Volume V, No 1, 2004 194 Issues in Information Systems

LINKING KNOWLEDGE MANAGEMENT WITH HUMAN CAPITAL

STRATEGY DEVELOPMENT

Dr. Jay Liebowitz, Johns Hopkins University, jliebow1@jhu.edu

ABSTRACT

Organizations are realizing that knowledge management should play a critical role in
their human capital strategy. In the U.S. government, for example, a learning and
knowledge management pillar is recommended as part of the framework in building a
human capital strategy. In the government, a new position called the Chief Human
Capital Officer has been created to develop a human capital strategy for the agency or
department. A question arises as to how best to integrate knowledge management within
the strategic management of human capital. This paper will shed some insights on how
to achieve a stronger linkage of these two areas in order to achieve organizational
success.

Keywords: Knowledge management, human capital strategy, Chief
Human Capital Officer

BACKGROUND

A number of researchers and practitioners have been studying techniques and
methodologies for developing knowledge management strategies and implementation
plans (11). According to Chourides et al. (4), to get anywhere with knowledge
management, you must have a strategy and individuals must be persuaded to contribute to
both formulation and implementation. The knowledge management strategic plan has
greater focus on the knowledge needs of the organization and an evaluation of
capabilities. Apostolou and Mentzas (1) developed the Know-Net knowledge
management approach, which includes the interplay between strategy, assets, process,
systems, structure, individuals, teams, inter-organizations, and the organization itself.
Sveiby (19) discusses his knowledge-based theory of the firm.

ODell et al. (17) have performed benchmarking studies on knowledge management
strategies. They have found organizations using knowledge management strategies as a
matrix of: KM as a business strategy, transfer of knowledge and best practices,
customer-focused knowledge, personal responsibility for knowledge, intellectual asset
management, and innovation & knowledge creation. Levett and Guenov (10) have
developed a methodology for knowledge management implementation that looks at a
four-phase approach of case-study definition, capture knowledge management practice,
build a KM strategy, and implement & evaluate. April (2) has developed guidelines for
building a knowledge strategy looking at the interlinking of assets or resources,
complementary resource combinations, and the strategic architecture of the company.
Nickerson and Silverman (16) have examined intellectual capital management strategies
and proposed a strategy integration analysis methodology which uses six steps: assemble
a multi-disciplinary team; identify and select a target market and position; identify
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Volume V, No 1, 2004 195 Issues in Information Systems
investments and technology; identify unique or idiosyncratic technologies that form the
basis of competitive advantage by comparing the firms technology and intellectual
position with that of potential competitors; choose optimal organizational and intellectual
capital management configuration based on the preceding four steps; evaluate expected
profitability of this integrated strategy. Other researchers and practitioners like Chauvel
and Despres (3), McElroy (14), Mertins et al. (15), Hult (8), Earl (6), Holsapple (7),
Seeley and Dietrick (18), Liebowitz (13), Liebowitz et al. (12), and Davenport and Probst
(5) have been involved in writing case studies dealing with knowledge management
strategy and implementations.

Knowledge management plays an important role in developing a human capital strategy
for an organization. In order to address the knowledge bleed occurring in many
organizations due to attrition, retiring employees, and changing work patterns of more
mobile, younger workers, knowledge management should be one of the key pillars
underpinning a human capital strategy. Nourishing the roots of an organization (that is,
the people/human capital) must occur if the organization is to blossom and bear fruit.

Human capital is the collective experience, knowledge, and expertise of those
contributing to an organizations mission. Knowledge management refers to how best to
leverage knowledge internally and externally in order to achieve organizational success.
Here we see an overlap in what knowledge management and human capital can
contribute to the organization. Most knowledge management approaches use codification
and personalization approaches to capturing knowledge and connecting employees (9).
Codification refers to developing a systems-approach to capturing knowledge, and
personalization refers to improving the people-to-people connections. Codification then
is a collection approach, and personalization uses a connection theme.

In the next section, we will link knowledge management with human capital strategy and
discuss a methodology for effectively integrating knowledge management into an
organizations human capital strategy.

LINKING KNOWLEDGE MANAGEMENT WITH HUMAN
CAPITAL STRATEGY

A human capital strategy should contain four essential pillars. Competency management
should be one pillar in order to determine the necessary competencies and skills needed
for the organizations workforce in the future. Performance management deals with how
to measure, assess, and reward performance in the organization. Change management is
another important component that looks at how best to transform the organization for
adaptability and reduce resistance to change. Last, knowledge management addresses
how to transform individualized learning into organizational learning in order to build
and nurture a knowledge sharing culture, create a stronger sense of belonging and
community, and increase innovation and customer satisfaction. All four pillars are
interrelated and provide the foundation for building a human capital strategy in the
organization.

Linking Knowledge Management with Human Capital Strategy Development

Volume V, No 1, 2004 196 Issues in Information Systems
Knowledge management has a special relationship with human capital. Knowledge
management involves four key functions: knowledge identification, knowledge sharing,
knowledge application, and knowledge creation. Once critical at risk knowledge is
identified, this knowledge needs to be captured and shared with others (knowledge
sharing). The knowledge sharing process will be used in some context whereby the
knowledge is applied. Once this knowledge is applied and internalized, new ideas should
be generated (knowledge creation).

