*Aligning Human Resource Management with Knowledge Management for Better Organizational… DOI: http://dx.doi.org/10.5772/intechopen.86517*

cooperation, as well as communication flows and networks inside the organization and across its borders. They proposed an integrative approach between KM and HRM, so that if we compare the KM cycle with HRM processes, we will find that various activities are shared between both.

The literature has for a long time supported the claim that employees are the most important organizational asset, especially when it comes to achieving an effective KM process [12, 22, 27, 28]. Employees are the vehicles for knowledge creation, sharing and implementation. Nilsson and Ellström [12] emphasized that the general organizational success is increasingly associated with identifying, recruiting, managing, and retaining high performers or talented individuals to meet the present and future demands of an organization. Therefore, the core purpose of the HR function is to develop, select and hire people, train and develop the staff, evaluate their performance, reward them and create a culture of learning to support and achieve the business strategy [22]. In fact, human capital advantage stems from having more capable people than the competition [29]. Shaw et al. [30] argue that human capital can meet the criteria of sustained advantage, when HRM investments are aimed at increasing the knowledge and skills of the workforce and also to tightly integrate the human capital.

Therefore, HRM activities, such as recruitment and selection, education and training, performance management and reward systems, are essential for managing knowledge properly [28] and contribute instrumentally to improving the knowledge flow, i.e., acquisition, transfer and its integration in the organization [7]. Zhou et al. [31] found that several HRM practices (namely, internal communication, training and performance appraisals) play an important role in helping firms to build absorptive capacity and to enhance knowledge transfer during mergers and acquisitions. Knowledge sharing practices must be integrated into strategic business objectives, human resources practices, and the organization's culture so as to encourage and support on-going collaborative behavior [32].

Some scholars have highlighted recently "Knowledge-based HRM" including those HRM practices purposefully designed to enhance knowledge processes within an organization [33] with the need to reposition its functions, orienting them towards strategic capacities of knowledge. That is to manage knowledge workers, to construct a value from knowledge and to assess the risk of knowledge loss [7]. For instance, Hussinki et al. [34] divided HRM practices into several categories such as heterogeneous workgroups and brainstorming commitment-based HR practices (e.g., employee empowerment and career development) and knowledge-based (e.g., recruiting, professional development, and employee retention).

Broadly speaking, HRM should be aligned with KM and organizational strategies, especially as there is a positive relationship between HRM and those of performance and innovation [21, 35, 36]. HR policies should also be evaluated on their ability to foster the application of personal knowledge for the benefit of the firm. Gourlay [37] added that the employees' willingness to cooperate with KM initiatives is likely to be dependent on HRM policies and procedures. Moreover, Kase and Zupan [35] commented that the performance of HRM should be linked with learning, innovation and intellectual capital. It should focus on building social capital and knowledge networks. An advantage of using HRM is that it is built through the maintenance and development of human capital and organizational processes. This gives it a major role in managing social networks, which are essential in transferring tacit knowledge. Hosseingholizadeh et al. [38] added that HR practices have a vital role in supporting knowledge-work within organizations, especially that they empirically confirmed that motivation, ability and the opportunity provided to knowledge-workers influence knowledge application, sharing and creation. HR practices should focus mainly on enhancing employees' ability and motivation for them to contribute individually to KM activities.

*Current Issues in Knowledge Management*

**of extant literature**

interpret and imitate [25].

are closely interrelated [10].

exists within individuals and is tacit in nature. The decision makers are then likely to support an HR-based approach to KM with an underpinning personalization strategy. It has been noted, however, that these two approaches are not mutually exclusive and completely independent of one another. Alternatively, Edwards et al. [23] suggested a combination strategy; where opposing perspectives and strategies are held on an equal footing. It then follows that if the premise of this approach is followed then the debate concerning the knowledge concept is of less concern.

