Knowledge Management And
The Nonprofit Industry: A Within And Between Approach
Tracy A. Hurley, Carolyn W. Green, Texas
A&M University-Kingsville, San Antonio
ABSTRACT:
Non-governmental organizations (NGOs) need to manage their knowledge similarly to for-profit organizations. Leavitt's model of organizational change is presented as a framework for affecting culture change. The model suggests that four subsystems - technology, people, task, and structure - need to be balanced and coordinated - and the introduction of technology, alone, is not sufficient for the development of effective KM programs. The nonprofit industry is specifically examined and it is suggested that the uniqueness of this industry requires both a "within" and "between" approach to KM. The within approach suggests that organizational culture needs to be modified to motivate and facilitate KM processes within the organization. The between approach suggests that the industry needs to facilitate a KM culture between organizations in order to effectively leverage money and knowledge in the industry. Specific examples and suggestions are discussed.
1. Introduction
Knowledge Management (KM) has been defined as "the process by which an
organization creates, captures, acquires, and uses knowledge to support and
improve the performance of the organization (Kinney, 1998)." KM has
recently been discussed in several key articles (Alavi
and Leidner, 2001; Nonaka,
For-profit organizations have many reasons to practice sound KM
processes. Stakeholder interests such as
profitability and return-on-investment require this behavior. In most circumstances, given a competitive
environment, a company that has poor KM processes will be inefficient and
ultimately its products will become obsolete and competitors will absorb its
market share. For-profit organizations
have, for many years, pursued a strategy of replicating successful business
practices in different communities. This
process is known as franchising.
Franchising is not only successful in the
Just as there is a demand for fast food in most communities, so there is a demand for specific social programs in most communities. Non-governmental nonprofit organizations (NGOs) usually operate in neighborhoods or communities. Each community organization spends "large amounts of time, funds and imagination…reinventing the wheel, while the potential of programs that have already proven their effectiveness remains sadly underdeveloped. This, in many instances, represents a substantial loss to society overall. The objective is to replicate the successful program’s results, not to recreate every one of its features (Bradach, 2003, p.19).”
The difficulty in replicating programs is multi-faceted, but the nonprofit sector’s failure to replicate successful programs is only a symptom of a more important problem: nonprofit organizations lack the critical processes and knowledge needed to help them develop, evaluate, document, and share successful programs. Similar to for-profit organizations, it is critical that NGOs perform essential knowledge creation and transfer functions so that they, as well as others, can replicate successful programs or program features when and where appropriate. The purpose of this paper is to
1. Review the literature and build a case for the development of KM programs in NGOs;
2. Review a theoretical model that can be used to support the development of a KM culture in NGOs;
3. Discuss existing KM programs that have been successful in for-profit organizations and extend them to the nonprofit arena - both within and between organizations in the industry.
2. Knowledge
Management Review
2.1. Theory
A "knowledge-intensive" organization refers to organizations where most work is of an intellectual nature and where well-educated, qualified employees form the major part of the workforce (Alvesson, 2000, 2001). Typical examples include law firms, accounting firms, management consulting firms, software engineering companies, research and development companies, and other high-tech organizations. Although NGOs are often omitted from the example lists, in a recent article, Capozzi, Lowell, & Silverman, L. (2003, p. 89) suggests, “philanthropic foundations are knowledge-intensive bodies”. Given this definition, it is evident that NGOs – which often employ professionals such as psychologists, counselors, health-care professionals, and educational specialists – are also knowledge-intensive bodies.
One of the key requirements in identifying a knowledge-intensive organization is its reliance on human capital and knowledge as being a source of competitive advantage, where knowledge has more importance than other inputs such as physical or financial capital (Starbuck, 1992). Bontis (1998) views knowledge-intensive organizations as utilizing the quality of human capital as a source of innovation and strategic renewal. Swart (2003, p.62) defines knowledge-intensive organizations in terms of their emphasis on:
· The nature and quality of their highly skilled human capital;
· The work processes that create market value through knowledge; and
· The deployment of the knowledge involving innovation, initiative and competence building in the provision of services.
This implies that employee skills are central to the creation of a competitive advantage and to the survival of the organization when market conditions are tough (Swart, 2003).
