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posted 28 Mar 2006 in Volume 9 Issue 7

Masterclass: Change management (Part I)

By Catherine Kelly

Organisational success, it is recognised, increasingly hinges on the creation of the so-called “conductive” organisation (Saint-Onge & Armstrong, 2004), where both information and knowledge flow easily throughout the organisation – enhancing organisational effectiveness and efficiency. Such organisations are more commonly referred to as learning organisations or knowledge-driven enterprises.

Managing information, in some respects, is a straightforward process. It requires only the storage, manipulation and retrieval of digital and print documents and data. But managing knowledge requires different, more subtle approaches. In reality, it is possible only to manage the environment in which knowledge is created and shared.

Information versus knowledge

For the purpose of this masterclass, a distinction will be drawn between managing information and managing tacit knowledge – that knowledge in people’s heads, which is frequently taken for granted.

These are in essence separate, but complementary, areas of practice. It is commonly suggested that only about one-fifth of an organisation’s overall knowledge base resides in tangible information, while the remaining four-fifths resides in the heads of the employees who work within the organisation. Creating an environment in which this tacit knowledge is unleashed and allowed to grow and develop is absolutely crucial.

In the first wave of knowledge management (KM), there was a focus on trying to make tacit knowledge tangible. In other words, a focus on capturing the knowledge that the employees carry around in their heads and making it ‘real’ in a documentary, audio, video, digital or some other format. That was easier said than done.

In terms of sharing tacit knowledge, this is now recognised as a somewhat flawed and artificial approach. Thinking and practice in KM has now moved on to advocate the overall creation of environments in which workers communicate on a human-to-human level through working collaboratively with each other. Why should this need to be managed, one might ask? Is this communication process not a natural part of human interaction?

Managing knowledge sharing

At one level, knowledge sharing happens whether or not it is actively managed. However, in an organisational context where competition on an individual and functional level is often the norm, these knowledge-sharing dynamics do not necessarily flow particularly easily.

Often, knowledge sharing takes place only among those within an employee’s network of trust, and that trust network may not necessarily correspond to the knowledge-sharing ‘conductivities’ that would make the organisation better able to achieve its objectives.

Indeed, in some cases, that network of trust may not extend any further than the colleague at the opposite desk.

To create an environment more conducive to knowledge sharing, it is often necessary to address the need to change the behaviour of employees at all levels in the organisation, in order to create the desired knowledge flows and collaborative working practices. In this sense, the management of change and the management of knowledge have, in many organisations, become overlapping areas of practice.

In order to effectively manage change in relation to KM, it is key to understand the mix of factors which affect the development of a knowledge-sharing culture within the organisation. This will increase the chances that any change-management initiative related to KM will successfully address any problematic issues.

Key questions to consider include:

Whether there is an effective and realistic fit between the KM strategy and the organisational structure and culture;
How the relationship between power and knowledge is managed and how high the level of trust is among employees across all levels within the organisation;
How clear the recognition is that levels of trust are heavily influenced by the differences between the stated goals of the organisation and the reality that employees often compete with each other in a detrimental manner. How do employee incentive and reward systems address this issue?
How it is possible to maintain high levels of creativity and innovation in the organisation on a long-term basis.

In this two-part article, we will deconstruct these issues and offer solutions to these key dynamics in managing knowledge and change.

No magic bullets

To start with, it is worthwhile deconstructing the key elements behind the problems that may arise around any KM project implementation. If these are understood, then common pitfalls can be avoided.

The discussion of issues around KM and change processes in organisations can be addressed from a number of different perspectives. The first two perspectives (A and B) will be addressed in part one of this article and the remaining two perspectives (C and D) in the second part. These are outlined below:

The organisational structure perspective;
The organisational culture perspective;
The political perspective;
The learning organisation perspective.

Organisational structure

It is often suggested that the ways in which employees within an organisation behave are strongly related to the way in which the organisation is structured.

If this structural perspective is adopted, knowledge-sharing problems within the organisation can be attributed to poorly designed organisational structures. This creates organisational rigidities, and consequently behavioural rigidities, among employees.

