Richard A. Kleinert, global practice leader of the human resources strategy group that specializes in human capital advisory services at Deloitte & Touche LLP, nicely sums up the new role that organizational knowledge has assumed in the management of an organization:
To me, knowledge has three Ms: message, medium, and motivation. Message—you have to define the business critical information in your organization. Medium—you need some sort of system to provide the right type of information to the right people at the right time. But most important, I think, is the motivation side. You have to motivate people both to populate a system and to use it. And that gets into the amorphous cultural area comprised of rewards, both monetary and non-monetary; communications, both pull and non-pull; measurement; and finally, but not least, leadership. (Haapaniemi, 2001, p. 73)
The unique characteristics of knowledge described in Chapter 2 ("Knowledge as a Capital Asset") mandate a holistic approach to its harvesting, transfer, and acquisition. Preceding chapters have examined many of the complex, interrelated factors that affect continuity management implementation and practice. This chapter examines another crucial factor: the organizational environment within which operational knowledge is transmitted.
Two environmental influences have a direct—and even decisive—effect on the implementation and effectiveness of continuity management and knowledge management: organizational culture and organizational reward systems. "You cannot do knowledge management," says John Kunar, President of Delphi Group Canada, the management consulting firm, "unless you change the existing culture of the organization. The overwhelming majority of companies that have actually done knowledge management have claimed that the cultural barrier is the greatest barrier" (Buckler, 2001). Similarly, organizational rewards support or impede continuity management implementation by motivating employees to participate in the continuity management initiative or to reject it. An appreciation of knowledge, a willingness to share it, and a commitment to preserving and enhancing it cannot be dictated by fiat. Such attitudes can, however, be grown, and the soil in which they grow is organizational culture, fertilized by focused rewards shrewdly designed and carefully administered.
Organizational culture is a concept that organizational theorists have borrowed from anthropology as a means of understanding why organizations behave collectively as they do and how they influence the individual behavior of their members. It refers to values, beliefs, assumptions, practices, and norms shared by members of the organization that shape their behavior and provide a sense of identity for them. Simply put, organizational culture is who we are and how we do things. It is largely tacit and, hence, is mostly invisible. Yet it is extremely powerful in determining organizational characteristics and individual behavior. Organizational culture can generate intense commitment or deep antagonism to an organization's mission and goals, and it directly affects organizational performance levels. Culture is particularly important in continuity management. The success of the continuity management process is highly dependent on individual behavioral responses, particularly positive attitudes around sharing and acquiring knowledge, which are either supported or discouraged by the organization's culture.
Organizational culture can be intentionally reshaped by altering the factors that create and sustain it so that it directly supports continuity management. In fact, such reshaping is mandatory if the existing culture is not open to knowledge sharing. Yet changing an organization's culture is a complex process, because the factors that influence it are many, highly interrelated, and subtle. They emerge as much as they are created, and so they are hard to manage. Yet, ignorance or denial of the importance of culture in an organizational change effort dooms that effort to failure. An American businessperson would never attempt to manage a company in Japan or the Middle East without understanding the culture of that country. Similarly, no leader can expect to manage an organization without understanding that organization's culture or to manage knowledge effectively without understanding the extent to which the culture values it.
Whatever degree of cultural change may be required to implement continuity management, it can be achieved through a two-pronged initiative. The first effort is to identify, overcome, or remove existing obstacles and impediments that block continuity management implementation. The second, launched simultaneously, is to develop new forces or strengthen established forces that support continuity management implementation. An analysis of those factors that affect continuity management should be conducted to determine where these obstacles and opportunities lie.
Many good books have been written on organizational culture and how to change it, most notably John Kotter's book, Leading Change (Kotter, 1996), and the excellent multiple works of Edgar Schein. It is not necessary to repeat the contents of these books in this chapter. The objective here is to create an awareness of organizational culture rather than to provide specific instructions on how to change it. Nonetheless, an understanding of the components that create an organization's culture makes it possible to identify what has to be changed. The following paragraphs describe the primary determinants of organizational culture.
This determinant consists of formal statements of position and principle that define an organization's purpose, mission, and goals and that are presumed to embody the ideals of the organization and its employees. Such beliefs are often contained in mission statements, declarations of corporate purpose, and lists of goals repeated by executives and managers and often appearing in official communications. These stated beliefs may or may not reflect the true purpose, goals, and beliefs of the organization and may or may not be supported by the culture or by organizational structure and personnel policies. Nevertheless, official beliefs promulgated and repeated by the organization and its executives and managers are a starting point of cultural change. The vision of the organization must be embraced by employees if they are going to adopt behaviors that reflect it. Therefore, knowledge-based objectives embodied in continuity management should be written into the vision of the organization through its statements of principle, mission, and objectives. Knowledge continuity should be a stated goal of management that is communicated through every available medium.
