Mr. Davenport, what is the relationship between knowledge management and human capital management (HCM)?
Davenport: Knowledge management is one of the things that organizations can do to increase the value of human capital. When people share knowledge, they increase their own value and those of people with whom they share. Increasingly knowledge management is merging with organizational learning—another approach to building human capital.
What role should technology play in knowledge management?
Davenport: Initially most organizations used technology to build repositories. Increasingly, however, we all have little free time to access and contribute to repositories. So now I am convinced that the best use of technology is to embed knowledge into the flow of the work itself. This might be done with workflow tools or role-based portals. I’m working with SAP to try to identify some effective uses of portal technology to embed knowledge and important information into work.
What do you think is important in human capital management?
Davenport: One that some Accenture colleagues and I have been focusing on in working with SAP is how to measure human capital. As the old cliché goes, if you can’t measure it, you can’t manage it. A lot of management surveys tell us that executives believe that human capital is a very important resource, but very few have a good sense of the quality and quantity of their human capital development efforts relative to other organizations. Accenture and SAP have been working on a very comprehensive measurement approach. There are certainly other measurement approaches from academics, from consulting firms, and from survey research organizations such as Gallup.
Which mistakes should be avoided?
Davenport: The biggest mistake in HCM is not to invest in it, and not to treat people as a very critical business asset. Unfortunately this mistake is all too common! Once a measurement framework has been put in place, I am sure there are many mistakes that could be made—but most organizations aren’t to that point yet.
How can companies increase their value through higher employee productivity?
Davenport: There is a lot of data suggesting that companies that treat their employees well—a proxy for managing human capital—perform better than those that don’t. The best illustration is that the “100 Best Companies to Work For” in Fortune magazine consistently outperform the Standard & Poor’s 500 index (S&P 500). Over a three year comparison, for example, they outperformed the S&P 500 by 19 percent in total return to shareholders. Companies with higher productivity can offer greater value to customers with better pricing. Particularly if you define productivity broadly — as producing higher levels of quality outputs with fewer inputs — it’s the source of much competitive advantage. At a lower level, employees with higher productivity get to keep their jobs!
…and employees with lower productivity have to fear the loss of their jobs?
Davenport: Yes, if a company is very interested in measuring productivity it may indicate that employees have to perform well on those measures, or perhaps the company will outsource the work or take it offshore. Or it may simply mean that the company is trying to improve the productivity of its existing workforce.
Is it possible to measure employee’s knowledge and compare it directly to others’?
Davenport: I think it’s very difficult to determine the comparability and value of knowledge across individuals, because the value of knowledge is established by the user. The creator or sharer may have an opinion about the potential value of a piece of knowledge, but that’s only a rough guide to its value. Knowledge that is useless to one individual at a particular time may be very valuable at another time, or to another individual. I have worked with a lot of companies on knowledge issues, and I have yet to see one that has been able to successfully measure knowledge.
What must CEOs or CIOs do to align their companies to the idea of knowledge management?
Davenport: The most important things are to demonstrate that knowledge is important to the business, that positive knowledge behaviors will be rewarded, and that some knowledge is more important than other knowledge.
What is the ideal, knowledge-sharing employee like?
Davenport: I used to believe that the ideal knowledge-sharing employee was one who shared all of his or her knowledge with everyone else, and who actively sought out knowledge from around and outside the organization. But now I’ve concluded that employees must be selective in terms of both what they share and what they seek. We are all drowning in excess information and knowledge, so we can only share and seek out the highest-quality knowledge. The ideal employee would seek out only the knowledge important for his job and tell each colleague only the knowledge important for his or her job. This requires that employees are conscious of their responsibility for the entire enterprise.
At the organizational and the individual level, it’s important to know what knowledge is really important to your success and to manage that form of knowledge very well. This is really what might be called “knowledge strategy.” I do think it’s important, however, for individuals to share information freely if it’s wanted.
Do different rules apply in the public sector or in secret services?
Davenport: In general I think the same rules apply. It’s still important to prioritize, and still important to share knowledge freely if it’s wanted. In some countries the public sector has somewhat higher levels of employment stability, which sometimes increases the willingness to share. – I think the Sept. 11, 2001 disaster is an example of what happens when organizations don’t share knowledge well within so-called secret services.
So are secret services inefficient by their nature?
Davenport: Sharing knowledge widely may be inefficient, because you have to sift through more information. But that makes it even more important to prioritize. Before Sept. 11th, there was insufficient prioritization in the US to knowledge about domestic terrorism. Now there is much more attention on terrorism-oriented knowledge, but the primary focus is of course on the modes of terrorism that were employed on September eleventh, which means hijacking planes. I think it is unlikely that it will be the preferred mode next time.
In which companies has your “big idea” come true?
Davenport: Right now my “big idea” is on how to improve knowledge worker productivity and performance. In some of my recent research I was impressed by companies like Intel, Cisco, and Novartis. None of these companies are perfect, but they are putting a lot of effort into it! Right now my “big idea” is on how to improve knowledge worker productivity and performance. We have done a good job of improving manual and administrative work, but knowledge workers have been left alone for the most part. I’m looking at both organization-level approaches to knowledge work, and also at things the individual worker can do to improve his or her own productivity. Certainly human capital and knowledge management will be involved in these approaches, but I’m not sure yet how they will all fit together.