Strategies to retain the organisational knowledge of current employees and transferring it to new staff

The report looks at the HRM strategies specifically aimed at retaining the organisational knowledge of current employees and transferring it to new staff through the lens of knowledge management. It discusses the objectives of knowledge management and its relationship to employee rewards management, evaluates various aspects of HRM practices that could be adopted to encourage employees to share their knowledge and discusses how employee learning and development strategies could be implemented, concluded by an eight point recommendation.

Definition of knowledge has various flavours around a common theme – Davenport and Prusak (1998, p5) defines knowledge as ‘a fluid mix of framed experience, values, contextual information, and expert insight’, while Davenport, Long and Beers(1998) classifies knowledge as high-value form of information which is ready to apply to decisions and actions. It is information combined with experience, context, interpretation and reflection.

Never before knowledge has gained so much importance in business ; with explosion of service related industries and work related to information and cut throat global competition of customers and employees alike, knowledge has become an essential source of competitive advantage. (Nijhof, 1999). In the US, the percentage of people not involved with professional services as an occupation has declined from 83% in1900 to approximately 41% by 2000, whilst the percentage of information based workers has increased from 17% to around 59% (Stewart, 1997).

Retention and effective transfer of knowledge is imperative to achieving competitive advantage in market place in light of aging workforce, high attrition of knowledgeable employees and increasing complexity of services. The report discusses how intricately knowledge management is interlinked with human resource management elements – recruitment and selection, job design, reward and performance management and training and development and how each of those can be tailored to encourage knowledge sharing, which is at the heart of knowledge management. The report then discusses how learning and development strategies can be implemented.

Knowledge management and knowledge objectives
Broadly, knowledge can be classified into tacit and explicit – can be thought as two ends of a continuous spectrum. Tacit knowledge, or know-how, is knowledge that exists in the minds of experts through experience and can be displayed when they make judgments and take actions, usually without making direct reference to a framework that explains what they are doing. Therefore, tacit knowledge is a meaningful and important source of information that influences the decisions and actions of practitioners (Brown & Duguid, 2001 ; Zeira & Rosen, 2000). Tacit knowledge is personal and difficult to formalize because it is embedded in action, procedures, commitment, values, and emotions and acquired by sharing experiences and observations that are not easily communicated (Nonaka, 1994).

In contrast, explicit knowledge refers to knowledge that has been captured and codified into distributable artefacts – manuals, procedures, etc. It could refer to knowledge that has been learned through explicit instruction or to a skill acquired through practice. As a result, tacit and explicit knowledge are interdependent, essential to knowledge creation and of equal importance (Nonaka, 1994).

In essence, “managing” both types of knowledge effectively in an organisation for business advantage is knowledge management. It comprises of a range of strategies and practices used in an organization to identify, create, represent, distribute, and enable adoption of insights and experiences. Such insights and experiences comprise knowledge, either embodied in individuals or embedded in organizational processes or practice. Knowledge Management has gained significant momentum in the last decade and has been widely used recently by firms and organisations in order to improve decision making, product innovation, productivity and profits (Edvardsson, 2006).

Davenport et al. (1998) describes four broad objectives of knowledge management systems in practice:
a) To create knowledge repositories that will store knowledge and information
b) To provide and improve access to knowledge databases to every individual and also facilitate its transfer
c) To enhance knowledge environment, so that the environment is conductive to more effective knowledge creation.
d) To manage knowledge as an asset and to recognize the value of knowledge in an organization.
As obviously evident from above, knowledge management encompasses retention and transfer of knowledge. The key to knowledge management is to increase and use intellectual assets for sustainable business benefit by transforming the processes and operations of the business, leveraging knowledge strategically to accelerate innovation and growth, and using knowledge to provide a competitive advantage for the business.

Success Factors for Knowledge Management
Based on studying 31 knowledge management projects across R&D to Sales and Marketing, Davenport et al (1998, Winter98) cite eight factors for successful KM projects – link to economic performance or industry value, technical and organisational infrastructure, standard flexible knowledge structure, knowledge-friendly culture, clear purpose and language, change in motivational practices, multiple channels for knowledge transfer and senior Management support.

It can be seen that two factors from the above list are directly related to human resources ie the employees themselves – to create a knowledge friendly culture and change in motivation practices.

