Project Management Institute

Human capital

Companies can use knowledge management to retain valuable information—even when the project staff that generates it moves on.

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by Aaron Dalton

knowledge management can seem abstract, far removed from the nuts-and-bolts concerns of business. However, formidable knowledge management programs can offer advantages in speed, consistency and strength that directly impact the bottom line. Companies seem to be catching on, continuing to invest in knowledge management as “one of the critical competencies in high-performance workplace initiatives” from 2006 to 2010, according to Gartner Inc., Stamford, Conn., USA.

If corporate knowledge exists only in a diffuse cloud dispersed in the heads of employees at large, a new project manager may take months to get up to speed on a time-critical initiative—blowing the schedule and, most likely, the budget.

Knowledge management could rank as one of the largest issues facing human resource departments today. As companies have moved to more projectized structures, people are sometimes regarded as expendable resources. When employees leave the company, little care is given to making sure they don't walk out with all that information.

Whether a company is growing or retrenching, knowledge management can prove useful. Many of the companies that endured the massive layoffs of the late 1980s and early 1990s had trouble growing quickly during the boom years of the late 1990s because many of their great thinkers had left—and taken their insider knowledge with them, says Jonathan Weitz, PMP, a consultant at Interactive Broadband Consulting Group LLC, Princeton Junction, N.J., USA.

Demographic trends alone should have companies scrambling to institute or strengthen their knowledge management programs. “The graying of the IT workforce is a growing issue and will only get worse,” he says.

People Power

Many companies rely on cross-training and knowledge-sharing sessions, as well as mentoring relationships, but those practices often don't go far enough. Companies think once they've it written down, they're fine—without recognizing the informal knowledge people have gained and the relationships they've built that help them find things.

MEET ME HALFWAY

When employees leave, companies want to ensure knowledge stays. One way to do that is to make it standard corporate practice for employees to regularly populate a broad information repository with their collected data. Then, all the knowledge that a person has gained is part of organizational knowledge base where it can be sorted and retrieved at will.

Employees must add data to the repository in such a way that the information is useful. To facilitate retrievable information, employees can tag their knowledge according to project phase, task, areas of architecture or different stages of a business value chain.

Companies must balance the benefit of easy access to intensively tagged documents and the overhead cost of creating those tags in the first place. “There is a certain amount of trial and error to determining how much metadata to wrap around knowledge components,” says Jonathan Weitz, PMP, Interactive Broadband Consulting Group.

It's the difference between Googling for information and talking with a librarian. If you don't ask the right question, the search engine can't help you. A person, on the other hand, can help you formulate the right question and then tell you where to find the answer.

“I've been practicing project management for decades and teaching it at [University of California at Irvine, Irvine, Calif., USA] for 10 years, but with all my knowledge in project management, I could not be as effective as someone who has been within an organization for 10 years, whether they've been trained in project management or not,” says Frank Parth, PMP, president and founder of Project Auditors LLC, Rancho Santa Margarita, Calif., USA. “I don't have the network, I don't know who to go to when stuff needs to get done. It is that knowledge that is so important, and when those long-term employees leave, they take that knowledge with them.”

Knowledge sharing among project team members generates benefits not just when team members roll off a project or exit the company, but also in the case of unexpected emergencies.

Knowledge sharing among project team members generates benefits not just when team members roll off a project or exit the company, but also in the case of unexpected emergencies. Clients expect a consistent performance baseline that companies in flux will find hard to deliver, says Phyllis Larson, PMP, a consultant with PM Solutions and director of marketing and public relations for the PMI Service & Outsourcing Specific Interest Group (SIG). “Associates have family emergencies, they get sick, they take vacations,” she says. “All of these things take them away from the workplace, but the work still needs to be done. Associates need to be capable of covering for each other with minimal disruption.” Teams and companies that take the time and effort to spread and share knowledge throughout groups of employees will make it easier for remaining staff to deliver on expectations.

SAP, Boeing, KPMG and BearingPoint are all companies using advanced knowledge management programs to make their operations more efficient, says Art Drake, director of project management office operations, Group Health Inc., New York, N.Y., USA. He is also executive chair of PMI's Program Management SIG. “As they start, work on and finish projects, they are consistently building an active knowledge base with issues and how they are overcome. They then extrapolate best practices from that,” he says. “They start with knowledge acquisition and collaboration and then leverage that knowledge management framework to develop best practices.”

Lagging Behind

Widespread adoption of all things knowledge management—the enabling technologies and rooted processes—isn't necessarily as accepted as it should be, however. There seem to be more challenges than solutions. For instance, in Europe, knowledge management may be more difficult than in the United States due to cultural and language issues, says Joy Gumz, PMP, a director at Project Auditors.