However, it is not only the presence of human capital that is important; it is also the way in which it is applied that makes these organizations distinctive. In a knowledge-intensive organization, the organization's risk of knowledge loss is directly proportional to the amount of knowledge held at the individual level (Brown & Woodland, 1999). David Owens, vice president of KM at Unisys Corp. suggests that, "Only 2% of information gets written down - the rest is in people's heads (Hickens, 1999)." Without a system that facilitates the capture and sharing of this knowledge, NGOs face a constant risk of losing their competitive edge.
2.2. Definitions
Alavi and Leider (2001, p. 109) define knowledge as a "justified personal belief that increases an individual's capacity to take effective action." Similarly, Sveiby (1997) suggests that knowledge is an intangible resource that exists within the mind of the individual. Polanyi (1964) further defines knowledge as either explicit or tacit. Explicit knowledge can be expressed in numbers and words. These are then easily shared formally and systematically in the form of data, specifications, manuals, etc. Essentially, explicit knowledge is "knowing about" (Connell, Klein, & Powell, 2003). Tacit knowledge, on the other hand, is "knowing how" and includes insights, intuition, and hunches – which are often built by experience and difficult to formalize and share (Connell, et al., 2003). Explicit-knowledge transfer is a relatively common occurrence. Employees share reports, financial budgets, policies, etc. Tacit knowledge, however, needs to be converted into explicit knowledge in order for this sharing to take place. This needs to be done without losing critical parts of the tacit knowledge. The transfer of tacit knowledge into explicit knowledge (within the individual) and the transfer of explicit knowledge between people (within or between organizations) are the two actions underlying KM theory.
Alavi and Leider (2001, p. 109) state that knowledge is not the same as information -- "information is converted to knowledge once it is articulated and presented to others in the form of text, computer output, spoken, or written words or other means." Sharratt and Usoro (2003, p. 188) define knowledge as "directly related to understanding and is gained through the interpretation of information." Additionally, they argue that knowledge enables us to interpret information or derive meaning from the data. Alavi and Leider (2001) argue two additional points:
· In order for someone's personalized knowledge to be useful to another, this knowledge must be communicated in such a manner as to be interpretable and accessible; and
· Hoards of information are of little value and "only information that is actively processed in the mind of an individual through reflection, enlightenment, and learning is useful (p.110)."
3. An
Applied Model For Knowledge Management
Applied models of KM imply action: they provide insight into developing action plans that result in the transfer of knowledge among and between employees and organizations. For the most part, it is assumed that technology plays a key role in the processes involved in KM. A broader view looks at KM requirements from three perspectives (Alavi and Leidner, 2001):
· Information-based,
· Technology-based, and
· Culture-based.
3.1. Leavitt's
Model Of Organizational Change: Developing A KM
Culture
If an organization wants to implement a KM program, Leavitt’s (1965) model of organizational change can provide insight. Leavitt suggests that the effectiveness of any change program – including a KM program – can only be achieved through a balance of four organizational subsystems: technology, structure, tasks and people. The model shown in Figure 1 illustrates how all four of these items are interrelated. Leavitt’s model suggests that all four subsystems must be coordinated and balanced to create an effective KM culture.
3.2. Organizational
Culture
Organizational culture has been identified as either a major catalyst or a major hindrance to knowledge creation and sharing (Alavi & Leidner, 2001). A knowledge-friendly organizational culture is one of the most important conditions leading to the success of KM initiatives in organizations (Davenport & Prusak, 1998). The development and incorporation of KM processes throughout an organization usually requires a major cultural change. This is due mainly to the fact that organizations have traditionally rewarded employees based on individual performance. Specifically, cultural barriers to KM (e.g., cultural norms that promote and encourage knowledge hoarding) must be replaced by an organizational culture that promotes and encourages knowledge sharing. It is important that the new culture promote attitudes and behaviors that encourage, allow, and reward sharing of knowledge and insights. An employee must not perceive that his or her value to the organization is worth more if important knowledge is withheld (i.e., knowledge hoarding).
