What happens to knowledge workers when the economy heads south?

Batten down the hatches, a recession threatens the U.S. economy. A looming recession has important implications for KM, and business analysts have turned their attention to forecasts of economic trouble. A Gartner report, “Weathering an Economic Downturn with KM,” December 2000, argues that KM projects allow businesses to increase their market share over their less savvy peers.

KM is a business philosophy that manages intellectual capital with the same attention 19th century industrialists paid to material capital. In the industrial age, companies worked to accumulate material wealth--steel, factory equipment, buildings and other tangible items. In the information age, companies work to acquire and deploy enterprise knowledge. KM centers on the idea that one of the most valuable corporate assets is the experience locked inside people’s heads.

In the contemporary marketplace, according to KM tenets, competitive advantage is the result of "smarter employees." Mentoring programs, for example, provide a method of transferring expertise from one employee to another. Such programs, KM proponents argue, spur innovation and increase market share because workers learn from the mistakes of others, build on the insights of their peers and, in general, have the collective wisdom of an entire organization at their disposal. Gartner estimates that companies that manage their intellectual capital using KM initiatives increase their productivity by 30%.

In economically troubled times, managers must take a second look at the KM policies they are promoting. KM projects will fail if managers ask workers to act contrary to their own long-term best interests. KM is a highly political endeavor because workers lose ownership of the knowledge they share. When workers transfer their expertise to a broader community of practice, they could find their personal standing within an organization diminished. In some businesses, hoarding knowledge is a reliable means of gaining status.

KM will be effective only if workers believe their labor is honored and their need to earn a livelihood respected. In too many organizations, the old cliché that "our people are our greatest asset" has been nothing more than lip service. It’s not that KM can only work in a stable economy where people feel secure in their jobs. Rather, the best way to encourage knowledge transfer and worker collaboration is by rewarding teams of workers instead of specific individuals. Likewise, cutbacks in personal should occur at the level of project teams or work groups.

Economic uncertainty and internal inconsistencies with KM thought

While KM is attractive to managers during a recession, the same conditions that make it look good also make it more complicated to apply, if you take into account the cooperation of the keepers of the intellectual capital--the employees. KM asks them to act like a team in an environment in which the company may not return the favor. If it is my skill (knowledge) that makes me valuable to the company, why on earth would I give it away only to be sent packing?

People will not share their flashes of individual brilliance or hard-won expertise with co-workers if their workplace does not support learning, cooperation and openness. One business, for example, sought to increase worker collaboration and knowledge reuse while simultaneously downsizing that same work force. The combination proved untenable. While jobs hang in the balance, asking employees to dole out insights or record their tacit knowledge is fruitless. Under those circumstances, any employee would suspect that KM was simply a tool of manipulation.

An economic recession is a gut check for managers. Downsizing and layoffs reduce a company’s intellectual capital because it reduces the work force, the owners of important knowledge. Myopic business decisions regarding payroll can result in a corporate brain drain from which it is hard to recover. Furthermore, workers who do keep their jobs quickly ferret out the difference between the official company line regarding KM and how the company in fact behaves.

Where does knowledge reside within an organization? When work is shared among communities of interest and project teams, individual input is hard to trace. Specifically, it is tough determining which team member is expendable. Some commentators suggest that a “knowledge inventory” should be conducted before a company makes layoff or downsizing decisions. In practice, that is a tricky strategy to execute because evaluating “where knowledge resides” within an organization is a complex task. Identifying the skill sets of employees is a standard KM procedure, but that step, by itself, does not necessarily indicate whose labor can be judged redundant. For example, multidisciplinary teams are lauded in KM circles because they promote synergy. Pulling out the strands of individual merit within a genuinely cooperative effort is next to impossible.

Realpolitik: the role of corporate politics

KM transforms businesses into learning organizations. As an enabling set of routines and processes, KM imagines a corporate environment where information is shared and openly accepted. In addition to the fear of unemployment, however, the chief impediment to such an environment is an enterprise’s culture. In most workplaces, information is power. Status and rewards go to the knowledge owners, not the knowledge sharers. Hoarding essential information, in that context, is beneficial: employers view those workers as indispensable members of the corporate team and, therefore, immune from termination. As KM author Thomas H. Davenport noted, everyone who has ever worked in an organization knows individuals who have exclusive control of enterprise knowledge and use that advantage to establish positions of power.

Given the rewards, there’s little incentive to share information. While an organization may preach information sharing and worker collaboration, such behavior generally goes unrewarded. It is important for managers to ask: Are people promoted, rewarded or recognized for sharing knowledge?

Tacit or explicit: Who owns knowledge?

In a business context, knowledge is conceptualized as a continuum with structured, explicit knowledge on one extreme and unstructured, tacit knowledge on the other. Workers create knowledge all the time, and the transfer of knowledge across the continuum--from tacit to explicit--is not politically neutral.

Most companies have an intranet or portal system to capture explicit knowledge, such as blueprints, database entries and computer code. That information is easily stored, retrieved and classified. For a manufacturing plant, explicit knowledge could include proprietary manufacturing formulas, machine operating instructions and strategic marketing plans.

Tacit knowledge, by contrast, is difficult to codify. It includes subjective insights and hunches, and is developed through practical experience. Explicit knowledge is often quite limited in its usefulness. Even mechanical tasks require a backdrop of tacit know-how. Take learning to ride a bike as an example. You need to develop a “feel” for keeping the bike balanced. Directions on the placement of body weight or changing gears won’t suffice. Riding a bike is more like an art than a science. It calls for subtle adjustments that occur almost unconsciously. Both physical and intellectual labor rests on just that type of assumed knowledge.

Rewards help

The distinction between tacit and explicit knowledge also determines who has effective control of information. Explicit knowledge is likely to be the property of an enterprise. Either as raw data or a completed project, codified knowledge belongs to the sponsoring enterprise. Because tacit knowledge is private and subjective, it effectively remains the property of the worker. If workers leave an organization without sharing what they know, they take their knowledge with them. The best way to encourage knowledge transfer and worker collaboration is through a team-based system of rewards.

To be successful, KM projects should create a corporate culture that genuinely rewards knowledge creation and reuse. Typically, corporations base merit on individual achievement. A company can spend millions on information retrieval and data integration tools, but if bonuses and other rewards are handed out to individual "top performers" only, nobody is going to share what they learn.

Team approach

Incentive systems that use a team approach and reward a group within the company for its efforts are more conducive to KM. If you want people to work together as a team, it makes sense to award bonuses, time off and other benefits to teams and not specific workers.

Conversely, companies can re-examine teams that do not sustain a business’ mission. Companies may choose to eliminate teams or projects that do not support their core business activities. For example, a company can choose to spin out a non-essential project and help that body create its own free-standing business. In the context of community-based work groups, cutbacks should occur at the team level.

Katherine C. Adams is an information architect and free-lance writer, e-mail kadams@mohomine.com. The author thanks Lillian Taiz for her thoughtful and substantive editorial comments.