Knowledge-friendly culture is one of the most important factors and one most difficult to create afresh, they argue. It requires the employees to be intellectually curious and exploring while being strongly encouraged from the executives of the organisation to do so, and also not to be inhibited in sharing knowledge with others from fear or apprehension of being impacted adversely.

Chase (1997) affirmed that culture was the largest obstacle faced by organisations in creating a successful knowledge-based enterprise. As culture is a wide concept, it comprises many facets. One cultural aspect which is crucial for KM is collaboration as asserted by Goh (2002), who has asserted that a collaborative culture is an important condition for knowledge transfer to happen between individuals and groups.

Stonehouse and Pemberton (1999) also pinpoint trust as also another fundamental aspect of a knowledge friendly culture,without which, employees would be hesitant about other’s intentions leading to withholding their knowledge.

Knowledge Management and Reward Management
Rewards are instrumental to eliminate cultural impediments and to motivate employees in the way of creating a knowledge sharing culture. The leadership and the demonstration of usage of rewards must be initiated and maintained from the top – the board room, and must be visible to the entire organisation.

At Hewlett Packard Consulting, the senior leadership team, instituted the HP Consulting’s Knowledge Masters Award, which recognizes excellence in knowledge creation and use. This prestigious annual award recognizes employees whose knowledge mastery best exemplifies the culture of balancing innovation with reuse ( Holsapple, 2003 ).

In Buckman Laboratories, 150 employees who have made contributed significantly to knowledge sharing were invited to a special conference at a holiday resort and each of them was presented with a laptop computer. The CEO himself used the knowledge sharing system from time to time, demonstrating his commitment to KM. People who do not share are ignored, fail to be promoted or are “siloed” ( Bartol and Shrivastava, 2002 )

In knowledge and services industries, where knowledge management is of critical value, knowledge each individual possesses would appear to be the source of his or her competitive advantage with respect to other employees in the team – a fact which would appear to be a significant impediment to knowledge sharing. Research confirms the above proposition.

Researchers have cited several factors as impediment to share knowledge – degradation of power and superiority as knowledge is a source af expert power sharing which will undermine the power position (French and Raven, 1959), lack of motivation (Szulanski, 1996) and the perception that adequate reward for knowledge sharing does not exist (Szulanski, 1996), extent of time and resources needed by an individual for the knowledge sharing (Szulanski, 1996)

Hauschild et al. (2001) maintain that “grass root desire among employees to tap into their company’s intellectual resources” is essential for successful knowledge sharing, which inevitably boils down to benefit perceived by each employee for sharing their much coveted knowledge base. That perception must be positive. And its there motivational tools such as reward systems can be effective. Rewards can be in the shape of both monetary and non-monetary, may take various forms and serve to fuel both extrinsic and intrinsic motivation. Giving incentives to employees helps to stimulate and reinforce the positive behaviours and culture needed for effective KM.

HRM strategies to encourage knowledge sharing

HRM strategies are at core of making knowledge management successful, as it is all about people, the employees. As stated by Davenport and Volpel (2001), “managing knowledge is managing people; managing people is managing knowledge”. Human resource functions such as Recruitment and Selection, Job Design, Performance Management, Training and Development, Compensation and Rewards management, play a key role in shaping up the human resource strategies employed to encourage knowledge sharing. Each function is tailored as required by the organisations as per the overall KM strategy – Codification and Personalisation, and to nurture the human related critical success factors for knowledge sharing– collaboration, trust, return of investment, learning by mistakes and openness.

Recruitment and Selection

From knowledge sharing’s perspective cultural fit and its aspects should be part of recruitment and is imperative that a newly selected employee possessed is culturally aligned to the organisation. The fact applies to all levels of the organisation, but higher the leadership role is the more critical the alignment will matter due to his or her jurisdiction on a team of employees, one would expect. In fact, Robertson and Hammersley (2000) highlighted the significance of recruitment to focus on the ability of candidates to fit into the firm’s culture or distinctive way of working rather than just matching them to a job specification.

Edvardsson (2008) cites other studies highlighting the importance of a fit between new recruits and the organisation’s knowledge culture. They stress a fit between organisational culture and hiring of suitable personalities, as well as the socialisation of individuals into the culture of the firm, while Gloet and Berrell (2003) point out that in firms which adopt the codification strategy the development of technological solutions are encouraged, particularly in electronic recruitment and psychometric testing.