This determinant of organizational culture consists of assumptions held by employees about the way things really work and beliefs about the way things are that may or may not reflect the official beliefs and stated positions of the organization. For example, a university may claim that it values the quality of a professor's teaching whereas, in fact, what it values is the quality of a professor's research. The quality of teaching may have little effect on a professor's status, class assignments, compensation, or promotion. The official university position sounds good to parents, but the professors know that, despite administrative protestations to the country, advancement depends on the quality (and quantity) of their research, not on the quality of their teaching.
When official beliefs and unofficial assumptions are not aligned, a dysfunctional organization results. Ordinarily, unofficial assumptions that guide employee behavior are based on what employees see as being rewarded or on what is reinforced by their peers rather than on what they hear. Because unofficial assumptions are more important than official statements of belief, cultural change can be brought about only when actions are in line with official statements. Realignment of the reward system is discussed later in this chapter.
Norms and values prescribe what is acceptable and unacceptable behavior within an organization, define success and failure, and assist in ethical and strategic decision making. They influence, for example, how employees treat each other, how they deal with customers, how they dress, and how punctual they are at meetings. Because norms and values shape what is honored and what is ignored, they are particularly important in the acceptance or adoption of new behavior. In the case of continuity management, norms and values must be changed to support the importance of knowledge to the organization, the need to leverage and increase it, and a willingness to share and acquire it. The preservation of knowledge continuity between employee generations must become a central value of the organizational culture.
HR oversees human resource planning, development of job descriptions, recruitment and selection, training and development, performance appraisal, and compensation. HR can play a powerful role in cultural change and the incorporation of continuity management into the fabric of an organization through the policies it issues, the personnel it hires, the training it conducts, the evaluations it performs, and the compensation it sets. Cultural change requires the marshalling of all organizational resources and communication capabilities if it is to succeed, especially those available to HR. A respect for knowledge and a commitment to continuity management can be instilled in new hires through orientation and training efforts and can be strengthened in established employees through performance evaluation criteria and personnel policies.
Rewards are an important means through which an organization supports desirable behavior, punishes undesirable behavior, and shapes its culture. This topic is discussed in more detail later in the chapter.
These symbolic aspects of organizational culture provide meaning and structure at work and indicate what an organization values. Ceremonies tend to be more formal than rituals, somewhat grander, less frequently occurring, and more celebratory, such as ceremonies associated with employee awards, promotions, or other honors. Examples of rituals include staff meetings, annual performance reviews, quarterly results, annual shareholder meetings, and so forth. Ceremonies should be developed to honor successful examples of continuity management, and rituals can be designed to support continuity management practices. An example of the former might be honoring an established manager for innovative use of the knowledge profile or a new employee for a comprehensive update of the profile. Examples of a ritual might be opening the knowledge profile portal as soon as the workday begins and always updating it, if necessary, at the end of the day.
Initiations confer organizational acceptance on newcomers. They confirm membership in the organization, make that membership valuable, and introduce new members to the norms and values of the group. Initiations may be formal or informal, planned or spontaneous, but they will always occur. They are essential to bringing a new employee from outsider status to insider status. Rather than leaving such initiations to chance, savvy leaders design and implement meaningful initiation ceremonies, including those that emphasize continuity management as an important practice of group members.
Rites of passage formally convey a new status. Baptism and bar mitzvah are examples of formal religious rites of passage in American society. Promotion ceremonies are rights of passage, as they formally convey a new title, new authority, and new responsibilities. As employees work their way though the phases of productivity and up the learning curve, their enhanced states of operational knowledge should be acknowledged and honored through rites of passage designed for that purpose.
This determinant of organizational culture includes the lines of authority in the organization, the division of labor, and the policies, procedures, job descriptions, and objectives that guide organizational activities. A rigid hierarchical structure with many management layers and strict policies and procedures will create a more inflexible, less responsive culture than one with few management layers, widely dispersed decision making, and an emphasis on vision and mission. Policies and procedures, job descriptions, and corporate objectives that emphasize continuity management will positively affect its adoption and incorporation into the organizational culture.
