Knowledge
Management,
A
Tool to Higher Profits, Better Cash Flow and Higher Stock Value
Based on data collected from a study by the University of Chicago,
companies who integrated Knowledge
Management programs far outweighed those who didn't in realizing higher
profits, better cash flow and higher stock value--all without increasing their
employee base. Of the 437 publicly traded companies reviewed, 205 respondents
with knowledge management programs also benefited with significant gains in
financial performance and production, higher sales growth per employee, and
lower real growth in numbers of employees.
Only as recently as ten years ago did executives begin to realize the
need to practice and maintain Knowledge
Management.
"As the foundation of industrialized economics has shifted from
natural resources to intellectual assets, executives have been compelled to
examine the knowledge underlying their businesses and how that knowledge is
used." According to Harvard Business School, Boston, Massachusetts.
"At the same time, the rise of networked computers has made it possible to
codify, store, and share certain kinds of knowledge more easily and cheaply than
ever before."
There are two basic strategies for Knowledge
Management. The first, codification, is
the process in which knowledge is carefully codified and stored in computer
databases where it can be accessed and used by anyone in the company. The
second, personalization, in which
company knowledge is closely tied to the person who developed it, and is shared
through direct person-to-person contacts.
Knowledge Management has proven
extremely helpful as a principle course to practice and protect companies who
face large employee turn over or acquisition and sale.
For example, the law Firm of Baker & Daniels, located in Fort Wayne,
Indiana, uses the codification method of Knowledge
Management offered by Roster Network.
"We are witness to an unprecedented level of corporate mergers and
acquisitions," said Mike Nader, a partner in the law firm of Baker &
Daniels, Fort Wayne, Indiana. "The surviving company must identify skills
and expertise in the combined workforce in order to produce synergistic savings
so often promised to Wall Street. To that end, employers are finding that Knowledge
Management is a useful tool for eliminating redundancies and retaining
expertise to maximize synergy’s."
"If
a company has a wealth of knowledge about what it processes and sells, business
owners have to find an intelligent way to manage it. You can't manage what you
can't measure, so first identify what the knowledge is, and then implement a way
to manage it through Knowledge
Management," said John King, president of Roster Network, an alliance
of Indiana Professional-services firms.
King is referring to a proven Knowledge
Management tool Roster provides called Position Matrix and Performance Ware
which enables employers to systematically record employee performance and
knowledge of the business. The Position Matrix also allows employees the
flexibility to generate new ideas and make valuable knowledge contributions to
the company.
Six steps to Creating A Knowledge Management Program
1. View your organization as
a human community capable of providing diverse meanings to information outputs
generated by the technological systems.
2. Encourage diverse viewpoints. Viewpoints of persons with differing
backgrounds and expertise can provide a much broader focus that is essential for
completely grasping the essence of the core issues.
3. Encourage greater
proactive involvement of human imagination and creativity.
4. Give more explicit
recognition to tacit knowledge and related human aspects such as ideas, values,
or emotions, for developing a richer conceptualization of knowledge management.
5. Implement flexible
technologies and systems that support and enable communities of practice.
6. Make the organizational
information base accessible to organization members who are closer to the
action, while simultaneously ensuring that they have the skills and authority to
execute decisive responses to changing conditions.
7. Implement a data
gathering system that is much like a traditional library. It must have the
capability of containing a large cache of documents and include search engines
that allow people to find and use the documents they need.
Despite the vast amount of information available defining what Know/edge Management is, the simplest definition yet is that Knowledge Management is the technique of documenting what your employees know in relationship to what your business does. Utilizing a systematic procedure of safeguarding this knowledge is the key. Look to tools that will streamline the process and keep both employers and employees confident and content with what they share.