Organizations that want to develop a KM program need to provide a culture that is capable of nurturing behaviors that motivate knowledge sharing, transfer, and application (Brand, 1998; Hickins, 1999). Knowledge hoarding needs to be discouraged (Yang, 2004). Employees need to be assured that their knowledge contribution will not be exploited. The effect of this problem can be minimized through long-term employment commitment (Brand, 1998) and the development of a culture that is based on trust and integrity (Sharratt & Usoro, 2003). When developing this type of culture, employees need to be assured that all ideas are valued instead of worrying that they might lose face, that their ideas might be inaccurate or that they might let other employees down (Ardichvili, Page & Wentling, 2002).
For knowledge creation and transfer to flourish, group members must understand that the viability of their group depends on their contribution and commitment. If this understanding does not exist, the group will not survive. Each time someone contributes to knowledge sharing, the outcome not only increases the common knowledge base, but also increases the trust among group members (Hall, 2001). Tacit knowledge is exchanged through joint activities rather than through written or verbal instructions (Nonaka, 1994). Hayduk (1998) suggests that learning processes are more effective when shared within or among a self-selected peer group. Brown and Duguid (1998) share this view and suggest that knowledge creation is best served by close ties in a “Community of Practice”, since these individuals would share a common language and be more at ease when discussing ideas openly and challenging the ideas of others. They suggest that this encourages a shared understanding or a “collective-knowledge base.”
Leadership commitment to the KM process is also essential. In a case study that compared manufacturing plants that had successful KM programs to ones that did not, Kalling (2003, p. 119) reported that one of the critical factors in success was the commitment among top leaders of the plants. Successful plant managers reported being "deeply involved" in finding and developing new methods of production. Conversely, in those plants that were not successful, management felt that "we have other priorities here at the moment" and " I don't think we need that production knowledge today". Leadership is responsible for creating the knowledge vision of the organization, communicating that vision, and building a culture that regards knowledge as a vital company resource (Pemberton, Stonehouse, & Francis, 2002).
3.3 Organizational
Structure
[Incentive Systems.] Van Krogh (1998) suggests that when employees’ futures with the company depend on the expertise they demonstrate and not on the extent to which they help others, individuals will attempt to build up and defend their own knowledge bases. This leads to the belief that sharing more information than necessary will lead to reduced power and influence. Employees will only share the amount of information they perceive as favorable to themselves. Incentive systems are essential to creating a culture in which knowledge sharing is the norm (Szulanski, 1996). Since knowledge can only be volunteered, individuals and teams decide whether any reward that is offered matches the value of knowledge sharing. People’s time and energy are limited and they will choose to do what they believe will give them a worthwhile return on their investment (Hall, 2001). Rewards must not only motivate knowledge acquisition and sharing but also motivate employees to seek it out, receive it and incorporate it into their own personal knowledge-bases (Kalling, 2003)
Motivation, however, is not solely dependent on extrinsic rewards. Sharratt and Usoro (2003, p. 191) suggest that extrinsic rewards "may provide only temporary compliance, rupturing relationships and reducing pro-social behavior." Furthermore, Wasko & Faraj (2000) report that systems based on extrinsic rewards can turn moral obligation into acts of self-interest. For example, in Xerox, technicians were "more than happy to add tips to the [KM] database because they received credit for their contributions, which enhanced their standing among colleagues. When management suggested attaching financial incentives to the tips, technicians resisted the idea. They felt this would diminish the value of their contributions (Hickins, 1999, p.42)." O'Dell and Grayson (1998) warn that the process of sharing and transferring knowledge must be inherently rewarding and celebrated and supported by the organizational culture. One factor that Sharratt and Usoro (2003) suggest as potentially successful in motivating knowledge sharing is the perceived potential for career advancement. Although this is often viewed as an extrinsic reward, career advancement is closely related to the intrinsic motivators of recognition and reputation.
3.4. Decentralization
Several models have been proposed as an attempt to depict organizational relationships. Mintzberg (1979, p. 2) notes, “The structure of an organization can be defined simply as the sum total of the ways in which it divides labor into distinct tasks and then achieves coordination among them.” Sharratt and Usoro (2003, p. 190) suggest that "organizations with a centralized, bureaucratic management style can stifle the creation of new knowledge, whereas a flexible, decentralized organizational structure encourages knowledge-sharing, particularly of knowledge that is more tacit in nature." Organizations that rely on quick and adaptive responses as a competitive advantage need a flat organizational structure and short lines of communication among employees and between the employees and management thus allowing employees to make important decisions at all levels (Beijerse, 2000). The 3M company has successfully modified their structure to accommodate and encourage innovation and knowledge sharing by flattening their structure and decentralizing the decision making process (Brand, 1998).