Given that KM is often adopted by organisations in complex, unpredictable environments, traditional selection and recruitment practices have more often than not to be modified. In such settings, it may simply be too difficult to specify the requisite knowledge and expertise in advance (Scarbrough, 2003).

Edvardsson (2008) expresses his concerns that traditional recruitment and selection practices can block knowledge sharing between groups or departments in firms organised according the functional principle. Currie and Kerrin ( 2003 ) warns that where assessment centres are functionally focussed they can strengthen the sub-cultures of functions and make knowledge sharing between functions very difficult. Hence, appropriate mitigation measures need to be taken in the assessment procedures.

Learning and Development
Learning and development for both employees and managers will play a key role in nurturing a sustainable knowledge sharing culture. For the managers and leaders, they will need to lead by example and pave the way for the cultural pre-requisites to foster knowledge sharing, which are innovation – employees are constantly urged to generate new ideas thru problem seeking and solving (Goh 2002), to challenge existing practices (Stonehouse and Pemberton, 1999 ) and mistakes are allowed and considered investments for learning.

To stay ahead in the cutting edge of their respective disciplines and for them to be able to grow, continuous professional and personal development in multitude of forms – training, seminars, conferences is considered to be essential to employees. (Robertson and O’Malley Hammersley, 2000). Employees have realised the only their skills sets and knowledge are the only the real keys to sustainable employment. Continuous learning programs for the employees not only allow the organisation collectively to be equipped with knowledge and confidence to handle unknown and unforeseen scenarios, the employees feel themselves as assets and share the management belief that the company is investing in them because they care.

With respect to knowledge management strategies, and its relationship to learning and development, Hansen et al. (1999) and Gloet and Berrell (2003) argue, that firms adopting codification strategies tend to hire undergraduates and train them in groups to be implementers, i.e. to emphasise knowledge acquisition, manipulation, and storage, including the focus on technology. Personalisation firms hire graduates to be inventors, i.e. to use their analytical and creative skills on unique business problems, and to share and disseminate knowledge.

Large consulting companies, such as Andersen Consulting and Ernst & Young use a codification strategy. Using “people-to-documents” approach employees document or codify their knowledge in databases which are then reused by the entire organisation while strategy consulting firms such as Bain, Boston Consulting Group, and McKinsey use a personalization strategy. They focus on dialogue and brain storming interactions between experts and newcomers where Know-How is transferred (Hansel et al ,1999)

If one relates this to Argyris’s (1978) theory on single and double loop learning, then codification strategy focuses on single loop learning, while double loop learning is emphasised in personalisation strategy.
Job Design

As employee motivation is strongly co-related with intention of sharing knowledge with others, using motivational approach to job design will be a reasonable expectation. As Herzberg’s two-factor theory states that the individuals are more motivated by the intrinsic aspects of the work, setting various parameters of the job characteristics model as part of job design is imperative to be able to generate the level of motivation desired, such as skill variety, task identity, task significance, autonomy and feedback.

Indeed, Foss et al (2009) have successfully hypothesized that
(1) job autonomy increases employees’ intrinsic motivation toward knowledge sharing,
(2) task identity is positively linked to introjected motivation toward knowledge sharing, and
(3) feedback on the job has a positive impact on employees’ external motivation to engage in knowledge sharing.

Management must design jobs to elicit intrinsic motivation out of the employees. As Theory Y or Behavioral School of Participative Management suggests jobs should provide employees with opportunities to participate in decision making on issues related to themselves, as well as provide job satisfaction ie interesting and challenging (Deci, 1975).
Few factors in the job design equation can help accomplish the above – meaningful and challenging, flexible working hours, career with growth and development, and vertical and horizontal transfers.

Another important issue related to KM is to retain employees to prevent knowledge loss.
Providing opportunities to them to grow and to advance their career, horizontally or vertically, will help motivate them to stay on. HR policies and practices should be adapted to cater to their personal aspirations (Brelade and Harman, 2000)

Performance Management
Performance Management offers a great lever to the management to ensure the employees are congruent to organisational goals, as the employee’s future in the organisation – change, growth, compensation, rewards and transfers are greatly driven by how they ‘perform’.

To motivate all employees to share their knowledge between their peers, within and with other teams and functions, and also for them to effectively reuse knowledge from either databases or other experts, it is imperative that performance management encompasses both quality and quantity of knowledge created, shared and even reused, as both creating and reusing collectively as an organisation will help an organisation to achieve competitive advantage through innovation and operational efficiency. Contribution of both explicit and tacit knowledge must be able to be measured accurately and should be perceived as fair by the employees. Having performance indicators on a team, group and organisational levels related to knowledge sharing is essential to encourage proactive knowledge sharing and reuse for the employees.

