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Department of Management and Marketing, Universiti Putra Malaysia

ABSTRACT This paper examines five areas of human resource management and its ability to accommodate the implementation of knowledge management. The five areas are (1) recruitment and selection, (2) training, (3) performance appraisal system, (4) reward and compensation system, and (5) retrenchment. The results suggest that the majority of Malaysian companies are still at the initial stage of knowledge management practices. However, more concrete measures are expected after the groundwork of knowledge management is completed.

INTRODUCTION In recent years, a dramatic change in the world economy and the use of IT have affected the way businesses and organizations operate. One of the changes is the shift from a resource-based view of competitive advantage (i.e. capital, labour, and raw material) to a knowledge-based competitive advantage through Knowledge Management (KM). This

increased enthusiasm on KM is a result of cost reduction in data management, due to the rise of computing capabilities like the Internet, electronic networking, and local database (Civi, 2000). This also means an increase in an organization's feasibility on acquiring,

documenting, processing, and distributing data and information globally. The adoption of KM by businesses and organizations has initiated the interests of researchers and academicians. Many issues are being examined and studied, such as KM structure, knowledge diffusion, KM implementation, KM performance framework, and HRM strategy in KM. Roberson and Hammersley (2000) pointed out that the earlier stages of these studies tend to associate KM with information technology, which was perceived as the main driver for KM. However, technology is not the only requirement of KM. What is more important is the knowledge created by human beings (Civi, 2000). This view is also

supported by other researchers and academicians such as Filius, et al. (2000), Davenport and

Prusak (1998), Mintzberg (1989), Quinn (1992), and Robertson and Hammersley (2000), and Soliman and Spooner (2000). This paper will focus on five areas of HRM and its ability to accommodate and implement practices that enhance the knowledge creation process. The five areas are: (1) recruitment and selection, (2) training, (3) performance appraisal system, (4) reward and compensation system, and (5) retrenchment.

HUMAN RESOURCE MANAGEMENT AND KNOWLEDGE MANAGEMENT Knowledge can be defined in many ways. A comprehensive definition of knowledge is given by Davenport and Prusak (1998). They said, that knowledge is “a fluid mix of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experience and information. It originates and is applied in the mind of knowers. In organizations, it often becomes embedded not only in documents or repositories, but also in organizational routines, processes, practices, and norms" (p 5). However, KM has a different meaning. The American Productivity & Quality Center defined KM as “the strategies and processes of identifying, capturing, and leveraging knowledge (Manasco, 1996)”. Chong, et al. (2000) defined KM as “the ability to recognize and manage the system of core competencies required for knowledge-intensive businesses”. An empirical survey by Chong, et al. (2000) suggests KM as “a process of leveraging and articulating the skills and expertise of employees, supported by information technology.” Malhotra (1998) believed that KM “embodies organizational processes that seek synergistic combinations of data and the information processing capacity of information technologies, and the creative and innovative capacity of human beings”. The implementation of KM requires a system called Organizational Knowledge Management Systems (OKMS). Meso and Smith (2000) define OKMS as a "system that provides for the creation of new knowledge, the assembly of externally created knowledge, the use of existing knowledge, and the finding of knowledge from internal and external sources.” The OKMS could fall into two major perspectives, namely: (1) technical perspective, which stresses the employment of a combination of new telecommunication technologies, and (2) socio-technical perspective that sees OKMS as combinations of technology infrastructure, organizational infrastructure, corporate culture knowledge, and people. In Meso and Smith's (2000) view, the socio-technical perspective of OKMS will help generate the sustainable strategic advantages an organization desires, by leveraging the key source of intellectual capital, the employees. Many other researchers and practitioners also

express the importance of people in KM. Hence, the role of HRM should not be taken lightly and exploration of its relationship with KM is deemed necessary. According to Armstrong (2000), HRM can be viewed as an extension of personnel management, that is “concerned with obtaining, organizing, and motivating the human resources required by the corporation (Armstrong, 1977)”, with greater emphasis on strategic management. The reason for strategy being highlighted is that new changes around the world have led to the need to re-position of both organizations and personnel management. Based on his experience as a personnel director of Book Club Association in the 1970s and 1980s, Armstrong (2000) suggests that the role of HR in the context of learning organizations or KM, is “to facilitate the dissemination of learning through workshops, projects and conferences and, later, to take responsibility for co-ordinating the preparation of business plans which incorporated the outcome of the learning activities”. Soliman and Spooner (2000) viewed the role of HRM in managing human resource knowledge as an identifier of knowledge gap(s) and facilitator in filling the gap(s), apart from mapping out the human resource knowledge. They have outlined the HRM roles in eight strategies of human

resource knowledge management. These eight strategies are: 1. Alignment of knowledge management with business directions, 2. Identification of the benefits of knowledge management efforts, 3. Choosing the appropriate knowledge management programme, 4. Implementing a know-how strategy, 5. Creating supportive environments for knowledge management programmes, 6. Using of enabling technologies for the knowledge management programme, 7. Creating the knowledge management team, and 8. Creating knowledge management leadership.