**3. Human resource management and knowledge management: a review** 

Knowledge as an asset and KM as a process has received considerable attention in the strategic management and strategic HRM-literature, as a means to attain competitive business advantage [3]. KM's effectiveness often depends on HRM processes and on the quality of management's strategic alignment (organization, people and knowledge). HRM must be analyzed as a factor influencing KM implementation [7]. From the strategic HRM perspective, a set of integrative HR practices that support a firm's strategy produce a sustainable competitive advantage. Human capital (skills, knowledge and behaviors) and organizational capital (routine, systems, tacit knowledge) are the most cited resources in the resource-based view literature, which are gained over time and make it difficult for competitors to

HRM is understood here as a set of policies, practices and systems that influence behaviors, attitudes and performance of organizational members, aiming to increase their competitiveness and learning capacity, to the extent of creating a culture of learning. For example, Gope et al. [8] found that HRM practices, which enhance individual learning, motivation and retention of employees with an intention to boost knowledge-acquisition and knowledge-sharing, improve organizational performance. Their findings also showed that the traditional roles of HRM practices are evolving to support the achievement of talent management goals such as talent identification, talent development and talent engagement. As suggested by Bontis and Serenko [26], employees' capabilities depend on their training and development as well as job satisfaction levels. Arunprasad [25] noted that strategic HRM practices are significantly and positively related to learning outcomes. For instance, staffing and performance evaluation are the factors that significantly contributed to learning dynamics in software firms. Therefore, according to Theriou and Chatzoglou [16], firms pursuing best HRM practices achieve higher performance through designing HR practices that support KM and organizational learning capability, and in return, the creation of organizational capabilities. It is suggested that best HRM practices are not only related directly to organizational capability, but also indirectly related to the processes of organizational learning capability and KM. In fact, HRM acquires a key role in potentiating and facilitating both KM and learning processes [7]. Thus, if HRM is about managing people effectively and if people's most valuable resource is knowledge, then HRM and KM

Studies of an alternative point of views have examined the type and quality of HRM and KM linkages. It is widely accepted that HRM is not KM [27]. For example, Teece (2000), cited in Svetlik and Stavrou-Costea [10], argues that KM is more multifaceted than HRM because it involves managing intellectual property rights and the development and transfer of individual and organizational know-how. However, Svetlik and Stavrou-Costea [10] stated that HRM and KM share common activities, goals and strategies when creating work units, teams, cross-functional

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Some scholars have stated previously that the HR section in an organization is the one best equipped to handle KM initiatives due to the fact that the activities of the department itself do not directly conflict with the KM initiatives [39]. However, whether or not the HR section is chosen to undertake this role is based on the performance of the department, i.e., the better it performs, the more trust is generated within the organization and the more likely it is to be chosen as the best candidate to roll out KM initiatives [40]. It should also be borne in mind that HRM practices are not exclusively actioned by the HR department per se; top, medium and line managers are highly involved in HR practices as well. This leads to the assumption that, even if HR departments are assigned to play a leading role in KM, strong results are not expected exclusively from them [19].

HRM at its strategic and functional levels should be aligned with organizational and KM strategies and practices. The personalization approach usually aids decentralized, explorative and double-loop learning along with organic organizational strategies. This is different from the codification approach, which aids to a greater extent centralized, exploitative and single-loop learning along with standardization strategies [22, 41]. HRM practices in an organization are adjusted in line with which approach is adopted. In the literature, it is not clear exactly how the combination approach, when used, handles the different KM approaches and organizational strategies in the context of translating their goals into HRM practicalities. Thus, the chapter focuses on the personalization and codification strategies while assigning the contextual HR practices under each strategy.

To understand the overall effect HRM practices can have, it is best to view them in combinations [41]. Horwitz et al. [42] stated that HRM practices should be aligned with HRM, KM and organizational strategies but also noted that other organizational factors could also be considered to influence the development of HRM practices. These factors could be the size and nature of the industry, the organizational characteristics of a firm and the ownership structure of a firm, along with cross-cultural factors and cultural differences. The competitiveness of human capital has also been claimed to have an effect on the selection of HRM practices, which inevitably goes on to affect KM [43].

In short, various HRM practices do have a noticeable effect on KM [36, 40, 44–46]. There are, of course, numerous HRM practices that exist in current literature; however, only six HR practices that have been discussed in depth in previous literature are analyzed in this article. These six HR practices are: recruitment and selection, compensation management, training and development, performance management, retention management and career management. Although each will be discussed separately, the alignment of each practice with others under each KM strategy is highlighted in **Table 1**. In this study, according to Kianto et al. [33], traditional HRM practices have seen from a knowledge-based perspective and integrated with KM. The nature of these practices is outlined in the following sections.