THREE TO START

For companies without a knowledge management program already in place, the key to starting one is to prioritize the knowledge that's most vital or at most risk.

Look at the areas where there will be greatest turnover, the division where you expect to see the most retirement, or the business unit that faces the greatest likelihood of growth and change. Static, stable businesses have the least need to document their knowledge. If cost-cutting seems likely to force layoffs in the near future though, now is the time to capture and retain the knowledge of any employees you might lose.

To take the first steps toward a knowledge management system, define a taxonomy, choose your metadata, then require project managers to feed all their documentation into the new knowledge management universe, says Jonathan Weitz, PMP, Interactive Broadband Consulting Group LLC. Technology is an important consideration, but your requirements should drive the process, not vice versa.

Timelines and compliance matrixes can be used to track which project managers are cooperating and fulfilling their knowledge management responsibilities and which need more encouragement. Even though it makes sense to capture knowledge in stages to prevent knowledge loss from people who leave a project midway through, many companies don't match deliverable milestones with knowledge management milestones. “Knowledge management gets lost and shoved under the rug,” Mr. Weitz says. “It's not seen to be as important as the deliverable milestones, but if you do require documentation at the same time as the deliverable milestones, it's far easier for new people to immediately find what they need.”

Intra-European language barriers get in the way of knowledge sharing, she says. The lean-and-mean staffing of European companies also makes them less likely to have the tools necessary to implement a knowledge management program. Technology barriers, often related to security, also exist.

In the United Kingdom, knowledge management concepts have not yet become deeply ingrained even at bigger companies, says Jamie Thompson, a principal advisor at KPMG's Risk Advisory Services, London, U.K. “Now and again, we see the odd portal that people use for knowledge management purposes, but it tends not to be all that well-structured,” he says. “People rely on file servers rather than knowledge management processes.”

Mr. Thompson predicts acceptance will be evolutionary, driven by the creation of a reward structure for knowledge sharing.

The same reticence to employ formal knowledge management seems to hold true in Asia Pacific. That may be changing, however. Most of the 17 respondents in a study of Fortune 100 companies in India reported they had or were considering a knowledge management program. “Knowledge explosion, increasing globalization, the rapid development and diffusion of information and communication, and their interactive effects on competition call for a paradigm shift in development strategies,” according to the study by Griffith University School of Management, Brisbane, Queensland, Australia, and BML Consulting, Kyiv, Ukraine.

Most of the respondents were well-aware of the potential payback that knowledge management can achieve, although the study reports that these same organizations may be missing fundamental opportunities. “They see short-term gains from the strategy like cost-reduction and improved marketing but are unsuccessful in linking them to external, longer-term benefits, such as intellectual capital growth,” according to the report.

“While reviewing the activities undertaken by respondents toward developing a sound knowledge management program, it was evident that organizations had failed to comprehend the cultural implications of knowledge management,” according to the report. “An ideal knowledge management program should bridge the gap between employee and the free-flowing knowledge within the organizations.”

FORWARD FOCUSED

According to research by Gartner Inc., a number of trends are shaping the world of knowledge management.

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Information management can't take the place of knowledge management, and as a result, they will continue to co-exist.

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The future workplace will require tacit knowledge management.

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Knowledge management practices and supporting technology will continue to be innovative.

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Because knowledge management is useful for collaboration, expertise management and capturing insightful ideas, it will move beyond knowledgebase management and into customer-relationship management.

Source: “Knowledge Management Enables the High-Performance Workplace,” Gartner Inc., February 2006.

Value Proposition

While companies struggle to determine the return on investment (ROI) on knowledge management, executives should consider the cost of not having a good system. Each company will have to come to its own ROI conclusions based on the costs of training a new team member to perform optimally within the company. It then must compare those costs with the costs of creating a knowledge repository and then developing a culture that rewards sharing. Much of this comes back to culture. If the company's culture is built on sharing knowledge and collaborating and that is part of the financial model for compensation, employees will probably have more collaboration and sharing. As a result, the loss of a particular person will have a less significant impact.

Mr. Parth points to PeopleSoft, which gave employees points for updating information in its knowledge database and then incorporated those points into an employee's quarterly evaluations. “The culture has to change within management,” he says. “Project managers cannot do it by themselves. There has to be recognition by upper management that it is important and financially beneficial to capture knowledge.”

Only then will knowledge management achieve the reach and prominence it deserves. PM

Aaron Dalton is a New York, N.Y., USA-based freelance writer who covers business and technology issues for IndustryWeek, Workforce Management and Wired News.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK | AUGUST 2006 | WWW.PMI.ORG
AUGUST 2006 | PM NETWORK

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