Week 4

Knowledge-based enterprises,
knowledge workers and human
resource management

1
Week 3 review: Intellectual capital
• The value of the organizational brain

• Difference between the market value and book value of

organizations

• Intangible assets

• Sources of intellectual capital

– Customer loyalty, repeat business
– Patent, copyright
– culture, business processes
– competencies, know-how

2
Week 3 review: Managing IC

3
Week 3 review: Measuring IC
• Direct Intellectual Capital Methods
– for estimating dollar value of intangibles

• Market Capitalization Methods

– calculating the difference between market capitalization
and stockholder equity

• Return on Assets Methods

– comparing relative returns

• Scorecard Methods
– reporting performance in various indicators
4
Week 3 review: : The Skanida model

Market value

Financial Intellectual
capital capital

Human Structural
capital capital

Customer Organisational
capital capital

Innovation Process
capital capital

5
Week 3 review: The Skanida model

6
Week 3 review: Assessments one and three
• Assessment one
– Individuals
– What to do
– Outline
– Due date

• Assessment three
– Group of three in the class
– What to do
– Outline
– Due date

• Assessment one versus assessment three

• Check the marking rubric in the canvas

7
Week 3 review: Questions?

8
Outline of week 4 lecture

• Different views of organizations

• Organization structures and their implications

• Knowledge workers, knowledge based organizations

• Human resources management

9
Views of organisations
• Particular sets of relationships in operations at any
one time
• Specialisation and
accumulation of
knowledge means that
the ideal type no longer
exists
• Knowledge-based
enterprise resulting
from:
— rise of knowledge economy
and changes to the global
economy
— greater priority on services

10
Knowledge-based organisations
• Knowledge based organizations are organizations that
depend on the capability of employees to produce, acquire
and apply knowledge to create products or services

• Organizational knowledge
o Tacit knowledge
o Explicit knowledge
o Individual knowledge
o Collective knowledge

• Five stages of knowledge-based organizations

o Sharing of tacit knowledge
o Creation of concepts
o Justification of the concepts
o Construction of an archetype
o Interactive dissemination of knowledge
11
Perspectives on knowledge-based
enterprises
• Sole business is knowledge creation and embodiment
• Sub-group of services distinguished by packaged output for
clients
• Learning organizations
• Most work is intellectual and most employees well-educated
• Firms found across specific sectors (e.g. law, accountancy)
• Professional service firms similar to traditional partnerships
but less bound by entry and other requirements (e.g. IT)

12
Why is organizational structure important?

• The way in which knowledge-intensive firms structure

and organise internally will be crucial where innovation
and creativity are the basis on which the firm competes

• Informal, loosely coupled organisational environment is

thought to provide autonomous working conditions
where employees engage in creative and innovative
behaviour

13
Logical structure of organisations: Examples

• Common structures
— Functional
— Divisional
— Matrix

• Let’s look at some other

approaches to
structuring the
organisation…

Functional

14
Logical structure of organisations: Examples

• Common structures
— Functional
— Divisional
— Matrix

• Let’s look at some other

approaches to structuring
the organisation…

Divisional

15
Logical structure of organisations: Examples

• Common structures
— Functional
— Divisional
— Matrix

• Let’s look at some other

approaches to
structuring the
organisation…

Matrix

16
Logical structure of organisations: Adhocracies

• Complete opposite of bureaucracy

• Genuinely de-emphasises hierarchy

• Structure based on self-forming, self-managing teams,

decentralised decision-making and few formal rules

• Control based on professionalism and non-direct

methods

17
Logical structure of organisations:
Adhocracies (caveats)

• May be most relevant to start-ups and can regress:

– time: focus on billable hours that can erode creativity
– growth: can lead to formalisation
– culture: potential clashes between efficiency and autonomy

18
Logical structure of organisations:
Flexible organisations

• Responsive to markets yet retain employee commitment

• Cosmopolitan and global in outlook

• Engaged in intra-industry alliances

• Capability-based where people the key resource

• Silicon Valley-type firms

19
 Logical structure of organisations:
Flat organisations
• Where flatness refers to the organisational structure

• Deliberately re-designed to replace the rigid hierarchies

of the Industrial Age firm

• Greatly facilitated by advances in information technology

• Structured for a knowledge-based economy

20
 Logical structure of organisations:
Competency-based
• What makes a core competence?
– unique bundles of skills/ technologies
– disproportionate contribution to customer-perceived value
– competitively unique
– the basis for entry into new product/service markets

