Role of Knowledge Management in Improving Performance of Operations Departments

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Table of Contents

Introduction
Overview of Knowledge Management
Role of KM in Performance Improvement
Discussion
Conclusion
References

Introduction

Knowledge is arguably the most important asset an organization has. Its good management is crucial if the organization is to succeed in a competitive environment. In the past, many organizations did not recognize this and few resources were dedicated to managing the knowledge that the organizations had.

However, this has changed in the course of the last decade and knowledge management (KM) has emerged as an important field that provides the rationale for managing knowledge in order to achieve the increased productivity of the organization. Baskerville and Alina (2006) note that knowledge management has become such an important concept that many executives today characterize their most important task as “leveraging organizational knowledge” (p.83).

It has been recognized the KM plays a crucial role in the accomplishment of organizational goals and KM has therefore become one of the necessary tools for modern organizations. Against this background, this paper will set out to discuss the role that knowledge management plays in improving the performance of operations departments of an organization. The paper will demonstrate how KM strategies can help an organization to improve its performance and therefore remain competitive.

Overview of Knowledge Management

Knowledge is a “justified personal belief” and it is a mix of framed experiences, values, contextual information, and expert insights. It provides the framework through which new information or experience is evaluated or incorporated. Knowledge is a very important and strategic resource for an organization. However, it can only be utilized properly if an organization makes an effort to discovery patterns and rules where knowledge works.

This can only be achieved through the proper management of the knowledge; a task that is essential for a business to improve its efficiency and effectiveness in delivering of services and goods to its clients. Knowledge management is defined by King (2009, p.4) as the “planning, organizing, motivating, and controlling of people, processes and systems in the organization to ensure that its knowledge-related assets are improved and effectively employed”.

KM aims to increase competition between organizations and increase the level of effective decision making. Management of the knowledge base is a very important issue and King (2009) proposes that for KM to be optimal, a large number of employees should be relied upon to contribute their knowledge. Relying on specialists to enter and manage the knowledge base greatly limits the effectiveness of KM Systems.

Role of KM in Performance Improvement

KM helps the organization to identify the factors which lead to superior performance and capitalize or make further improvements on these aspects. Baskerville and Alina (2006) state that for many organizations, these factors include: organizational creativity, high quality of products and services offered by the organization, and enhanced effectiveness of operations.

The operations department can use KM to identify these factors and once this has been done, the department is able to make improvements on them and hence increase its productivity.

KM plays a very important role in enabling the department to make the best use of organizational knowledge. This kind of knowledge is very beneficial since most of it is laboriously developed over a long duration of time through the trial and error method. Baskerville and Alina (2006) state that most organizations fail to make good use of this knowledge because they lack KM systems and therefore, the organization does not know what it knows.

Decision making is one of the most important roles of management in any organization. The quality of decisions made often determines the future success of a business and with this consideration, many organization invest resources in measures to assist in the decision making process.

KM plays a very major role in the decision making process of operations departments (King 2009). Normally, knowledge has a more critical function in decision making process than resource and data. KM helps to sort the knowledge and define it as accurate and non-accurate knowledge. The managers are then able to make the best decision since they can identify the contexts where the knowledge works by using KM.

Increased productivity is a core goal for all organizations and for this to be achieved; the performance of each employee has to be optimal. KM assists in increasing employee performance since it increases the interaction between co-workers. There is therefore a higher level of knowledge sharing among employees and this increases the chances of organizational goals being met. Employees are able to keep track of projects in progress and easily obtain the assistance of their peers though KM.

As has been noted, the productivity of the operations department depends on the ability of the individuals who make up the departmental team. Therefore, the productivity of the department is dependent on the skills possessed by the employees. When some employees lack proper skills, the total output of the entire department is reduced.

KM assists in ensuring that all employees possess the desired level of skills. This is achieved since KM assists in the sharing of knowledge between employees and at the same time the prevention of non-educated employees (Baskerville & Alina 2006).

In an increasingly competitive market, innovation and creativity have become the defining characteristics of successful organizations. Big profitable organizations such as Microsoft and Wal-Mart are continuously looking for new ideas and innovations in order to stay ahead of their competition. Innovation has today become paramount to the growth of a company and in most cases it comes from individuals in the company.

This innovation can then be utilized to advance the goals and objectives of an organization. Skinner (2007) asserts that the presence of innovation alone is not good enough; innovations must be “disseminated and ‘reach’ target users for uptake and utilization to be possible” (p.53).

KM assists in the innovation process of the department in a number of ways. To begin with, it increases knowledge sharing among employees which results in the generation of new ideas and innovations by the employees. KM also captures the reasons behind the adoption of disseminated innovation and the practitioners are therefore made aware of new innovations and the relative advantages that they offer.

Skinner (2007) reveals that previous experiences as articulated in the KM system will inform user’s current practices. In addition to this, they will integrate their existing knowledge as they adopt and implement new innovations.