#### **3.1 Knowledge-based recruitment and selection**

Constantly new and changing demands in the world of work create challenges for HR professionals attempting to identify and develop relevant talent. However, the identification and development of talent have generally been based on a technical rational perspective that is driven from labor economics [12]. But, it seems that traditional recruitment and selection practices can block knowledge sharing between groups or departments in firms organized according to the functional principle [22]. In a knowledge-intensive labor market, it is increasingly difficult to assess the competence of individuals in relation to the requirements of specific jobs [12].

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**Table 1.**

*Aligning Human Resource Management with Knowledge Management for Better Organizational…*

Alignment with the personalization and

loop learning and organic strategies

Focus on filling "knowledge gaps"

Both individual and group incentives

Both short-term and long-term incentives

Training subjects are diversified and address technical and interpersonal skills needed for

The training aims to strengthen the depth and breadth of knowledge embedded in employees Informal T&D is primary and formal T&D is

Unstructured T&D is primary and structured T&D

Focus on the breadth and depth of knowledge/

Direct knowledge-sharing between leavers and

Promotion is encouraged and, at many

Potential shortage in managerial skills due to emphasizing technical career ladders

organizations, it is a must Dual career ladders Early lateral movements

Focus on individual and group performance Utilized to locate the knowledge gaps and to form

Focus on knowledge sharing and creation and

Focus on the short-term, medium-term and long-

Catering to decentralization, explorative, double-

Highly qualified new recruits with knowledge depth and breadth, ability to learn and willingness

The tendency towards achieving a flexible and

Intrinsic rewards are primary while extrinsic ones

organizational strategies

innovation

term contributions

to share knowledge

diversified culture

should satisfy

secondary

is secondary

skills/competencies

High retention rates People-retention orientation

successors

personal development plans Underperformers are tolerated

current and future tasks

Both internal and external T&D

**Codification Personalization**

codification and organizational

Focus on retrieving and contributing to explicit

Catering for centralization, exploitative, single-loop learning and standardization

Limited sets of skills and experience for most new recruits with a focus to fill "job

Highly qualified "key employees" with demonstrated

technical knowledge The tendency towards seeking

Individual incentives Extrinsic rewards Short-term incentives

For most, training subjects are limited to procedural knowledge and IT skills needed to accomplish current tasks

Focus on basic business and IT

Underperformers face a high

Retention plan focuses on a few

Limited progress for most

Rare hierarchal and lateral

*DOI: http://dx.doi.org/10.5772/intechopen.86517*

HRM Alignment with the

strategies

knowledge Focus on short-term contributions

strategies

vacancies"

a cultural fit

Formal T&D Internal T&D Structured T&D

knowledge Focus on individual performance Utilized to identify underperformers

risk of dismissal

key experts Knowledge-retention orientation through codification

employees

movements

*The role of HRM in supporting various KM strategies.*

Low retention rates

Recruitment and selection

Compensation management

Training and development

Performance management

Retention management

Career management


*Aligning Human Resource Management with Knowledge Management for Better Organizational… DOI: http://dx.doi.org/10.5772/intechopen.86517*

#### **Table 1.**

*The role of HRM in supporting various KM strategies.*

*Current Issues in Knowledge Management*

not expected exclusively from them [19].

the contextual HR practices under each strategy.

which inevitably goes on to affect KM [43].

**3.1 Knowledge-based recruitment and selection**

Some scholars have stated previously that the HR section in an organization is the one best equipped to handle KM initiatives due to the fact that the activities of the department itself do not directly conflict with the KM initiatives [39]. However, whether or not the HR section is chosen to undertake this role is based on the performance of the department, i.e., the better it performs, the more trust is generated within the organization and the more likely it is to be chosen as the best candidate to roll out KM initiatives [40]. It should also be borne in mind that HRM practices are not exclusively actioned by the HR department per se; top, medium and line managers are highly involved in HR practices as well. This leads to the assumption that, even if HR departments are assigned to play a leading role in KM, strong results are