4. Programs,
Successes, and Strategies
Hanson, Nohria, and Tjernay (1999) present a taxonomy of approaches to KM implementation which includes:
· A Codification strategy – Where knowledge is carefully codified and stored in databases so that it can be accessed and easily used by anyone in the company.
· A Personalization strategy – Where knowledge is closely tied to the person who developed it and is shared mainly through direct person-to-person contact. The chief purpose of computers at such companies is to help people communicate knowledge, not to store it.
Earl (2001) also recognizes the importance of codification (describing it as a contribution of knowledge to databases) and expands the “personalization strategy” component to include the formal and informal sharing of knowledge within and among workgroups and individuals as well as the sharing of information within a “Community of Practice.” Communities of Practice represent voluntary forums of employees formed around a topic of interest. Hanson, et al.’s (1999) taxonomy will be used to explore the roles played by NGO service providers, the funding organizations, and the academic community in the furtherance of KM processes at both the organization and industry levels.
4.1. Codification
Strategy
A vast majority of NGOs employ many professional-level employees. These employees may be counselors, psychologists, program facilitators, therapists, social workers, etc. What these employees do and how they do it (i.e., develop and run programs) requires important information – information that can usually be categorized as tacit knowledge. One of the keys to an effective nonprofit organization is the transfer of this tacit knowledge into explicit knowledge. By combining and documenting the explicit knowledge learned from program development, management, and program evaluation, these “best practices” and "lessons learned" can be stored for use. This process will allow the best elements of old programs to be modified, replicated, and incorporated into new programs – the result being better programs and more efficient and effective organizations.
Ericsson, a major competitor in the mobile communications industry, uses
technology to collect, process, and manage information. Implementation of the "Stargate" database system – a directory with
information on who can do what and where – has resulted in the
corporation being able to access experience and learning-knowledge from
consultants within the organization (Hellstrom & Kemlin, 2000).
Similarly, Xerox has used technology to develop a repository of
information for their technicians (Hickins, 1999). Hickins (1999) reports that the "challenge is to
capture and transform such knowledge into a sharable form (p. 42)."
Through its
Szarka, Grant, and Flannery (2004) investigated the various tools and methods used in the three elements of knowledge learning (i.e., knowledge acquisition, knowledge transfer, and knowledge application) in a team-based environment of an electronics firm. Among the teams, electronic retrieval of information was rated as the second most used method to acquire knowledge (second to benchmarking) – with almost 50% of the teams using this method. The authors also reported that the "predominant method of electronic information retrieval used by teams was to search a site that had been created specifically to support the Quality Improvement teams (p. 26).
4.2. Personalization
Strategy
In order to produce meaningful improvements in organizational performance, knowledge stored in databases must be put to use: it must be incorporated into employees’ personal knowledge and shared with others. The role of the NGO is to establish and encourage an organizational culture that values and rewards the transferring of tacit knowledge to explicit knowledge among employees and workgroups. Cultural and structural changes can encourage this formal and informal sharing of knowledge among employees. Strategies that can facilitate this type of knowledge sharing include training, communities of practice, and mentor programs.
Szarka, et al. (2004) reports that training is the most widely used method of knowledge transfer used by employees to share knowledge. Nearly 70% of all teams included in their study relied on training as a major source of information. The benefits of training can be leveraged even more when employees are required to share the information, skills, and knowledge they gained from their training (Yang, 2004; Swart & Kinnie, 2003).
Communities of Practice (COPs) are described as "groups of people informally bound together by shared expertise and passion for a joint enterprise (Wenger & Snyder, 2000)." COPs can provide opportunities to meet and discuss “best practices” and “lessons learned” with people of similar backgrounds and job experiences. COPs can be either face-to-face (F2F) or virtual conversations. F2F COPs can occur at work group, department, organization, and professional meetings, but often they occur at unscheduled times among employees at lunch or in the break room or as they pass by a co-worker's office. A common mechanism for gaining knowledge is to request help from another (Sharratt & Usoro, 2003). These activities assist knowledge sharing among individuals on a reciprocal basis, building trust and friendship among workers (Yang, 2004).