At American Management Systems, an IT company, sharing knowledge is a criteria to get the highest rating on a performance evaluation. AMS recognizes contributions to its knowledge centers through annual awards, such as “Knowledge in action” and “Best practices awards”. Lotus Development, a division of IBM, devotes 25% of the total performance evaluation of its customer support workers on the extent of their knowledge sharing activities (Davenport, 2002).

In the inter team level, Currie and Kerrin’s (2003) study of problems of knowledge-sharing has revealed that the performance management system must be aligned between different functions in the organisation in order not to inhibit knowledge transfer between functional teams.

Reward and Compensation

As discussed earlier in depth, reward management and compensation is one of the most influencing HR instrument at management’s disposal. Edvardsson’s (2008) comprehensive literature review has concluded that knowledge workers mixture of rewards are needed to motivate knowledge workers as they tend to have a high need for autonomy, significant drives for achievement, stronger identity and affiliation with a profession than a company, and a greater sense of self-direction. These include: equitable salary structures; profit-sharing or equity-based rewards; a variety of employee benefits; flexibility over working time and location, as well as being given credit for significant pieces of work. For many knowledge workers it is as motivating to have free time to work on knowledge-building projects, going to conferences or spending time on interesting projects, as monetary rewards. Bartol and Locke (2000) identified perceived fairness of rewards, among other levers for employee motivation which organisations can use to set behaviour targets.

One example is Siemens’ ShareNet, which measured and rewarded employees for knowledge sharing through a competitive reward structure based on the number of contributions made (Nielsen & Ciabuschi, 2003).

Bartol and Shrivastava (2002) examines the role of monetary rewards in encouraging knowledge sharing in organizations through four mechanisms of knowledge sharing. They argue that the system of contributing knowledge to databases is the most amenable to rewards contingent on knowledge sharing behaviors because of opportunities for the reward allocator to measure the knowledge sharing behaviors. In the case of formal interactions within or across teams and work units, while rewards could be made partly contingent on knowledge sharing behaviors as in merit pay, rewards based on collective performance are also likely to be effective in creating a feeling of cooperation, ownership, and commitment among employees. In addition, they propose that team-based rewards and company wide incentives (profit sharing, gain-sharing, and employee stock options) would be particularly instrumental in enhancing knowledge sharing within teams and across work units, respectively. In the case of knowledge sharing through informal interactions, the key enabling factor is trust between the individual and the organization. In this case, the role of rewards is indirect, that is, procedural and distributive fairness of organizational rewards are important factors in the development of trust. They also consider knowledge sharing in communities of practice and theorize that intrinsic rewards and factors that build expertise and provide recognition are the most appropriate means of fostering feeling of competence.

There is a view that in a higher level, that HRM strategies will differ based on whether an organisation is following a Codification or a Personalisation KM Strategy, as the former will be driving efficiency, while the latter will be driving innovation, each leading to different sets of HRM practices.

Edvardson (2008) advocates the following KM and HRM strategy relationship:


In general, recruitment and selection, job design, learning and development, performance management and reward management are all critical to foster the culture of knowledge sharing among the employees and ensuring that new employees are aligned to the same cultural values. Perhaps one can argue training and development is at the core of the strategy as employees need to be continually developed to meet the changing business goals, live by the culture of continuous improvement and equipped for uncertain scenarios. Without continuous learning, knowledge asset would be rendered stale failing to act as source of competitive advantage for the organisation. Hand in hand, job design, the trigger point of the intrinsic motivation – the all important burning fuel of the employees to perform, is an essential ‘get it right’. Complementary to job design, reward management is also a hygiene factor. Knowledge sharing among knowledge employees will require a lot of motivation, trust on the employer and other employees and a positive culture of openness and collaboration, which reward management strategies can significantly cultivate. And at the end, its all encompassing performance management which ties all the threads together, incorporating learning and development, knowledge sharing and reward managementas the inputs and the outputs of ‘performance’. So, in conclusion, all of the above aspects are ‘musts’ in any HRM strategy, and must there be any compromise made, assessment of each will need to be be circumstances led rather than followed by any existing prescription. Based on KM strategy, each HR component will need to be customized as per organisation’s short and long term goals, resource constraints and current culture.