These transmitters of culture reinforce or redefine fundamental organizational beliefs, describe appropriate role behavior, and unify members. Myths and stories transmit what is valued and rewarded by the organization, reinforce organizational goals and objectives, provide role models, prescribe guidelines for success, and motivate employees. Because they have a powerful effect on organizational culture, the stories that leaders and managers tell should foster continuity management and recount examples of how to do it well. Myths serve the same purpose. Whereas stories are true, myths are technically not, although they communicate truth by describing core values. Stories of George Washington's courage are true. The myth that he never told a lie is not likely to be, but it nonetheless conveys a core value of American culture.
Jargon, or slang, is the specialized language that develops within an organization. Jargon helps to define the organization, unify it, and create a sense of belonging among its members. The deliberate introduction of new slang words into an organization can help reshape its culture by creating a common language through which to discuss and internalize the new characteristics that are sought. Usually, slang emerges naturally out of the culture, but it is possible to introduce it through explanation and repetition. Knowledge continuity, for example, is not a common phrase in contemporary organizations, and yet it would be quite common in an organization that has implemented continuity management. In fact, introduction of the phrase would be necessary because it is a central continuity management concept, and employees must have that phrase (or one like it) to understand and talk about continuity management and its advantages.
Brett's journal provides numerous examples of the jargon that became part of the culture at WedgeMark. Some of the jargon, such as barrier reefs and ghost work, emerged from the continuity management process itself. Other terms, such as PEAK meetings, K-Quest, knowledge vacuum, and knowledge collapse, were chosen to explain new concepts that had to be discussed. The knowledge questionnaire, for example, was often called K-Quest at WedgeMark, which was short for knowledge quest. Knowledge quest has the favorable connotation of an adventure involving a search for knowledge. The term knowledge Profile was chosen, in part, because it connoted something personal through its association with the human profile and even with the head, which contains the mind, where knowledge is stored. Likewise, the term K-PAQ (knowledge profile analysis questions) was chosen because of its positive connotation of a "knowledge pack" that could be employed in the knowledge quest. Choosing the right words to introduce the continuity management initiative is a first step in building acceptance of continuity management into the culture.
Metaphors use analogies to express complex ideas simply, and so they clarify the ambiguity and uncertainty that characterize work. Organizational metaphors may come from the military ("Let's nuke 'em"), football ("It's fourth and ten"), medicine ("We need a tourniquet, not a band-aid"), horticulture ("It's time for heavy pruning"), engineering ("That group can't carry its weight"), and so forth. Metaphors have an important impact on organizational culture because they influence the way in which employees perceive the organization and their own roles within it.
Continuity management represents a dramatic shift from the archaic perspective of knowledge as a byproduct of work—and thus largely expendable—to a contemporary recognition that knowledge is the driving force of work and thus is essential to high performance. This paradigm shift in perspective requires a change in organizational culture. Fortunately, a culture that supports continuity management is likely to support knowledge management, organizational learning, innovation, and vice versa. The critical role of culture in the success of knowledge management initiatives is now clear. But culture is only one ingredient in a successful implementation of continuity management. A related factor of equal importance is the system of organizational rewards.
Years of research have confirmed that managers get what they emphasize, what they measure, and what they reward. "Ultimately, to make knowledge management work and work well," observes James Copeland, CEO of Deloitte Touche Tohmatsu, "it's going to require a fundamental change in the way we do business and the way we reward our people" (Haapaniemi, 2001, p. 71). Organizational rewards can be used to create a new organizational perspective on knowledge, a willigness to share existing operational knowledge and, beyond that, a strong desire to acquire knowledge in order to create new knowledge. Organizational rewards can help create a culture in which exiting knowledge is enthusiastically offered, shared knowledge is passionately acquired, and knowledge creation is vigorously pursued. Organizational rewards can be divided into two types: extrinsic and intrinsic. Each is approached differently, and each is described in the following paragraphs.
Extrinsic rewards are tangible organizational rewards offered or granted to employees in order to motivate them to engage in specific behavior. This reward category includes bonuses, promotions, stock options, employee honors, salary increases, and the like. To ensure alignment of these rewards with the goals of continuity management, an analysis should be conducted of every organizational reward as well as the strategic planning, goal-setting, and performance evaluation systems. In every case, two criteria should be applied:
Do the existing rewards support (or work against) continuity management?
How can the existing reward system and its elements be modified to support continuity management more effectively?
