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

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 not those of managers, with proper justification and communication.

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

*Current Issues in Knowledge Management*

within firms—both at the individual and group levels.

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

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 afore-

mentioned abilities and competencies, it could be argued that the higher

relevant knowledge, learning and networking capabilities [33].

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

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

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

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that adopt a codification strategy.

encourage network cohesion. Yet, they also acknowledge the importance of all incentive levels being included in the overall compensation of individuals. Laursen and Mahnke [41] state that individual incentives serve to underline the strong performance of individual employees when carrying out personal tasks. Yet, they also stress that the process of allocating individual incentives should be reliably measured or the process could be viewed as being complicated and lacking in fairness. Siemsen et al. [56] graded compensation management based on inter-employee linkages within workgroups. These gradings can be categorized under three group headings: outcome, help and knowledge linkages. The first group, outcome, tends to emphasize the coordination of the group whilst the latter two promote cooperation. They found that if employees are "outcome-linked" then individual incentives were found to work best; however, if the employees are reliant on helping each other (or "help-linked") within the group to complete the goal, then group incentives produce an optimal result. When employees are knowledge-linked then both individual and group incentives are considered vital and complementary. Individual incentives are important in encouraging an employee to put his/her acquired knowledge into use, while the group incentives encourage possessors to share their knowledge. Siemsen et al. [56] made similar findings that add to Taylor's [50] contribution in which he found that group-based incentives promote a greater degree of co-operation between employees. Moreover, Quigley et al. [57] found that group incentives are stronger in promoting knowledge sharing from the provider perspective when supported by organizational norms.

Therefore, whenever tasks are interrelated, group incentives are perceived as a better choice of compensatory measure for employees. This holds true whenever the standardization level is low and the output process is complex. Another potential drawback to individual incentives is that they limit potential knowledge and information sharing, i.e., they create an atmosphere of secrecy. When individual incentives are used by organizations, they tend to be used to reward the achievement of personal and short-term goals. Overall knowledge creation and the achievement of long-term objectives are rewarded through group incentives. Thus, the literature indicates that group incentives are more suitable than individual ones when interaction and direct tacit knowledge sharing are required. In this fashion, group incentives then seem to serve companies that adopt personalization strategies the best; however, individual incentives are not wholly excluded: rather they are relegated to playing a secondary role. If individual incentives were dominant in this type of organization, then employees would be encouraged to push for an outcome favorable to themselves as opposed to pursuing the group goal. For companies with a codification-based strategy, personal incentives are more commonplace. This is due to the fact that interaction between employees is less necessary to the company goal and personal effort in extracting explicit knowledge is considered more essential.

Another issue related to compensation management is whether intrinsic rewards, extrinsic rewards or a combination of the two should be given to personnel completing KM-based tasks. For this circumstance, it seems that the characteristics of personnel described in knowledge worker-based literature are in alignment with those described in the literature published about the personalization strategy. Smith [36] claimed that knowledge workers value nonfinancial incentives more than financial ones. Consistently, Zhou et al. [31] found that performance-based compensation (extrinsic) has an insignificant effect in supporting absorptive capacity and knowledge transfer in mergers and acquisitions. Additionally, Despres and Hiltrop [54] suggested that effective compensation systems during the knowledge economy era should place emphasis on social and intrinsic needs rather than extrinsic needs (which should be regarded as secondary). Not underestimating extrinsic motivators, Hosseingholizadeh et al. [38] empirically demonstrated that intrinsic motivators have much more influence on knowledge-work than extrinsic motivators. Lee and Ahn [58], in addition to

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

this, argued that intrinsic rewards tend to support the vision of a company that holds a personalization-based approach, whilst formal extrinsic rewards tend to support the

mostly want part of the organizational profit through methods of equity sharing. Gope et al. [8]' findings also stated employees are expected to repeat positive behavior in obtaining rewards and recognition by the company. Thus, the firms use compensation and rewards as tools to elicit, enhance and maintain the desired

intrinsic and extrinsic rewards, for each addresses a different "need" [39, 58]. Managers can use both tangible/financial (e.g., bonuses and one-off rewards) and intangible/nonfinancial incentives (e.g., status and recognition) to motivate employees to share, create and apply knowledge [33]. This is consistent with the practices of most companies, where this kind of rewarding system motivates and supports individual employee's performances through better learning and commitment that increase the motivation to share and create new knowledge, as already

Whereas Vicere [59] stressed that knowledge workers should be paid fairly and

Many scholars stated that compensation systems should strike a balance between

Another debate in this topic area is that concerning the use of short-term and long-term rewards. Many argue that using a combination of the two is the most favored method for companies, as the short-term rewards act as a direct motivator encouraging individual and group contributions, whilst long-term rewards are important for the retention of employees by rewarding them for long-term organizational performance [47]. Olomolaiye and Egbu [39] highlighted the importance of long-term incentives in the process of grouping key contributors with the

organization. It can be hypothesized that short-term incentives would be utilized to a greater degree in the codification-based companies; however, both reward types seem important in personalization-based and combination-based companies.

Training and development allow the employees of an organization to acquire and develop key skills that improve personal and organizational performance. The process itself is viewed by many scholars as being an effective HRM practice that aids the implementation of the KM strategy, activities and outcomes. HRMrelated research on KM is chiefly focused on the transfer of knowledge by training [60]. Knowledge transfer concerns various forms of learning, the creation of a knowledge sharing climate, the establishment of training units which assess and analyze training needs, provide and evaluate training, and lead towards learning organizations [10]. Application of training is important to develop employees' learning capabilities and provide a common language and shared vision. This would develop a high level of self-efficacy so that employees may feel more assured of their abilities and will be more likely to exchange knowledge with others, thus fostering the acquisition of new knowledge and the dissemination of individual knowledge within the firm [8]. Training and development has a positive effect on increasing human capital and subsequently innovation within the hotel industry [51]. They argued that employee development tends to be much more effective than recruitment in increasing human capital. Similarly, Keat and Lin [61] found that talent development has a mediating effect between knowledge management and organizational performance in Malaysian private colleges. They added that employee development is more important than retention management, as their findings found no support that talent retention has a mediating factor between

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

knowledge sharing behavior of employees.

**3.3 Knowledge-based training and development**

knowledge management and organizational performance.

confirmed in other studies [8].

vision of a company that holds a codification-based approach.
