denotes premium content | Nov 22 2008 Feature
posted 1 Jun 2000 in Volume 3 Issue 10
What’s in it for us?
For any KM programme
to be successful, the active participation of each member of staff is an
absolute necessity. Focusing on the case of business consulting firms, Ines
Mergel and Matthias Reimann explore incentive reward systems for knowledge
management.
The most important performance factor in ensuring that a holistic
knowledge management programme is carried out successfully is the participation
of the staff. The sharing and distribution of the knowledge existing within an
enterprise are of overriding importance, particularly in business consulting
firms, since these are naturally orientated towards knowledge.
To keep the staff
motivated to participate in a knowledge management initiative, many enterprises
run incentive reward systems directly related to the knowledge management
programme. In the following article, the incentive reward system, and the
critical factors of performance at Gemini Consulting, will be described.
Knowledge as the
dominant resource
Knowledge constitutes the dominant production factor, especially in
business consulting firms. Competitive advantage and thus long-term retention
and improvement of market position can only be achieved by identifying one´s own
resources of knowledge and know-how. That is why unexploited knowledge and
unidentified capacities of knowledge can lead to curbs on productivity for
business consulting firms.
In order to safeguard the future
potential of a company’s knowledge assets, it is above all necessary for
business consulting firms to realise the problems and the risks evolving from
the drain, destruction, and disuse of knowledge, and to find out how best to
preserve and exploit existing knowledge.
In 1999, the authoress carried out a
survey for which she interviewed knowledge managers from the top business
consulting firms. It revealed that employees are highly motivated to incorporate
third-party knowledge into their own projects, thus enabling them to offer more
efficient solutions. Nevertheless knowledge is – often unintentionally – not
passed on to other consultants because of the non-transparent infrastructure and
unwanted knowledge barriers; that is, the experts are either not aware of what
they know or it is not clear to others which projects have already been carried
out concerning which subject area, in which field, for which client and by
whom.
The
greatest obstacle to ensuring participation in a knowledge management programme
within the surveyed business consulting firms is partly explained by the slogan
‘knowledge is power’. Above all though, it comes from a lack of team spirit.
Solutions to consulting problems are often ‘invented’ again for each client,
without utilising the experience of professional colleagues.
But there is a way out
of this miserable situation towards a more efficient knowledge management
approach; by transforming the existing corporate culture into a knowledge
culture. It will then not be the individual staff member who benefits from the
knowledge exchange but the complete project team, the department and,
ultimately, the whole organisation.
Appropriate incentive reward systems
should be created for knowledge exchange that are based on openness and honesty,
and which thereby give confidence to the staff in his or her ability to share
knowledge and to use the knowledge of professional colleagues. The specialist
literature on knowledge management, in particular Probst, repeatedly insists on
the necessity of incentive reward systems for knowledge management: “For the
successful sharing and distribution of their knowledge the staff must be
motivated by adequate incentive-contribution systems to make their relevant
knowledge available for and exchange it with others voluntarily.” Probst (1999),
p.134.
Incentive reward systems for knowledge management
The term incentive is
understood as a situational condition that can motivate staff members, because
of their individual structure of needs, to a certain conduct/performance (von
Rosenstiel 1987, p.320).
Incentives activate motives (=readiness to behave in a particular way)
and have a ‘stimulative nature’, as they influence the staff member to take
certain actions as intensively as the enterprise requires. The benefit of the
work done by the staff must at least equate to the benefit of the incentives
(for instance wages/salary), or even go beyond it (=compensation) (compare
Becker 1990, p. 6).
Extrinsic and intrinsic incentives
According to the sort and source of
satisfaction of one´s needs, we can differentiate between extrinsic and
intrinsic incentives.
The prospect of remuneration comes under extrinsic incentives. Here the
incentive for carrying out a task is not inherent in the job, but rather lies in
monetary benefits. In the case of intrinsic incentives, the satisfaction of
one´s needs comes from carrying out the task itself. Intrinsic incentives can
not be quantified to the same degree as extrinsic incentives, which can be
expressed through a definite amount of money and are thereby comparable.