Equally, within KM literature it is often suggested that if the organisational structure is changed to a ‘networked’ or ‘flat structure’, then knowledge will flow through an organisation much more easily.

Obviously, organisational structures can take a number of different forms, including functional, hierarchical and matrix structures. Each of these will have its advantages and disadvantages in terms of organisational effectiveness, and the efficiency of knowledge flows.

Furthermore, even the best designed organisational structure will need to be changed over time, of course, although this may not always be clear.

Overall, an organisational structure should primarily be designed to ensure that the tasks and activities that must be undertaken to achieve organisational aims and goals can be best achieved through the structure that is in place, within a given set of available resources.

However, even if it is assumed that such a rational process occurs in the design of the organisational structure, organisations inevitably change their aims and objectives over time in response to internal and external drivers. As a result, a structure which may be ‘fit for purpose’ at one point in an organisation’s history, may at another point prove to be inflexible and unwieldy at another.

Therefore, for example, strongly hierarchical organisational structures, which may be suitable in order to ensure the achievement of particular objectives at a particular point in time within a particular operating environment, may later contribute towards employee rigidities and organisational inflexibility.

This can subtly change the motives and goals of staff. For example, in a rigid hierarchy employees may direct their efforts towards climbing the greasy pole and, as a result, develop a vested interest in maintaining those hierarchies – not helping to change them when they become out-of-date. Indeed, more effort may then be directed towards this end, than in employees carrying out their day to day activities in as efficient a manner as possible.

The self-perpetuating nature of bureaucracy is often cited as a case in point.

But it is also true that hierarchical structures can encourage people to strive to improve their performance, as they ought naturally to wish to be promoted up the hierarchical structure, thereby earning greater control and power, as well as more money. In this sense, hierarchical structures tap into some basic drivers in human nature.

At the other end of the scale lies the flat or non-hierarchical structure.

In theory, it offers employees much greater autonomy and the opportunity to work in more creative and fluid ways, unencumbered by the stifling hand of bureaucracy.

Organisations operating with a flat structure should be better positioned to adopt and adapt to changing needs. However, the downside is that it can leave employees to pursue their own individual professional goals at the expense of the organisation’s own stated aims.

In such organisations, there may be no clear lines of responsibility, authority and accountability, resulting in much activity that may be unproductive to the organisation. Some of the dot-com companies of the late 1990s, for example, have been cited as examples of this phenomenon. It is undoubtedly difficult to negotiate between the extremes of these two dynamics and, in reality, there is no ‘ideal’ corporate structure. Rather, the structure should be ‘fit for purpose’ and flexible enough to meet changing needs.

Organisational structure and KM

Regardless of organisational structure, it is paramount that communication and knowledge flows easily around the organisation in order to create a greater sense of understanding from the employee point of view as to the organisational goals, and the employee roles which contribute to the achievement of these goals.

Therefore, it is vital that employees have clear a understanding of their organisation’s goals, and how their individual roles contribute to those goals. There needs to be ongoing communication in the organisation on this level, as organisational needs will inevitably change over time as part of an adapt and survive strategy.

Beyond this, it is important to maintain fluidity within the organisational structure. In this sense, rotating employees to take on different areas of responsibility within their specific units, as well as on a wider level across the organisation where appropriate, is one approach. This can help to break down the stifling tendency towards employee rigidity within particular roles and particular work units – although this is something that few organisations do.

It should also be recognised that there needs to be an optimum level of hierarchy in any organisation and there will naturally be individuals who rise up the hierarchy faster than their peers, and who will therefore move into positions of leadership. However, other individuals may have excellent technical, communication or professional skills, which will be better utilised, through taking on more challenging or complementary roles across the organisation.

Organisational reward structures can therefore be structured in such a way as to reward people fairly for their output, as opposed to rewarding people by dint of their tenure in ‘office’ or their ‘position’, in the hierarchical sense. Indeed, most modern organisations today will have abandoned such old-fashioned attitudes to staff promotion.

In this sense, both the ‘leader’ roles and the ‘expert’ roles would be rewarded appropriately, so that not everyone would necessarily need to strive to become a ‘leader’ in order to be successful within the organisational structure. This approach should also help to address the common problem of inappropriate ‘knowledge hoarding’ – staff holding on to knowledge and not sharing it in the belief that it will give them more power or prestige – because of the desire for promotion in the hierarchical structure.