HRM at its strategic and functional levels should be aligned with organizational and KM strategies and practices. The personalization approach usually aids decentralized, explorative and double-loop learning along with organic organizational strategies. This is different from the codification approach, which aids to a greater extent centralized, exploitative and single-loop learning along with standardization strategies [22, 41]. HRM practices in an organization are adjusted in line with which approach is adopted. In the literature, it is not clear exactly how the combination approach, when used, handles the different KM approaches and organizational strategies in the context of translating their goals into HRM practicalities. Thus, the chapter focuses on the personalization and codification strategies while assigning

To understand the overall effect HRM practices can have, it is best to view them in combinations [41]. Horwitz et al. [42] stated that HRM practices should be aligned with HRM, KM and organizational strategies but also noted that other organizational factors could also be considered to influence the development of HRM practices. These factors could be the size and nature of the industry, the organizational characteristics of a firm and the ownership structure of a firm, along with cross-cultural factors and cultural differences. The competitiveness of human capital has also been claimed to have an effect on the selection of HRM practices,

In short, various HRM practices do have a noticeable effect on KM [36, 40, 44–46]. There are, of course, numerous HRM practices that exist in current literature; however, only six HR practices that have been discussed in depth in previous literature are analyzed in this article. These six HR practices are: recruitment and selection, compensation management, training and development, performance management, retention management and career management. Although each will be discussed separately, the alignment of each practice with others under each KM strategy is highlighted in **Table 1**. In this study, according to Kianto et al. [33], traditional HRM practices have seen from a knowledge-based perspective and integrated

with KM. The nature of these practices is outlined in the following sections.

Constantly new and changing demands in the world of work create challenges for HR professionals attempting to identify and develop relevant talent. However, the identification and development of talent have generally been based on a technical rational perspective that is driven from labor economics [12]. But, it seems that traditional recruitment and selection practices can block knowledge sharing between groups or departments in firms organized according to the functional principle [22]. In a knowledge-intensive labor market, it is increasingly difficult to assess the competence of individuals in relation to the require-

**84**

ments of specific jobs [12].

The recruitment and selection process are what provide the input of human capital. From a KM standpoint, recruitment and selection should aim at filling knowledge gaps, which allows an organization to adopt a more flexible approach, as opposed to simply "filling jobs" [47]. The aim of the recruitment process is to attract, obtain and create knowledge [42]. Moreover, Arunprasad [25] found that staffing is a significant factor contributing to the learning dynamics and innovation within firms—both at the individual and group levels.

Firstly, within the personalization strategy, knowledge workers' essential abilities and skills required for efficient KM, which are: a commitment to learn and develop, creativity, the ability to deal with complexity, adaptability and cooperation [33, 47]. Smith [36] added to this list lateral and visionary thinking, demonstrated skills and abilities, resilience, the capacity to be a team player and a willingness to share accrued knowledge. Further to this, Robertson and Hammersley [48] identified high specialization, knowledge in other disciplines, commercial awareness and innovative ability as strong characteristics on which to base a recruitment decision. Narasimha [49] also stressed demonstrated depth and breadth of knowledge as being important. Taylor [50] stated that new recruits must also have altruistic behavior. Arunprasad [25] observed that selection criteria of new recruits test for learning ability of individuals, decision-making approach, a desire to share tacit knowledge and readiness to take additional responsibility. In addition to the aforementioned abilities and competencies, it could be argued that the higher the occupation level recruited for under the personalization strategy, the more the hiring decision accounts for the intensity of industry experience and the demonstrated depth and breadth of specific bodies of knowledge. In short, knowledgebased recruitment involves a strong and explicit focus on choosing candidates with relevant knowledge, learning and networking capabilities [33].