The results of this analysis are likely to reveal virtually no organizational reward support for continuity management. This discovery, while not surprising, is ironic. Executives frequently talk of the need for knowledge continuity or at least bemoan its absence. And the majority of managers have suffered knowledge-starved job transitions of their own or the loss of valued subordinates that deprived them of much-needed operational knowledge. Yet, many companies are not, as it turns out, knowledge continuity–valuing companies at all, at least not from the standpoint of the rewards they offer, the measurements they employ, or the goals they set.
Extrinsic rewards are based on measures of performance, which may be relatively objective (as in the case of sales volume awards) or relatively subjective (as in the case of "employee of the month" awards, when the selection is not made on the basis of purely quantitative measures). These performance measures, in turn, are derived from a set of performance standards. Therefore, the examination of an organizational reward system begins with standards of performance, which, at least in theory, originate from the organizational vision and mission statements. These statements are official pronouncements of what an organization intends to reward and so are part of the organizational reward system. Vision and mission statements orient employees and set the presumed ideals that they should be trying to achieve. Although these statements do not always reflect what is actually rewarded, when they do, they can be significant motivators. Therefore, the goals of continuity management should be written into the vision and mission of the organization. The long-term process that leads to such an incorporation is more complicated than the simple statement sounds. Such a revision may, in fact, reflect a radical realignment of individual and organizational goals and values, but it must be made.
The standards of performance defined by the organizational vision and mission statements are generally broken down into specific performance criteria or objectives that the organization sets in order to achieve the vision. Attainable objectives with deadlines for achievement are powerful motivators of human behavior. The establishment of organizational continuity management–based goals and objectives provides an opportunity to explain concretely how continuity management is to be implemented and practiced and what its advantages are in terms that are meaningful to each employee. Knowledge itself is an abstract concept. Honoring knowledge is an unfamiliar paradigm that requires explanation so that people can relate to it and buy into it. Without concrete reasons for participating in knowledge sharing, acquisition, and creation, people may be hesitant to do so simply because they don't understand why it benefits them and why their lives will be better for it.
Specific objectives related to continuity management help incumbent employees realize that their competitive advantage is not based on static knowledge, but on knowledge that is growing—not on a knowledge base, but on a dynamic knowledge process in which they are the leading participants. This new value proposition emphasizes knowledge enhancement and creation, not knowledge hoarding or even knowledge transfer. Understanding knowledge as a process rather than as a commodity is critical. Such a statement is not a contradiction of continuity management's basic tenet that critical operational knowledge is a commodity. Critical operational knowledge is a commodity that can be transferred to new employees and then acquired by them. But the assumption in continuity management is that, at the moment of transfer, the operational knowledge that was a commodity for the predecessor becomes a process for the successor—a means to knowledge acquisition and to new knowledge creation.
Once specific continuity management objectives have been set, some form of measurement system must be established to determine whether the objectives have been met. Measurement is an essential part of any reward system, because it serves as the basis for choosing the recipients of the rewards as well as the kind of rewards that will be given for achieving different objectives. At least two types of measurements can be used in continuity management. The first type is a measurement of the number of times a targeted behavior is performed (for example, how many times employees update their knowledge profiles). The second measures how well the behavior was performed (for example, the quality or comprehensiveness of the profile updates). The task of choosing what behavior to measure is not as difficult as determining how to measure the quality or effectiveness of that behavior. For example, completion of K-Quest, regular updating of the knowledge profile, and attendance at PEAK meetings are obvious candidates for the first type of measurement. But what criteria will be used to judge how well the knowledge profile is updated or how comprehensively the knowledge questionnaire was completed? These issues will have to be addressed by each organization. To a large extent, the resolution of these issues will depend on how committed the organization is to continuity management and to making it an inherent part of management activities.
With performance objectives, criteria, and measurements in place, it is possible to determine the appropriate extrinsic rewards for each objective. These rewards take many forms, but they can be divided into three basic categories: promotion, compensation, and recognition.
Promotion criteria should be revised to include continuity management. Criteria for K-Quest completion, PEAK meeting participation, and knowledge profile updating should appear as specific objectives in employee goal-setting and as performance review criteria in conducting employee evaluations. For example, employees who fail to complete K-Quest, regularly update their knowledge profiles, or participate in PEAK meetings should not be considered appropriate candidates for promotion.