Implementation of learning and development strategies

A learning strategy congruent to business goal and strategy, and encompassing of continuous learning and development of the employees is essential for a knowledge management focussed organisation. The strategies must ensure employees are learning and being trained at least as per their current job requirements which must be aligned to current and future business goals, their future career aspirations and are abreast of the latest development in their functions, motivated and ready to deal with uncertainty. Integrating the learning and knowledge management strategy will reinforce the learning strategy where new knowledge being learnt is continually being made available for others to receive in organisation databases.

As with other HRM functions, learning strategy will be most successful if it has board room support and part of employee performance, reward and career management. The fundamental core component for a successful learning organisation is the workplace culture – it is imperative that employees are free to experiment, encouraged to take risks and learn from their mistakes without being penalised. Employees will need to see a learner in their line manager as a role model to be effective learners.

Hirsh (2005) affirms that a ‘learning strategy’ will include how learning is delivered, but should be just as much about a ‘learning culture’ – which embraces:

• defining and promoting values and behaviours, such as curiosity, openness, innovation, no-blame, experience sharing, comprehensive feedback

• processes and tools that bind together and enable those behaviours, such as knowledge management, career development, learning needs definition, design of learning processes, self managed learning, rewards and recognition, and so on.

Delivery of learning can be thru several means:

Formal training (courses, workshops etc) remains important, especially in teaching technical skills and knowledge; in meeting statutory requirements (in health and safety for example) and in maintaining a high emphasis on generic skills (such as communication) and management.

Personal support for learning through coaching, and to some extent mentoring, is more emphasised. For some groups this may be provided by specialist personal coaches or senior mentors, but for most employees it will come more informally from their managers or colleagues.

Other forms of experiential learning, such as projects and secondments, are seen as valuable, but are often reserved for ‘special’ groups such as senior managers or those seen as having high potential.

Action learning sets combine experiential learning with peer support.

Feedback through 360 degree feedback, development centres and so on is also seen as a learning intervention, especially used for managers.

e-learning is very important in organisations where people do much of their work electronically (eg the BBC) and for communicating and testing specific knowledge (eg Prudential). It is used to very varying degrees in other organisations, and is deemed less useful for developing people skills.

In addition to e-learning packages, electronic gateways are also providing access to libraries of self-study materials of a more conventional kind (books, videos, etc)

Learning on-the-job is being more strongly advocated – organisations are asking themselves how they can design learning into work, rather than stick learning on the side of normal work processes. Project learning goals and project reviews to share learning would be examples of such practices.

Communities of practices also are very effective learning vehicle, where employees of a certain practice eg sales, marketing, Information Technology or competency get together, share their individual experiences and ‘learn’.

Many organisations espouse a certain % learning rule eg National Grid Transco UK uses the 70-20-10 rule, advocating seven hours of on-the-job learning for every two hours of coaching and one hour of formal training ( Hirsh, 2005).

Further, for ‘Tacit’ knowledge transfer ie know-how, personalisation strategies are often used eg “shadow”ing a consultant where the learner spends considerable amount of time with an expert observing very closely to tap into her in depth thought processes and experience reservoirs. Dedicating a mentor is also a common way of achieving the above.

Conclusion and Recommendation

Objectives of knowledge management include knowledge retention and transfer between the employees using two main strategies – codification and personalisation. The report finds a compelling inter-linkage between knowledge management and human resource management as both are inordinately based on the very same cornerstone – the employees in the organisation. For a successful knowledge management initiative, successful human resource management practices – job design, recruitment, learning and development, reward and performance management must be in place to have a workplace environment conducive to knowledge sharing and reuse to maximise operations efficiency and business benefit.

Based on the theory and examples in the report, it is essential that :

1. the knowledge management initiative are led by the leaders in the boardroom
2. the inspired leadership is visible through annual and regular functions and appreciation
3. leaders help create and nurture innovative, knowledge sharing culture among employees
4. HRM aspects are tailored and help create and maintain a knowledge sharing culture
5. Substantial rewards are awarded publicly for sharing knowledge
6. Performance Management heavily encompasses knowledge sharing element
7. Continuous learning and development plans are in place as per employee’s current role, aspirations and business goals, and are part of performance mangement
8. organisation is clear on which knowledge management strategy to follow – codification or personalisation and customize HRM strategy accordingly