It also enables the organisational structure to evolve more easily on an ongoing basis to meet changing needs, fuelled by an employee mindset which is more open to change, as change in this context may be regarded as a positive opportunity, rather than a threat to one’s position in the organisation.

The overall idea is that the structure of the organisation is not the deciding factor in whether a KM strategy will work. Rather it is the overall values and reward systems that exist in the organisation which is important. Knowledge management can work around any structure, if the value systems in place uphold this aim.

For employees to work effectively within this kind of organisation, organisational communication, transparency and, above all, trust are key, so that employees will have belief that any change process is necessary and based on genuine organisational need rather than on the capricious whims of the managerial team. The complex dynamics around trust and knowledge will be looked at in more detail in part two of this masterclass.

Organisational culture

Organisational culture is defined by management guru Charles Handy as the values and beliefs that people in an organisation share. Organisational culture is concerned, however, with studying the behaviour of the organisational community as a body and is about understanding how people act and what they expect of each other in the organisational context. As Handy points out:

“…anyone who has spent time with a variety of organisations…will have been struck by the differing atmospheres, the differing ways of doing things, the differing levels of energy, of individual freedom, of kinds of personalities. For organisations are as different and varied as the nations and societies of the world…” (Handy, 1999)

When discussing organisational culture, it is useful to think of the organisation itself as a substructure or microcosm of society as a whole. So while the organisation will often, on the one hand, mirror societal norms; on the other hand, it will try to ensure that it creates its own behavioural norms within this overall societal framework.

Many of the factors that affect the culture of an organisation are obviously not always controllable by the organisation itself, and these various influences that impact on the behaviour of the individuals within the organisation can be described as comprising a cultural ‘onion’. The various layers within the cultural onion can be seen in figure 1.

So, for example, societal norms within the UK and the western world in general emphasise the importance of individual enterprise and the benefit of market competition. On the other hand, there are continuous efforts to create a strong sense of civic duty among citizens and the development of a commitment to, and belief in, the social virtues of cooperation and altruism.

The tensions that exist in a wider social sense between individualism versus communal values are reflected in the organisational context, where there is ongoing tension between the needs and desires of the individual, and the wider goals and objectives of the organisation.

The culture of an organisation is where these conflicts are played out and, ideally, maintained in a position of ongoing equilibrium. The dilemma for many organisations is in dealing effectively with the needs of the individual, while at the same time ensuring that the needs of the organisation are fulfilled by people working in co-operation with each other.

That is not necessarily an easy balancing act. How is it possible to identify an organisation’s culture? The obvious place is to look at current organisational values espoused in mission statements or core value statements. Looking at any formal induction programmes offered to new staff is also a useful place to start.

Although it is true that this sort of material may often say more about the aspirations of the management team, rather than the reality for the employees, it is nonetheless an obvious first place to start. Outside of this, there are many other places to look to understand the culture of an organisation, ranging from something as apparently unrelated as the physical space in which the organisation has chosen to locate itself, down to the unwritten rules and expectations placed on the employee by the organisation. These, of course, are harder to locate.

The behaviour of employees is the link between these stated values on the one hand, and the other unwritten expectations that impact upon organisational culture. The core values of an organisation are therefore not necessarily communicated through, for example, an orientation programme.

Rather, to understand organisational culture, it is often necessary to look more deeply, at how established organisational members behave and interpret and interact with the organisation around them. Examining culture focuses on looking in a deeper way at these shared systems of meaning among employees, which exist beneath the surface. Clearly, many organisational cultures hinge on these unwritten rules and expectations, and influences.

Culture and KM

In creating culture in an organisational sense, the focus is often on creating some kind of social ‘glue’ that holds employees together and ensures that everyone knows how they are expected to behave, according to management theoretician Gareth Morgan. Inculcating knowledge-sharing behaviour is an important part of this process. It is again, at its most simple level, about setting standards for behaviour and creating a values framework through reward and sanction systems to reinforce those standards. There are a number of types of tensions that typically exist in organisations in terms of enabling or disabling knowledge-sharing cultures. KM author Suliman Al-Hawamdeh clearly identifies both the key enablers and barriers in the creation of a knowledge sharing culture.