METHODOLOGY The question survey technique was used to solicit the data. Six different sections of questions were developed in the questionnaire, which are: (1) Recruitment (selection), (2) Training, (3) Employee Involvement, (4) Performance Assessment, (5) Compensation, and (6) Retrenchment. For the first section, several behavioural factors and non-behavioural factors are stipulated and respondents were asked to indicate the importance of these factors in selecting employees. The factors investigated are shown in Table 1.


TABLE 1 Selection of Employees
Mean Behavioural factors: Ability to communicate effectively Able to work in team or group efficiently Interest or affinity for that job Willingness to exchange ideas Creative and innovative Values that fit in with organization Dare to challenge exiting assumptions Multilingual ability Non-behavioural factors: Knowledge currently seeks by organization General computer literacy Marketing capabilities Related professional experience Strong commercial awareness High level of ICT knowledge Knowledgeable on others disciplines Good command of written and spoken English Active in external professional network or association 4.33 4.29 4.10 3.93 3.92 3.85 3.61 3.46 4.02 3.95 3.89 3.88 3.83 3.68 3.66 3.38 3.23 S.D 0.75 0.76 0.79 0.80 0.79 0.84 0.97 1.00 0.80 0.83 0.92 0.90 0.90 0.91 0.86 1.03 1.06

The second section covers the areas where training is conducted, and the approaches taken during training. The latter is adopted from Bramley (1990). Table 2 documents the training areas investigated and statements pertaining to training approaches.

TABLE 2 Training Areas and Approaches
Mean Types of Training Conducted Documentation of procedures and processes Problem solving skills and techniques Industry and business knowledge Quality initiatives Interpersonal communication Customer relationship management Team concepts/working in groups Managing performance Leadership Company mission and values Skills to build teams Information Communication Technology (ICT) Skills to build empowerment Managing change Creativity/innovation Coaching skills Stress management Approaches in Training Making sure that trainees understand the general principles and rationale behind 3.47 3.45 3.39 3.37 3.25 3.24 3.21 3.20 3.18 3.13 3.10 3.01 2.93 2.93 2.83 2.80 2.42 S.D. 1.19 1.21 1.17 1.20 1.20 1.31 1.30 1.26 1.24 1.28 1.28 1.31 1.32 1.30 1.30 1.47 1.40


1.17 4

the skills they are learning Ensure that what is being learned in training will be supported by colleagues, peers, and top management Many examples are being used during training by presenting various contexts in which trainees can expect to use the skills and knowledge learned in training Varying the training setting to show trainees that classroom is not the only place where knowledge and skills can be learned Open and supportive organization policies in rewarding and recognizing trained staff Intensive drills and practice techniques for trainees to reach a level of automatic implementation on the job Visual displays of information are offered to boost training transfer Letting trainees explore the training content before training actually begins

3.32 3.30 3.26 3.20 3.19 3.18 2.84

1.22 1.24 1.28 1.27 1.20 1.32 1.39

The third section investigates the degree of matches between characteristics of performance appraisal system proposed by Scholtes (1993) with the surveyed companies (Table 3).

TABLE 3 Basis of Performance Appraisal
Feedback useful for improvement Give direction to the work force Feedback used for ratings, rewards, and sanctions Controlling processes Directing individual employee Feedback based on needs of customers and the key process indicators Employees receiving systems/processes Feed-down from the next layer up in the hierarchy Controlling people Feedback from parts of the system that receive one’s work (internal customers) Employees receiving judgement on themselves Feedback based on personal characteristics not relevant to work Mean 3.77 3.69 3.59 3.57 3.51 3.36 3.36 3.35 3.28 3.23 3.21 2.81 S.D 1.01 0.99 1.12 0.97 0.99 1.22 1.01 1.06 1.04 1.06 1.09 1.20

In the fourth section, the seven dimensions of successful reward plans proposed by Hale and Bailey (1998) are listed in the questionnaire, and respondents were asked to indicate their degree of matches between their company compensation system with those proposed by Hale and Bailey. Table 4 documents the seven dimensions developed by Hale and Bailey (1998).