These steps are similar to human capital development. Knowledge gaps are determined
to see where critical at risk knowledge is being lost due to retirements, attrition,
organization transfers, etc. In order to minimize the loss of knowledge, we need to
connect people with others (via mentoring, knowledge sharing forums, storytelling,
shadowing, communities of practice, expertise locator systems, etc.) to transfer this
valuable knowledge. As this is being done, relationships will be strengthened resulting in
an increased sense of belonging and community in the organization. This will result in
the generation of new ideas among the organizations staff which should stimulate the
human capital in the organization.


In trying to correlate knowledge management with human capital, a means of comparison
can be drawn through Maslows hierarchy of needs, as shown in Figure 1. According to
Abraham Maslows hierarchy, physical needs exist at the most basic level. Then, safety
needs are most wanted, followed by social and esteem needs. At the top of the hierarchy,
self-fulfillment or self-actualization is the goal to be aspired.

Knowledge management can also be associated with this needs hierarchy. The recognition
and reward structure will drive certain basic behaviors. This motivation structure will
influence salary, sharing efforts, and the like. Safety needs in the form of competitive
edge or I needs will result to be sure that the individual feels he/she is important and
needed to the organization. Once this level of comfort is met, the social needs in the form
of building community and knowledge sharing (We needs) will be created. Over time,
the individual wants to be respected within the broader community (i.e., esteem goals).
When these esteem goals are achieved, individual learning can be transformed into
organizational learning and a knowledge sharing culture can thrive (self-actualization).

Similar to knowledge management, human capital strategy can be expressed in terms of
Maslows hierarchy of needs. The key pillars underlying a human capital strategy can be
layered in congruence with Maslows hierarchy. The fundamental level deals with
competency management to determine what are the basic competencies and skills needed
for the organizations current and future workforce. Then, the safety level involves
performance management whereby people feel secure by being rewarded for their positive
performance (of course, insecurity can also result by sub-par performance). The social
needs are then addressed in knowledge management whereby a knowledge sharing culture
is built and nurtured. In order to reach nirvana or self-actualization, people must feel
comfortable with change; therefore, a change management layer is needed. This should
also reinforce ones esteem by making the individual feel adaptable and respected in the
Linking Knowledge Management with Human Capital Strategy Development
Volume V, No 1, 2004 197 Issues in Information Systems
organization and community. Finally, based upon these four pillars, a human capital
strategy can be achieved and implemented.

Figure 1: Knowledge Management and Human Capital Strategy Within Maslows
Pyramid










































Physical
Safety
Social
Esteem
Self-
Actual
Recognition
& Rewards
Competitive Edge
(I Needs)
Knowledge Sharing
(We Needs)
Respect from the
Community/Organization
Knowledge Sharing
Culture
Competency
Management
Performance
Management
Knowledge
Management
Change
Management
Human Capital
Strategy
KNOWLEDGE
MANAGEMENT

HUMAN
CAPITAL
Linking Knowledge Management with Human Capital Strategy Development

Volume V, No 1, 2004 198 Issues in Information Systems
VIGNETTE: LINKING KNOWLEDGE MANAGEMENT WITH HUMAN
CAPITAL

The organization under study is a government agency with primarily a technical workforce.
Many of the employees are scientists and engineers and about one-third of the employees
are eligible to retire in the next five years. The average age of an employee is 46, with
scientists having an average age of 53. About 40 percent of the workforce is comprised of
federal civil servants; the other 60 percent are contractors. There were over 110 areas that
were cited as being critical at risk knowledge areas, whereby the expert would be leaving
in 1-3 years and there was no backup expert.

This organization, especially at the senior management ranks, saw the necessity for
engaging in knowledge management and developing a human capital strategy. The human
capital of the organization was being defined broadly as the organizations community,
that is, civil servants, contractors, term appointees, universities, partners, international
partners, sister organizations, and the like. Knowledge management was being designed as
one of the key pillars of the organizations human capital strategy. The central components
of the knowledge management strategy were built around people/culture, process, and
technology. Specifically, the organization was developing approaches to build and nurture
a knowledge sharing culture (people/culture), systematically capture critical knowledge
(process), and creating a unified knowledge network for facilitating knowledge sharing
(technology). Both codification and personalization approaches were used, but the
organization seemed to have the natural inclination for the codification approach due to the
technical orientation of the workforce.

The organization believed that for knowledge management to succeed, it must be linked
with the human capital strategy of the organization. Knowledge management, standing on
its own, would not easily survive. A Human Capital Working Group was formed in the
organization, and knowledge management was introduced as being an essential part of the
strategic management of human capital. Besides the Human Capital Working Group,
Human Capital Consulting Liaison Roles were created within the organization. The
individuals in these new roles help the directorates tailor a human capital program that
meets their needs. They make sure that the directorates human capital program is in
strategic alignment with the overall organizations initiatives in human capital. They work
with the Knowledge Management Working Group members in the respective directorates to
apply knowledge management techniques with human capital strategic needs. The other
components, besides knowledge management, of the human capital strategy being pursued
were competency management, performance management, and change management.

SUMMARY

In the near future, organizations will be in a tenuous position if they dont take knowledge
management and human capital seriously. Knowledge management needs to be closely
linked with the human capital strategy in order to achieve organizational success. This
paper presented integrative roles of knowledge management and human capital strategy.
Future work will be to apply these synergistic elements to case studies, and evaluate, in a
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Volume V, No 1, 2004 199 Issues in Information Systems
longitudinal study, how knowledge management and human capital strategy influence each
other to meet the strategic mission and vision of the organization.

REFERENCES

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