Material and
immaterial incentives
We can differentiate between material and immaterial incentives
according to the objective of the incentive.
Monetary remuneration is deemed a
material incentive. It constitutes a reward for the staff member having
performed his/her duties as he/she was asked to. The size of the reward
indirectly contributes to the satisfaction of needs in view of status and power
and determines the position of the staff member in the organisation.
Immaterial incentives
express themselves in the conditions for carrying out a task and have no
immediate monetary effects. Examples for immaterial incentives are: Contents of
the job, decision-making structure, management style and career prospects. Since
material incentives are usually limited through salary-level and the like, the
importance of immaterial elements is considerable.
Classification of
incentives
In
correspondence with the differentiation between intrinsic and extrinsic, as well
as material and immaterial incentives, it is possible to classify incentives
appropriately.
Demands on incentive reward systems for KM
The specialist literature also calls
for specific incentive reward systems for knowledge management in order to
support the sharing/distribution of knowledge. The existing incentive reward
systems should be extended so that they can contribute to a recognisable change
of conduct. Staff can be motivated, through well-directed incentives, to take
part in the sharing/distribution of knowledge, and to voluntarily put their
tacit knowledge at the disposal of others. To find out what incentives can
induce staff members individually to pass on their knowledge, it is important
that project leaders should try to talk directly with single members of staff to
determine their individual structures of motives.
Demands on remuneration systems and
status symbols
Demands on career
incentives
Demands on incentives
regarding the contents of the job
Demands on participation
Demands on the management
style
Demands on the corporate culture
The demands on the corporate culture
constitute the most comprehensive requirements regarding incentive reward
systems for knowledge management. They refer to the general treatment of
knowledge within the organisation.
KM incentives at Gemini
Consulting
Gemini Consulting is one of the leading international management
consulting companies. Its activities are particularly focused on the
implementation of solutions designed in co-operation with the client. Gemini
Consulting employs a staff of about 2,300 worldwide. As an independent part of
Cap Gemini Ernst & Young, it has access to the knowledge of 40,000
employees. Renowned business publishing houses and employers´ associations chose
the Cap Gemini Group as ‘European Enterprise of the Year’ in 1999. Power of
innovation and the development of knowledge as capital beside various
quantitative factors constituted the fundamental criteria of assessment.
Sustainable systems for knowledge management have been in existence since the
foundation of our company. This development has intensified through a number of
acquisitions – since 1990 – which have transformed Gemini Consulting into its
current shape.
Emphasis has always been put on the introduction of incentive reward
systems for the active transfer of knowledge and the extension of existing
systems. In our company there are various incentive reward systems in place. The
basic instrument is our system of agreements on targets within the company. This
instrument, orientated towards the Management by Objectives (MbO) approach, is
binding for every member of staff and constitutes the basis for the internal
review process. At the beginning of every year, each member of staff has a
meeting with their direct superior to agree on specific targets, which will set
the standard for the performance of the member of staff in a subsequent set
period of time. The agreement reached is genuine, as it stems from a real
exchange and compromise between the interests of the staff member and the
superior. This results in a system of different targets, classified by different
categories; for example, contribution to Gemini´s organisational development,
participation in the knowledge management programme, contribution to Gemini´s
public relations work, co-operation with universities and associations, and so
on. This target system consists of concrete quantitative and qualitative
targets. A review process takes place once a year, which measures how far these
targets have been realised.
This approach exists in parallel with
the ‘culture of permanent feedback’. It contains an MbO process for every
external or internal project, together with a system of 360-degrees-feedback.
This is a mutual assessment between members of staff and is integrated with the
review process.