TABLE 4 The Compensation and Reward System
Pay for performance that tied to successful achievement of critical business goals Reward for measurable competencies The extent of contribution in knowledge sharing in a work team Keep group incentives clear and simple Link rewards to other levels of organizational change Initiating new approaches and tactics in daily work Work or task itself provides the greatest incentive Match incentives to culture Over-communicate (compensation and incentives system) for best results Mean 3.69 3.60 3.38 3.35 3.35 3.34 3.31 3.01 3.01 S.D 1.05 1.05 1.01 1.04 1.06 1.06 1.03 1.09 1.05

Finally, the section on Retrenchment attempts to discover the conditions or circumstances a company will release their employee from duty. Ten situations are listed in the questionnaire, which are shown in Table 5.

TABLE 5 The Retrenchment Policy
Disclosure of information to customers and suppliers Destroying established relationship with customers and suppliers Values that do not fit with organizational values Low level of loyalty toward organization Conflict with supervisor or top management Opposes organizational change or restructuring Demoralise his/her team mates Unable to follow predetermined procedures and documentation Lack of self-initiative while interacting with others Fail to display positive reaction toward contributing ideas or information Mean 3.79 3.73 3.53 3.45 3.38 3.37 3.27 3.21 3.04 3.04 S.D 1.06 1.08 0.96 1.07 1.04 1.06 1.11 1.04 0.99 1.02

The questionnaires were answered by managerial personnel of Malaysian companies located in the Federal Territory and the Klang Valley. A total of 300 sets of usable

questionnaires were successfully collected and analysed. The companies were grouped in terms of paid-up capital (in Ringgit Malaysia): less than 5 million (53.9%), 5 to 20 million (19.4%), 21 to 50 million (7.2%), 51 to 100 million (4.4%), and greater than 100 million (15.0%). In terms of sector, they are: Manufacturing and Processing (30.8%), Banking, Finance, and Insurance (12.2%), Research, Consultation, and Training (8.0%), IT-related (9.8%), other services (27.6%), and others (11.6%).


RESULTS On the behavioural aspect in employee selection, many companies emphasized interpersonal communication skill. This is shown by a high mean score of “ability to communicate effectively" and “able to work in team or group efficiently” (see Table 1). Interest or affinity of applicant towards job exhibited during the selection process is another important behavioural factor that was considered important by the companies. In terms of non-behavioural factors, applicants who possessed knowledge currently required by the companies were highly preferred. On the whole, the weightage on behavioural factor

compared to the non-behavioural factor is much higher during the selection process. The training and development of employee deal more with knowledge of documentation of processes and procedures, problem solving skills and techniques, and industry and business knowledge (see Table 2). However, training related to creativity, information communication technology and customer relationship management was not extensively covered. The principles and rationale of training were thoroughly covered during the training. In addition, all parties in the companies expressed support for the training by encouraging the trainees to practise and apply what they learned during training. The results on performance appraisal suggest that the majority of companies valued the practice of providing useful feedback to employee after the performance appraisal (see Table 3). The practice of giving feedback that is not relevant to work was strictly contained by the majority of the companies and unconstructive comments or judgements on employees were shunned. This is also supported by the fact that another important aim of performance appraisal was to direct the employees toward attainment of critical business goals. Regarding the compensation and reward system, the majority of companies rewarded their employees based on the employees' ability to achieve the company’s critical business goals (see Table 4). The second important element of the compensation system, “reward for measurable competencies”, is in parallel with the first mentioned above. However, the system was not communicated to the employees effectively, and the system failed to match company culture. It is also found that not many companies could significantly instil the joy of working in employee in performing duties and responsibilities. Finally, an employee will be laid off if he or she discloses information to outside parties, and destroy company relationships with customers and suppliers (see Table 5). In contrast, an employee will not be retrenched if he or she is unable to perform his or her task effectively, and the company is willing to train them. This is reflected on the low mean score of “unable to follow predetermined procedures and documentation". Employees who did not contribute their ideas or actively communicate with their colleagues were not penalized for

the act. On the whole, the issue of employees’ ethical conduct was strongly emphasized in retrenchment practices compared to their capacity or ability in performing their duties and responsibilities.

DISCUSSIONS The results discussed in the previous section suggest that many companies were starting to establish the foundation of KM implementation. Such a move was apparent in the screening and selection process of new employees. In particular, the results in this paper suggest that employers value people that have good interpersonal communication skill, are capable of working as a team, and possess knowledge that is relevant to company needs. By recruiting these people into the company will help build a pool of strong human resource that is ready for knowledge creation and application. This recruitment practice has been viewed significant to KM by Mayo (1998). Other signs that suggest that knowledge is gaining importance in Malaysian companies are: (1) rewarding employees that contribute new knowledge to company, (2) greater weight on team performance than individual performance during performance evaluation, and (3) tight control of knowledge and information through company’s retrenchment policies. The first and second exercises act as a stimulus for the creation of a knowledge-sharing culture. The third exercise reminds employees of the consequence of exposing the company’s critical knowledge to external parties. However, it seems that many employers felt that their existing pool of human resource lacked the required skills and expertise for implementation of KM. This situation is