Examples of virtual COPs include discussion boards on the inter- or intra-net. These COPs do not require F2F contact by employees and are often useful if the workforce is geographically dispersed. Caterpillar, for example, has successfully implemented a virtual COP. The system enables users to locate subject-area experts and allows employees to post specific questions to them or the community at large (anonymous, 2003). Erricson has experienced similar success with its "Zopps" system that allows workers access to the virtual conversations regardless of the time of day or location (Hellstrom, et al., 2000). Szarka, et al. (2004) reports that nearly 50% of the teams surveyed relied on user groups as a source of knowledge transfer.
Mentoring programs have also been successfully implemented as part of an overall KM program (anonymous, 2003; Swart & Kinnie, 2003). In a unique program at SoftWareCo, a mentoring program was implemented as a method to help new employees gain valuable information from experienced software engineers (Swart & Kinnie, 2003). In this program, the mentors were responsible for the development of skills of employees who did not report directly to them.
6. The Nonprofit Industry: Within and Between
Although the role of each NGO is to encourage KM processes within its own organization through the implementation of training programs, F2F COPs, and mentoring programs, it is the funding agencies’ role to encourage and motivate the sharing of knowledge between organizations. This can happen through the encouragement of virtual COPs. Information from these COPs can be coded to become part of an industry database. Because of the limited resources and generally small size of most NGOs, it would be ineffective to develop a virtual COP within each organization – such COPs would not benefit the community. The most helpful type of virtual COP would be one that served the entire NGO industry, domestically and internationally.
Because of the unique relationship between funding agencies and the NGO community, it would be inappropriate for foundations to assume the role of COP facilitator; this might be perceived as a coercive effort where future funding would be determined based on participation levels. This would not foster a trusting environment across the NGO industry. A neutral third party, such as a university, would need to be the COP facilitator, making the information available to NGOs, funding agencies, communities, universities, governmental agencies, and other interested stakeholders. These organizations would all become partners in an industry-wide KM process, leveraging all resources in the nonprofit sector.
The benefit of this type of system is that organizations would be encouraged to become members of the KM community and in turn be rewarded for their contributions by an increase in their own knowledge. In addition, these member-organizations would be open to a variety of collaborations because each would become a more knowledge-intensive organization through the gains achieved through their partnerships.
7. Conclusion
and Suggestions For Further Research
The evolution of the nonprofit industry has led to an inefficient process for program development and deployment. NGOs routinely create programs from scratch instead of drawing on “best practices” developed by another organization. As a result, investment dollars from funding agencies are not effectively leveraged.
This paper offers NGOs many suggestions for more effectively managing their knowledge. Leavitt's model of organization change is reviewed and suggested as a framework for NGOs to consider in their development and implementation of a "within" KM program. This model suggests that in order to affect change, a coordinated effort of adjustment and balance between technology, people, task, and structure is required. More specifically, the model suggests that the addition of technology alone is not sufficient. Instead, all four of the subsystems require balance in order for a KM culture to be successfully established.
Additionally, this paper suggests that the industry – as a whole – could benefit from a coordinated "between" KM effort such as a virtual COP and a "best practices" database. These would effectively serve all industry stakeholders. The uniqueness of the nonprofit industry has led to a slow adoption of these types of KM programs. However, they are needed in order to advance both the NGOs and their industry in times of financial difficulties.
Future research should focus on examining the effectiveness of Leavitt's model in facilitating the development and implementation of KM programs within NGOs. In addition, the specifics of implementing an industry-wide virtual COP should be explored. This type of program should examine strategies that would motivate employees and their organizations to participate in an industry-wide KM program
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About The Authors:
Tracy A. Hurley, Ph.D. is an Assistant Professor of Management at Texas
A&M University-Kingsville's
Carolyn W. Green is an Assistant Professor of Management at Texas A&M
University-Kingsville's
Tracy A. Hurley and Carolyn W. Green, Texas A&M University-Kingsville, San Antonio, 1400 W. Villaret, San Antonio, TX 78224
Tel: 210-921-5559; Email: thurley@tamuk.edu; carolyn.green@tamuk.edu