In terms of addressing some of these barriers, a number of different approaches can be taken to develop a common values framework within the organisation generally, and in relation to knowledge development in particular, as outlined by human resources specialist and author Christina Evans:

Recruitment and selection of staff

Hiring people that hold a similar value system to the hiring organisation or, alternatively, may be flexible enough to adapt to the value systems of the hiring organisation;

Induction of staff

New employees learn about the organisation’s value systems and the importance of working with people and sharing knowledge, where appropriate, to meet organisational goals;

Performance management and performance reviews

Ensuring that KM practice as specified, for example, within a competency framework, is a part of the overall performance review process for every employee. It is important to remember that employees generally recognise that what gets measured is what matters, so this will impact strongly on behaviour. Typical knowledge competencies could include, for example, a level of collaborative working or social networking across the organisation;

Reward systems management

If knowledge competencies are incorporated as part of an overall competency framework for an employee, and assessed as such, then it will be possible to reward people for these competencies.

Different roles within an organisation will require employees to have strengths in different areas of knowledge competence, so performance reviews may need to be tailored to assess knowledge competencies in the light of this.

In relation to organisational culture as a whole, it has to be recognised that some level of conflict always occurs in organisations between individuals seeking greater levels of influence or authority. Examples include potential conflict over organisational direction or perhaps resource allocations or, at a more fundamental level, to the governing ideologies or the direction of the organisation. This is part of the natural flow of change which is also an integral part of the organisation’s overall equilibrium and ongoing adaptation to its environment. In itself it can be a healthy sign, provided that this conflict does not become destructive or reach a level where it affects the ability of the organisation to fulfil its function.

If an organisational culture is created that creates a sense of community and mutual belief in reaching organisational goals among employees at all levels, then KM initiatives will naturally and easily flow outwards from this. If knowledge management competencies are also included as part of an overall competency framework on which employees are assessed as part of their performance reviews, then the values of knowledge sharing will be made even more explicit in the organisational framework and employee mindset.

Part two preview

In part two of this masterclass, we will examine the political issues around the area of knowledge management. KM is regarded by some as an aspirational ideology, rather than a realistic, everyday management practice.

The rationale behind this view is that ‘knowledge is power’ and that employees will naturally use any power resource to their own advantage. Ways to address this problem will be considered in part two. This will involve, first of all, an analysis of the ways in which knowledge can be regarded as a power resource and, second, practical solutions to overcome knowledge hoarding practices in an organisational context. Specific discussion will centre upon the nature of trust and how it is created and maintained in the work context.

In addition, the next instalment will also address the practice of creating and maintaining a learning organisation that fosters innovation and creative thinking will also be addressed. This will include a section on challenging and breaking down fixed mental maps and single loop thinking (Chris Argyris, 2004) in the organisational context, in order to ensure that both the individual and the organisation maintain the ability to respond effectively to changing environments.

Catherine Kelly is currently a senior lecturer and course director for the MSc course in Knowledge Management at London Metropolitan University. Catherine's research interests focus on organisational culture and, in particular, the issues around successfully managing power and knowledge in implementing KM strategies.

Resources

Al-Hawamdeh, S. (2004), Knowledge Management: Cultivating Knowledge Professionals, Chandos, Oxford.
Argyris, C. (2004), On Organisational Learning, Blackwell, Oxford.
Evans, C. (2003) Managing for Knowledge: HR’s Strategic Role, Oxford, Butterworth Heinemann.
Handy, C. (1999), Understanding Organisations, Penguin, Harmondsworth.
Saint-Onge, H. and Armstrong, C. (2004), The Conductive Organisation: Building Beyond Sustainability, Elsevier Butterworth-Heinemann, Oxford.
Morgan, G. (1998) Images of Organisation, Newbury Park, CA, Sage.
BSI. (2003) PD7501 – Managing Culture and Knowledge: A Guide to Good Practice, London, BSI.