Contemporary Issues in HRM Managing Knowledge and Learning

Changing nature of work: Continued trend for reduction in lower-skilled manual roles and increase in higher-skill white-collar roles – referred to as ‘knowledge work’. 48% of UK workforce now employed in knowledge-based industries. Renewed focus by government on up-skilling agenda. Knowledge now seen as a major determinant of an organisation’s success. Significant consequences for HRM.

Objectives: Explain the term ‘human capital’. Discuss ways in which HR managers can encourage investment in human capital. Introduce the field of knowledge management. Explore the idea of the ‘learning organisation’. Debate the ways in which knowledge workers are best managed.

Human capital: ‘Capital’ refers to any asset that can be used to produce goods and services that have economic value. Tangible capital includes land, buildings, machinery, raw materials and money. Capital requires investment (for purchase and enhancement). Increasing focus on intangible assets, including brand, patents and people. Human capital refers not to people, but their collective knowledge, skills and experience.

Utilising human capital: Employing ‘human capital’ requires a different mindset to hiring staff. People are seen as an asset rather than a cost. Need care over selection, investment in development, and efforts to retain the capital for as long as it is value-adding. Human capital cannot be controlled in the same way as other assets – needs a more subtle, collaborative and emotionally intelligent approach. Metaphor of a steward is popular – deriving from work to preserve and nurture natural resources.

Human capital in the knowledge economy: Greater prominence of the concept in industries that employ knowledge workers. Greater prominence in complex environments, such as specialised industries or multinational contexts. Greater prominence in uncertain environments, where organisations rely on the good judgement of their people.

Differentiating models: To identify groups according to their relative capital worth Lepak & Snell (1999) use two dimensions: Human capital value (amount of added value brought). Human capital uniqueness (extent that skills are unique or firm-specific). High HC uniqueness Low HC value ALLIANCE PARTNERS High HC value    CORE KNOWLEDGE EMPLOYEES Low HC uniqueness CONTRACT WORKERS TRADITIONAL EMPLOYEES

Investing in human capital: Buying human capital (hiring people with the potential to add value). Building human capital (training and development). Borrowing human capital (forming long-term partnerships with external advisors and consultants). Bouncing human capital (removing low performers). Binding human capital (retaining the high performers).

Knowledge management: ‘Knowledge has become the key economic resource and the dominant – and perhaps the only – source of competitive advantage’ (Peter Drucker). In the modern world, most jobs include knowledge-based activity: processing or preserving data interpreting and acting on information generating information applying accumulated knowledge.

Knowledge management (cont): Increase in ‘knowledge-intensive work’ – involving extensive creation and use of knowledge. Particularly challenging group for HR. ‘Knowledge management’ has two key concerns: Encouraging knowledge sharing amongst workers – especially tacit knowledge. Creation of useful knowledge – individually and collectively.

Formal knowledge management initiatives: Knowledge repositories (electronic libraries) where staff can find information and add to the stores. Case-study banks. Expertise listings (‘corporate yellow pages’) – directories of staff with contact details and information on their areas of expertise. Electronic discussion forums. Traditional training, development and communication initiatives .

Informal initiatives: Providing opportunities for different employees to get together: job-rotation multi-functional team working coaching and mentoring schemes secondments external events that offer networking opportunities (training events/conferences) social activities.

Organisational learning: ‘Learning’ implies understanding and interpreting as well as just knowing. It is about making better decisions and avoiding the repetition of past mistakes. Idea that organisations can learn – collective level. Refers to the third level of Argyris & Schon’s learning model: - single-loop learning – how to do something - double-loop learning – learning from learning - triple-loop learning – questioning original objectives.

The idea of the ‘learning organisation’: ‘An organisation that facilitates the learning of all it’s members and continuously transforms itself’ (Pedlar, et al., 1991). An ideal that is rare in practice, but worth working towards. Pedlar, et al. cite 11 specific characteristics including: learning processes used in strategy making participative policy-making wide dissemination of information and management ‘tolerance’ on how it is used constant, open dialogue structures that provide opportunities for development and reward for learning.

Managing knowledge workers: democratic, consultative and participative leadership sophisticated HR practices tailored to the individual focus on development and support for networking collaborative environment, and extensive team-working limited supervision.

Summary: ‘Human capital’ is an influential concept for modern HRM. Strong arguments for HR managers seeing themselves as ‘stewards of human capital’. Increasing priority given to formal and informal knowledge sharing. Need to create and share both explicit and tacit knowledge. Growing prominence of organisational learning concept. Those doing ‘knowledge-intensive work’ require more subtle and participative management.