Salaries, raises, and bonuses should all be tied, in part, to the achievement of continuity management goals set by the employee and the organization. Joseph E. Griesedieck, CEO of San Francisco–based Spencer Stuart, a $365-million executive recruiting firm, described what it took to implement knowledge management at his firm. While his experience relates to knowledge management, it applies to continuity management, as well:
When we started pushing knowledge management, we made speeches about it, we tried to make it part of the culture. But at the end of the day, we finally had to just get serious and say it's also going to impact your compensation. Today, 20% of a person's total compensation sits within this area. I don't care how big a rainmaker you are, if you aren't putting information in the database, you're going to get 20% of your compensation taken away. So you can do everything you want to change the culture of the organization, but at the end of the day, you also have to tie it to some kind of measurement system, which we have on a monthly basis, and to the compensation system. (Haapaniemi, 2001, p. 74)
Various forms of recognition, such as awards, accolades, more exposure to superiors, better assignments, and so forth, can be used to reward employees for continuity management behaviors. Such recognition serves multiple purposes. Not only does it publicly reward the employee, but it also provides a role model for others and examples of continuity management in action that are both instructive and inspirational.
While extrinsic rewards are tangible and granted by the organization, intrinsic rewards are intangible and are experienced as a result of the work itself. Anyone who has felt a sense of accomplishment from completing a difficult project or satisfaction from helping another person overcome an obstacle has experienced an intrinsic reward. Indeed, such rewards can be the most deeply satisfying and motivating of all. But they are also more difficult to manage than extrinsic rewards. Management can grant extrinsic rewards directly to an employee. Intrinsic rewards, on the other hand, can only be facilitated through setting up environments that are appropriate to their development. Yet these "soft" motivators of human behavior are essential complements to the "hard" motivators of extrinsic rewards and must be considered in any analysis and design of an organizational reward system.
In fact, one of the reasons continuity management is effective in getting people to share their knowledge and to internalize and apply the knowledge of others is the many intrinsic rewards that are built into its design through the structured opportunities it creates to experience them. These rewards include knowledge-based opportunities to share, to feel connected to other human beings, and to be valued. Continuity Management Orientation Day, PEAK meetings, the annual follow-up PEAK meetings, online meetings, peer design teams, communities of practice, and knowledge profile creation allow people to be of service to others in ways that are personally rewarding and professionally enriching. These opportunities for knowledge sharing confer peer acceptance, confirm the value of individual knowledge contributions, and recognize the worth of participating employees.
Intrinsic rewards not only develop out of our relationships with others, they also develop out of our relationship with ourself. Learning, for example, is an inherently pleasurable undertaking when it adds value to our activities or satisfies our curiosity. It is an intrinsic reward. Learning is the centerpiece of continuity management because its primary activities are built around knowledge analysis, sharing, acquisition, and creation. Continuity management makes possible an exchange of credible knowledge structured for ease of access, transfer, understanding, and application. It encourages discovery, self-discovery, and continuous learning, facilitating the development of new insights, perspectives, frameworks, and ways of doing things.
Another rich intrinsic reward of continuity management is the opportunity to create, one of the fundamental pleasures of human existence. Continuity management challenges employees in competitive and collaborative ways to engage in creative endeavors that can be very satisfying. Updating knowledge profiles, expanding knowledge networks, developing new means to capitalize on knowledge leverage points, and creating knowledge in PEAK meetings are stimulating processes that can be intrinsically rewarding.
Somewhat related to creating is another intrinsic reward: the opportunity to leave a legacy. Every knowledge profile is a knowledge legacy. To personalize these profiles and increase incumbent and successor buy-in, each profile contains a biography and photograph of the founding incumbent who originated the profile and the biographies of each successor incumbent who followed in the position. These biographies contribute to the value of the profile as a personal legacy left for future generations of employees. Through their profiles, incumbents leave a record of their insights, accomplishments, and actions. They leave something of themselves. Through their biographies, incumbents personalize their legacy and sign their work.
An examination of an organization's reward system is a comprehensive task that forces hard questions. There is a tendency to rely on the obvious and the easy (paying people more) rather than the subtle and the difficult (creating opportunities for knowledge sharing that are satisfying). In manual labor, extrinsic rewards are effective—but only up to a point, as seven decades of management research have proven. In knowledge work, extrinsic rewards are also important, but intrinsic rewards may be even more so.
This chapter completes our discussion of operational knowledge transfer and acquisition and the realignment of the organizational culture and reward system. The following chapter examines the relationship between continuity management and knowledge management in more detail, explores aspects of continuity management that have already been implemented and are working well, and speculates on what knowledge asset management might look like in its fullest expression in the knowledge economy.