As for the process of recruitment and selection under a codification strategy, most new recruits target to fill vacancies at the entry-level positions. Hansen et al. [21], stipulates that new recruits—at junior levels—need limited specialized knowledge for their employment as their job description is mainly concerned with extracting knowledge from databases. Accordingly, the selection decision focuses on the candidates' abilities and skills to effectively utilize codified knowledge, to abide by preset work processes and procedures and to be productive within a short time frame after joining the organization. However, when it comes to the few experts that organizations depend on to design products and services, formulate work processes and procedures and ensure customer satisfaction, the selection processes focus on their demonstrated experience and depth of knowledge that could be directly exploited after joining the firm. Consistently, an effective selection is vital to acquire new knowledge and increase innovation for top key employees in the hotel industry [51]. That said, they found that this is not true for low-skill workers; where recruiting them will not have a significant effect on increasing the human capital. Firms which adopt the codification strategy, the development of technological solutions is encouraged, particularly in electronic recruitment and psychometric testing [22, 52]. Therefore, based on the preceding analysis of required KSAs under each strategy, it could be argued that the recruitment and selection process is more stringent for companies that adopt a personalization strategy as opposed to those that adopt a codification strategy.

Another major debate in relation to the recruitment and selection process is concerned with so-called "cultural fitness." Studies highlight the importance of a fit between new recruits and the organization's knowledge culture. They stress a fit between organizational culture and hiring of suitable personalities, as well as the socialization of individuals into the culture of the firm [22]. Others emphasized the need to select individuals capable of adapting to different cultures rather than

**87**

*Aligning Human Resource Management with Knowledge Management for Better Organizational…*

fitting an existing culture [47]. The logic behind this thinking is that the organizational culture of a firm may change in essence over time, rather than remaining fixed and static. Furthermore, Currie and Kerrin [53] placed emphasis on the importance of new employees having a good level of general business knowledge rather than simply having the functional skills required for the role, the reason being that employees with good general business knowledge can more effectively "bridge" the cultural gap between organizational entities. To present a different point of view, Kase and Zupan [35] emphasized the importance of recruitment and selection in being able to find people who fit the organizational culture and support knowledge networks. This "cultural fit" perspective was criticized due to the potential risk of duplicating employee skills, which in turn could limit the ability of newly recruited employees to contribute their new skills to the knowledge base of the company [47]. It may be hypothesized from the literature that the "cultural fit" approach to recruitment is more suitable for companies that adopt the codification approach to KM, whilst recruiting employees who embody cultural diversity and flexibility would be better suited to companies that adopt the personalization approach to KM. Thus, the recruitment process for all the companies considers the level of fit between the individual and the organizational culture. This influences the cultural aspects of the socialization process of individuals within the organization, as well as encourages and supports the interchange of knowledge among the

Adding to the work of Hansen et al. [21], Haesli and Boxall [19] highlighted that the organizations that adopt the codification strategy to KM suffer from a relatively higher labor turnover than those that follow the personalization strategy. So, to maintain a level of staff necessary to sustain the organization, a large portion of the duties undertaken in the HRM department will be based around the recruitment and replacement of people to fill the natural vacancies caused by high staff turnover. The working environment in a company also tends to repress the full range of skills an employee possesses. This is due to the fact that there are often few opportunities to utilize such skills, as these types of companies often have an expected dependency on IT and existing information and solutions. These kinds of companies, however, do tend to exhibit a higher level of overall HR spending due to the relatively larger expense of training and recruiting new employees along with having to live with reduced productivity during the induction periods of new recruits. Gope et al. [8] found that most of the companies tend to focus on the use of employment agencies to recruit talented employees and introduce new knowledge into the company. However, also the internal recruitment process is adopted,

*DOI: http://dx.doi.org/10.5772/intechopen.86517*

old and new members [8].

mainly for promotions and change of positions.

**3.2 Knowledge-based compensation and rewards management**

not those of managers, with proper justification and communication.

Arguably, compensation management acts as an effective tool to motivate employees to acquire, use, share, transfer and create knowledge [33, 36, 39]. Compensation management system should recognize innovation, risk-taking and group collaboration [46]. Furthermore, some scholars have suggested that relative compensation should also be based on contribution, knowledge and skills without sole emphasis on hierarchical position, i.e., taking into account teamwork and flexibility rather than functional and individual measures [54, 55]. Despres and Hiltrop [54] added that rewards should be engineered based on employees' perceptions and

One of the main arguments in this area is focused on whether individual or group incentives should be utilized as a source of motivation to stimulate KM activities. Kase and Zupan [35] stressed the importance of group incentives, arguing that they
