodied in human capital are crucial for firms as it helps to discover innovation opportunities. Development of new products or services begins with the motivation and ability of human capital to develop creative ideas and innovative approaches CITATION Sca03 l 1033 (Scarbrough 2003). Hence, the use of HRM practices, such as recruitment and selection, performance and reward management as well as training and development, helps to influence employees’ behaviors, motivates employees’ commitments and involves them in creativity and innovation CITATION Lau03 l 1033 (Laursen and Foss 2003).

When firms engage in innovative activities, greater uncertainty and inconsistency will be encountered during the innovation process. The need of high-calibre employees who possess flexibility, creativity, risk-taking attitude and problem-solving ability, are required. Through effective staffing, potential candidates who possess the required competencies will be hired. This way, they become the important sources of new insights and capabilities in the firm’s innovation process, thus increasing innovation performance CITATION Che091 l 1033 (Chen and Huang 2009). With regard to effective performance and reward management systems, it helps to enhance employees’ motivation and commitment to participate in innovative activities, thus achieving favorable innovation results for firms. Lastly, training programs help employees to acquire new knowledge and skills, broaden their insights and equip them with innovative capabilities required for performing their tasks CITATION Non95 l 1033 (Nonaka and Takeuchi 1995). Moreover, it helps to develop employees at all levels of the organization. This will, in turn, provide a potentially inexhaustible source of ideas for further innovation so as to improve performance effectiveness and to sustain competitive advantage for firms CITATION Tor95 l 1033 (Torraco and Swanson 1995).

A learning effect in the organization may occur when firms exhibit a greater level of KM capacity, improving their capabilities in reducing redundancy, responding rapidly to change, and developing creative ideas and innovation CITATION Sca03 l 1033 (Scarbrough 2003). Coupled with the use of effective HRM practices, it helps to further add values in developing innovation and achieve better innovation outcomes, thereby increasing innovation performance and competitive advantage.

Challenges Faced
There are, however, challenges faced when implementing KM through the use of HRM practices.

Challenge No. 1: Employees may tend to resist to changes whenever firm introduces or implements new system into the organization for improvements CITATION Wad071 l 1033 (Waddell, Cummings and Worley 2007). They are fear of the unknown consequences that may affect their job positions, roles and salaries. Resistance to change can have negative impacts on the organizational performance and effectiveness. In order to prevent this, it is important for firms to minimize the resistance generated in employees and manage the change process effectively. This can be done so by educating employees on the issues concerned with current practices and how change management program can benefit the individuals, groups and the organization as a whole; and by involving all employees in problem solving, decision making and implementing change process CITATION Jas11 l 1033 (Jashapara 2011).

Challenge No. 2: During the performance appraisal process, certain considerations should be taken into account, for instance the different ways in which knowledge is contributed by each individual CITATION Eva03 l 1033 (Evans 2003). In order to ensure procedural, interpersonal and outcome fairness to all the employees, managers should consider the following questions based on knowledge acquisition, sharing, application and development as shown below:

Source: Self-Develop.

This paper has focused on how HRM practices can aid in managing KM activities. The table below summarizes the strategies in managing KM through the use of HRM practices.

HRM Practices Strategy in Managing KM
Recruitment & Selection Competency-based approach
Cultural fit between knowledge creation and sharing
Performance Management Add ‘knowledge’ component in the appraisal criteria
360º feedbacks
‘Balance scorecard’
Reward Management Group incentives
Non-monetary strategy
Training & Development Internal & external training programs
Coaching & mentoring
Source: Self-Develop.

Apart from that, the paper has discussed the implications of HRM practices have on innovation performance. The acquisition, sharing and application of knowledge provide a positive contribution to the firm’s innovation performance. With the effective HRM practices managing KM, it can be concluded that the relationship between HRM practices and innovation performance are closely inter-related as well.
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