21
 Logical structure of organisations:
Competency-based (behaviour)
• Look beyond final products and services to understand
underlying knowledge and skills

• Leverage competencies across the firm

• Self-organising
– people are focused and empowered

• Long-term perspective
– takes time to nurture and develop competencies

22
 Logical structure of organisations:
Networked organisations

• Akin to virtual in that appearances can be deceptive

• Time and distance are decimated

• Difference in client interfaces

• New business patterns for staff and business partners

• Locus of knowledge is diffused

23
Physical structure of organisations

• Important to consider how the

physical workplace design
impacts knowledge
management
—Knowledge creation, transfer,
application
—Worker productivity

• Workplace design and layout

—Open plan versus closed plan
—Co-working
—Hot-desking

24
Physical structure of organisations

• Remote working
—Working from home
—Working from client
premises
—Working in multi-sight
organizations

25
Challenges of managing knowledge-based
firms
• Measuring intellectual assets/outputs

• Designing processes to generate greatest output from professional

service activities

• Identification of potential outsourcing activities

• Guiding/motivating people to give of their best

• Managing new organisational forms

26
 Challenges resulting from shifting
boundaries
• Shifting boundaries of authority
– e.g. how do traditional sanctions apply to knowledge workers?

• Blurring boundaries of control

– in a networked environment many resources are outside the boundaries
of the organisation

• Changing boundaries physical/intellectual

– things were central in the Industrial Age, today, knowledge is central
which is embedded in people vs. appearing on the balance sheet

• Shifting boundaries of loyalty

– jobs for life are a thing of the past

27
 Knowledge work

• What distinguishes knowledge work?

– primary raw material is information
– primary product is information to which value has been added
– it is mentally rather than physically intensive
– heavy reliance on individuals

Slide
28
28
 Knowledge workers

• What distinguishes knowledge workers?

– not easily interchangeable or replaceable
– autonomy and empowerment crucial
– co-location which often involves work remote from the firm in co-
location with clients
– gold collar element where knowledge workers often enjoy
special status and related advantages

Slide
29
29
Managing knowledge workers
• Leadership rather than
management
• Key motivators for
knowledge workers
— personal growth and
opportunity
— operational autonomy is
regarded as being more
important than strategic
autonomy
— task achievement and a sense
of accomplishment
— monetary rewards

Slide 30 30
Managing knowledge workers

• Bringing the human

spirit to work
• The truth about what
really motivates us
— Autonomy
— Mastery
— Purpose
• https://www.youtube.com/watch?
v=u6XAPnuFjJc

Slide 31 31
Human resource management

• Knowledge resides in
people so is HRM the
rightful place for KM?
— HRM focuses on the
recruitment, management
and provision of direction for
employees
— sometimes criticised for
being operational vs.
strategic

Slide 32 32
Human resource management

• Human Resource
Development
— branch of HRM
— focus on development of
employees and their
skills

Slide 33 33
Potential new roles for human
resource management

• Human capital steward

– creating an environment that attracts and retains knowledge
workers
– challenging and motivating knowledge workers

• Knowledge facilitator
– facilitating a proper work-life balance
– turning new knowledge into new behaviours

Slide
34
34
 Potential new roles for human
resource management

• Relationship builder
– linking people most effectively with ICT
– building networks and communities around strategic objectives
– building commitment when people have only a partial relationship to
the firm

• Rapid deployment specialist

– managing fluid work assignments and the people and teams involved
– ensuring that work is done in a flexible, empowered workplace

Slide
35
35
 Summary

• Identified the nature of knowledge-based organisations

• Considered the major challenges facing knowledge-based

organisations

• Identified the role of, and challenges for, HRM in the context of
knowledge-based enterprises and knowledge workers

• Described the impact of HRM policies and approaches on social

capital

• Identified potential new roles for HRM professionals in a KM context

36