Gregory G. Dess
G. T. Lumpkin
Marilyn L. Taylor
The Central Role of Knowledge in Today’s Economy
Creation of wealth in a knowledge economy
•
Effective management of knowledge
workers
•
Intellectual capital
•
Assets such as
n Reputation
n Employee
loyalty and commitment
n Customer
relationships
n Company
values
n Brand
names
n Experience
and skills of employees
The Central Role of Knowledge in Today’s Economy
Intellectual capital = Market value of the firm –
Book value of the firm
How do companies create value in the
knowledge-intensive economy?
•
Human capital (individual capabilities,
knowledge, skills, and experience of the company’s employees and managers)
•
Social capital (the network of
relationships that individuals have throughout the organization)
•
Knowledge
•
Explicit knowledge
•
Tacit knowledge
Attracting Human Capital
•
Hire for attitude, train for skill
•
Emphasis on
•
General knowledge and experience
•
Social skills
•
Values
•
Beliefs
•
Attitudes
Developing Human Capital
•
Train and develop at all levels
•
Training is not the sole responsibility
of the human resource department
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Rapid changes in technology
•
Employee skills become obsolete
•
Training is cost effective
•
Monitor progress and track development
•
Evaluate human capital
•
Employees must share knowledge and work
together, collectively, to reach organizational goals
•
Firms often use 360-degree evaluation
and feedback systems
•
Managers’ success cannot compromise the
organization’s core values
360-Degree Leadership Assessment
•
Has developed and communicated a clear,
simple, customer-focused vision/direction for the organization.
•
Forward-thinking, stretches horizons,
challenges imaginations.
•
Inspires and energizes others to commit
to Vision. Captures minds. Leads by example.
•
As appropriate, updates Vision to
reflect constant and accelerating change affecting the business
Ten Characteristics of Leadership
Vision
Customer/Quality Focus
Integrity
Accountability/Commitment
Communication/Influence
Shared Ownership/Boundary-less
Team Builder/Empowerment
Knowledge/Expertise/Intellect
Initiative/Speed
Global Mind-Set
Retaining
Human Capital
•
Provide mechanisms that prevent the
transfer of valuable and sensitive information outside the organization
•
Identify with organization’s mission and
values
•
Strong alliance to organization
(strategic intents)
•
Challenging work and stimulating
environment
•
Financial and Nonfinancial Rewards and
Incentives
•
Rewards are a vital organizational
control mechanism
•
However, money may not be the most
important reason why people take or leave jobs
•
Exodus of employees can erode a firm’s
competitive advantage
The Vital Role of Social Capital
•
Attraction, development and retention of
talent is a necessary but not sufficient condition for creating
competitive advantage
•
Knowledge workers often are more loyal
to their colleagues and profession than to their employer
How Social Capital Helps Attract and Retain Talent
•
Hiring via personal (social) networks
•
Some job candidates may bring other
talent with them
•
Emigration of talent from an
organization to form start-up ventures
•
Can provide mechanism for obtaining
resources and information from outside the organization
The Potential Downside of Social Capital
•
Groupthink
•
Cost of financial resources
•
Managerial commitment
Using Technology to Leverage Human Capital and
Knowledge
•
Sharing knowledge and information
•
Conserves resources
•
Develops products and services
•
Creates new opportunities
•
Technology can leverage human capital
and knowledge
•
Within the organization
•
With customers
•
With suppliers
Using Technology to Leverage Human Capital and
Knowledge
Using networks to share information and develop
products and services
•
E-mail
•
Virtual teams
n Enhance
speed and effectiveness with which products are developed
n Can
be applied to new business ventures
Using Technology to Leverage Human Capital and
Knowledge
Retaining knowledge when employees leave
•
Information technology can save some
tacit knowledge
•
Need to create motivation for people to
contribute their knowledge to the system
Creating Value Through Human Capital, Social
Capital, and Technology
•
Does the organization assess attitude
and “general make-up” instead of focusing primarily on skills and background in
selecting employees at all levels?
•
How important is creativity and problem
solving ability? Are they properly considered in hiring decisions?
•
Do people throughout the organization
engage in effective networking activities to obtain a broad pool of worthy
potential employees? Is the organization creative in such endeavors?
Creating Value Through Human Capital, Social
Capital, and Technology
•
Does the development and training
process inculcate an “organizationwide” perspective?
•
Is there widespread
involvement—including top executives—in the preparation and delivery of
training and development programs?
•
Is the development of human capital effectively
tracked and monitored?
•
Are there effective programs for
succession at all levels of the organization—especially the top-most levels?
•
Does the firm effectively evaluate its
human capital? Is a 360-degree evaluation used? Why? Why not?
•
Are mechanisms in place to assure that a
manager’s success does not come at the cost of compromising the organization’s
core values?
Creating Value Through Human Capital, Social
Capital, and Technology
•
Are there appropriate financial rewards
to motivate employees at all levels?
•
Do people throughout the organization
strongly identify with the organization’s mission?
•
Are employees provided a stimulating and
challenging work environment that fosters professional growth?
•
Are valued amenities provided (e.g., flextime,
child-care facilities, telecommuting) that are appropriate given the
organization’s mission, strategy, and how work is accomplished?
•
Is the organization continually devising
strategies and mechanisms to retain top performers?
Creating Value Through Human Capital, Social
Capital, and Technology
•
Are there positive personal and
professional relationships among employees?
•
Is the organization benefiting (or being penalized) by hiring (or by
voluntary turnover) en masse?
•
Does an environment of caring and
encouragement rather than competition enhance team performance?
•
Does the organization minimize the
adverse effects of excessive social capital—such as excessive costs and
“groupthink”?
Creating Value Through Human Capital, Social
Capital, and Technology
•
Does the organization effectively use
technology to transfer best practices across the organization?
•
Does the organization use technology to
leverage both human capital and knowledge both within the boundaries of the
organization as well as among its suppliers and customers?
•
Has the organization used technologies
such as e-mail and networks to develop products and services?
•
Has the organization effectively used
technology to codify knowledge for competitive advantage?
•
Does the organization try to retain some
of the knowledge of employees when they decide to leave the firm?
The Central Role of Leveraging Human Capital in
Strategy Formulation
•
Leveraging human capital and
business-level strategy (Chapter 5)
•
Sustainable over time
n Integrate
primary and support activities in the firm’s value chain
•
Leveraging human capital and
corporate-level strategy (Chapter 6)
•
Manage businesses to create synergy
•
Create more value by working together
across business units
The Central Role of Leveraging Human Capital in
Strategy Formulation
•
Leveraging human capital and
international-level strategy (Chapter 7)
•
Achieve economies of scale
•
Adapt to local market needs
•
Facilitate the flow of information and
knowledge between business units in different countries
The Central Role of Leveraging Human Capital in
Strategy Formulation
•
Leveraging human capital and internet
strategies (Chapter 8)
•
Create competitive advantages through
digital and Internet-based technologies
•
Lower costs
•
Enhance customer service
•
Improve performance
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