Many organizations are faced with the need to improve their organizational performance so that they can acquire greater benefits and better cope with the changes they constantly face. A chief consideration in KM is that the best outcomes can be achieved if the organization is engaged in a continuous learning process. This means that the efficiency and effectiveness of the operations department can only be guaranteed if the members of the department are willing to learn before, during and after activities.

Chen and An-Pin (2006) suggests that KM enhances the learning process of the individual through the provision of the necessary information. It then focuses on knowledge flows and the process of creation, organization, and retrieval of knowledge. The capability of workers is enhanced since their core competencies are supported by KM. By using staff knowledge, the department is able to improve its processes and therefore operate in the most efficient and effective way.

Businesses are constantly seeking ways to decrease their operational costs and therefore increase their profit margins. KM offers a good way of achieving this by helping to get rid of some of the activities that previously cost the organization. Some KM systems automate tasks previously performed manually such as the training of new staff members therefore decreasing the costs associated with such actions (Chen & An-Pin 2006).

In a company that has a high number of new employees either due to high rate of employee turnover or business growth that necessitates hiring new employees, such a KM assists greatly in keeping training costs manageable. The KM also makes sure that knowledge transfer takes place in a seamless manner and the new employees are able to gain the necessary knowledge to work efficiently in the shortest time possible.

Profitable growth strategies can only be achieved by understanding the needs of the customers and responding appropriately to them. Many organizations therefore invest significant resources in an attempt to increase the knowledge of their managers on the key drivers of customer satisfaction.

Chen and An-Pin (2006) highlights that when business leaders have an expanded knowledge of the key drivers of customer satisfaction and business process excellence, the can engage in strategies that expand their consumer base and hence increase the company’s profitability.

The relationship that the organization has with its customer base is also important and organizations seek ways to improve these relations. KM helps to achieve these goals by assisting in the development of customer relationships and therefore increasing shareholder equity.

A common reality for most organization is that key staff can leave at any time. The loss of such key personnel is normally accompanied by a loss of knowledge which is of critical use to the organization. Shaw and Baker (2003) states that this “knowledge erosion” which is caused by people leaving the organization or even changing jobs within it can be damaging to the organization since knowledge plays a crucial role in decision making and running the organization.

KM can help deal with this by enabling a department to have a “memory” that goes beyond the people in it. This knowledge is archived and remains with the specific department even if the key staff is lost.

Discussion

While many organizations acknowledge the importance of KM, many of them do not know how to go about implementing it. Razi and Abdul-Karim (2010) reveal that contemporary organizations have spent billions of dollars in the implementation of KM and from this, only marginal improvements have been attained with failure rates at the implementation stage ranging up to 70%.

The risks of failure during KM implementations are therefore high and if an organization is to reap the benefits of KM, ways of mitigating these risks need to be looked at. Research indicates that there is a relationship between workers and successful KM implementation and as such, organizations need to determine the individual members responsible for KM implementation. These members are responsible for the creation, promotion and identification of knowledge in the organization and their role in KM is crucial.

Having a KM system in place is a good move but it is not enough; there also needs to be a metric for measuring the relative success of KM strategies. Chen (2008) suggests that performance evaluation should be an integral part of the KM plan of any company. Such performance evaluation will help the department to better understand its KM level and offer a basis to improve its KM.

Conclusion

Knowledge management has emerged as a potent way of increasing the efficiency of an organization. It helps organizations to accomplish their objectives and remain profitable in an increasingly competitive market. This paper set out to discuss the role that knowledge management plays in improving the performance of operations departments in an organization. The paper began by describing what KM is and its relative significance in organizational growth.

The paper has demonstrated how a lack of KM can seriously hinder operational departments. It has revealed that for knowledge to be of optimal use, it has to be shared among various parties in the organization. The development of skills and professional qualification in the company’s staff can also be assisted by KM. While some organizations may have questions as to whether it is worthwhile to invest in KM, this paper has demonstrated that here are numerous benefits that the operations department can get from KM implementation.

References

Baskerville, R & Alina, D 2006, “The theoretical foundations of knowledge management”, Knowledge Management Research & Practice, 4(1): 83–105.

Chen, M & An-Pin, C 2006, “Knowledge management performance evaluation: a decade review from 1995 to 2004”, Journal of Information Science, 32 (1): 17–38.

King, WR 2009, Knowledge Management and Organizational Learning, Springer, Boston.

Chen, R 2008, An Evaluation Method for Enterprise Knowledge Management Performance Based on Linguistic Variable, International Seminar on Business and Information Management, Shandong, China

Razi, M & Abdul-Karim, N 2010, An Instrument to Assess Organizational Readiness to Implement Knowledge Management Process, Proceedings Knowledge Management 5th International Conference, Georgia.

Shaw, D & Baker, B 2003, “Achieving closure through knowledge management strategy. Electronic Journal on Knowledge Management, 1(2): 197-204.

Skinner, K 2007, “Developing a tool to measure knowledge exchange outcomes”, The Canadian Journal of Program Evaluation, 22(1): 49–73.

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