Gemini Consulting relies on a system of various material and immaterial
incentives. The most essential instrument having a material effect is the
remuneration system, which, according to the sort and source of satisfaction of
one´s needs, appeals most to extrinsic motives. At the end of every financial
year the extent of salary-rise and profit-sharing is determined via the review
process, as mentioned above. This highly transparent process of assessment,
which is also internationally standardised, can essentially be seen as a balance
between what the member of staff has achieved in the course of the year and what
was initially agreed upon. For this purpose, assessments of all the projects
dealt with by the staff member, as well as all the feedback conversations that
have taken place, are evaluated and together lead to an objective assessment on
the basis of the defined criteria. One of the essential criteria of this
assessment system is the contribution of the staff member to the development of
new knowledge or, on the other hand, to the further development of existing
knowledge by making service offerings, tools or by publishing specialist
essays.
At the
same time, the result of this process of assessment constitutes the basis for
the decision on whether the consultant is promoted to a higher level. Here we
find the most essential immaterial incentive to the active implementation of our
knowledge management programme; the career incentive. The possibility for each
staff member to become a recognised expert in a certain field by actively taking
part in the development and transfer of knowledge also counts among the group of
career incentives. At this point Gemini Consulting utilises further stimuli, two
of which should be emphasised: Publicising the personal knowledge through
documentation within the database, and the incentive resulting from the employee
being ‘flagged’ as an expert. By storing documents in the database, active
participation in the internal knowledge management programme leads to a wider
acceptance of the author as an expert in a certain field. This effect is
supported by the statistics showing which staff members feed the most documents
into the database, and also by the contact records of the expert evident within
the database. Consequently, the personal network, which is crucial within a
consulting firm, is extended and the expert within a given field is formally
recognised.
Corporate culture and management style probably represent the two most
important fields of immaterial incentives, because they determine how the
treatment of knowledge within the enterprise is seen strategically. The value of
a management consulting firm is mainly measured on the basis of immaterial
factors, in particular the knowledge and expertise of the organisation. Thus the
essential questions that have to be answered by a business consulting firm are
those concerning the culture of confidence and communication. Is each staff
member aware that he/she will not only suffer no disadvantages but will in fact
actively benefit from the open transfer of their knowledge into the organisation
as a whole? Is there a culture of communication consciously supporting this
active exchange? The target agreements made between the member of staff and the
superior constitute the most important instrument within Gemini Consulting to
convey the culture of confidence. These ‘contracts’ explicitly support the
transfer of knowledge within the enterprise. Beyond that, our company fosters a
culture of communication supporting and promoting direct and efficient
communication, via email, voicemail, the telephone, forums for discussion over
the intranet, and also the personal talks with the superior, the project leader
and so on. When using the voicemail system, for example, every staff member – be
they a consultant or the vice president – is obliged to answer requests
immediately and to the best of their ability. This also demonstrates the
co-operative style of management at Gemini Consulting; an employee’s superior
not only receives knowledge but also actively pursues the transfer of knowledge,
encouraging this within the project teams and the units of organisation as
well.
As stated
above, Gemini Consulting is a global enterprise. Every consultant has the chance
to deal with fascinating projects in an international environment. This
opportunity alone provides an incentive for the individual consultant to get
noticed as a recognised expert in a given field. Active participation in the
knowledge management programme is an important first step in this
process.
Another
non-monetary incentive is a highly sophisticated IT-system which is, above all,
easy to operate: Gemini Consulting uses Knowledge Portal MyGalaxy. It adopts the
concept of portals on the Internet, and offers staff the opportunity – by using
this tool – to gain access to the intranet and thus to internal knowledge
databases, as well as to the Internet, in the easiest possible way. The
essential components are such commonplace tools as the email system, an online
diary, an online news magazine dealing with issues within the company as well as
external ones, various news groups and forums for discussion, and more. The
success of this portal will essentially guarantee the future success of our
internal knowledge management programme.
Literature
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1992]
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Ines Mergel is an assistant
Lecturer at the University of St. Gallen.
She can be contacted at: ines.mergel@unisg.ch
Matthias Reimann is a
knowledge manager at Gemini Consulting.
He can be contacted at: matthias.reimann@gemcon.com