understandable, as before the Asian Currency Crisis, the prosperous business environment had made employers less harsh and demanding on their employees. However, as the business environment became more demanding and stiff, companies and employees needed to be more efficient than before in order to survive. As a result, the focus of current training is placed on enhancing employees' basic skills and expertise. The principles and rationale of training are being emphasized in order to give the trainees a complete picture of their future role in the company's operation. Companies realized that providing training alone would not be sufficient in preparing their current employees for KM implementation. Various kinds of support and incentives were given to the employees to ensure the success of employee transformation. For example, the reward and compensation of employees strongly hinged upon employees' individual ability in meeting critical business goals. In other words, employees must quickly equip themselves with the necessary skills and knowledge that are critical to the attainment of the

company’s goals.

Top management and other parties in the company also encouraged

trainees to apply what they had learned in training in daily operations. Performance appraisal is another area that was designed to direct employees to meeting the company’s goals, whether as a team member or an individual player.

CONCLUSIONS The findings of this study suggest that Malaysian companies are still at the infancy stage of KM. The very prerequisites or inputs of KM, employee’s skills and expertise, need further improvement and preparation in order to embrace the coming knowledge-era. Nevertheless, there are signs showing that many are giving more attention to the issue of knowledge, especially in the recruitment process. It is expected that more concrete measures that induce KM implementation will be carried out by the surveyed companies when their current employees and technology infrastructure are ready. The measures that could be considered by companies include mentoring of new employees, introducing incentives that encourage knowledge-sharing, establishing good communication plans on the

implementation of KM, emphasizing team performance, and giving more attention to employees’ creativity. The measures outlined above are only some basic guidelines of KM. One particular issue that needs to be seriously attended to is the sentiment of withholding information or knowledge which is perceived more pertinent spreading or disseminating it (Warren, 1999). To address this issue requires the establishment of a company culture that appreciates knowledge sharing and open discussion to resolve problems and reduce failures. The more important questions that need to be answered before a formal attempt of KM are:
  

What strategy is pursued by the company? What type of knowledge is needed to support the decided business goals or strategy? Which area of the company does this knowledge reside?

It is important to note that the aforementioned measures are not “new” models or rules of HRM for implementation of KM. Following Armstrong (2000), it is believed that the

practice of KM in HRM has long existed before the knowledge trivia. It is the enhancement of some areas in the company that are needed to support the implementation of KM.

REFERENCES: Armstrong, M (1977). A Handbook of Personnel Practice, 6th ed., London: Kogan Page. Armstrong, M (2000). “The name has changed but has the game remained the same?” Employee Relations, Vol. 22 No. 6, pp. 576-593.

Bramley, P (1990). Evaluating Training Effectiveness: Training Theory into Practice, Berkshire: McGraw-Hill Training Series. Chong C-W, Holden, T, Wilhelmij, P. and Schmidt, R A (2000). “Where does knowledge management add value?”, Journal of Intellectual Capital, Vol. 1 No. 4, pp. 366-380. Civi, E (2000). “Knowledge management as a competitive asset: a review”, Marketing Intelligence & Planning, Vol. 18 No. 4, pp. 166-174. Davenport, T, DeLong, D and Beers, M (1998). “Successful knowledge management projects”, Sloan Management Review, Vol. 39 No. 2, pp. 43-57. Filius, R, de Jong, J A and Roelofs, E C (2000), “Knowledge Management in the HRD office: a comparison of three cases”, Journal of Workplace Learning, Vol. 12 No. 7, pp. 286-295. Mayo, A (1998). “Memory bankers”, People Management, Vol. 4 No. 2, pp. 34-38. Meso, P and Robert, S (2000). “A resource-based view of organizational knowledge management systems”, Journal of Knowledge Management, Vol. 4 No. 3, pp. 224-234. Mintzberg, H (1989). Mintzberg on Management: Inside Our Strange World of Organisations, NY: Free Press, New York. Quinn, J B (1992). Intelligent Enterprise: A Knowledge and Service Based paradigm for Industry, NY: The Free Press, New York. Robertson, M and Hammersley, G M (2000). “Knowledge management practices within a knowledgeintensive firm: the significance of the people management dimension”, Journal of European Industrial Training, Vol. 24 No. 2/3/4, pp. 241-253. Soliman, F and Spooner, K (2000). “Strategies for implementing knowledge management: role of human resources management”, Journal of Knowledge Management, Vol. 4 No. 4, pp. 337-345. Warren, L (1999). “Knowledge management: just another office in the executive suite?”, Accountancy Ireland, December.


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