Productivity is the relationship between the outputs generated from a system and the inputs that are used to create those outputs (P = O/I; where “P” is productivity, “O” is output and “I” is input). In the fast-paced world we live in today, the importance of improving on productivity cannot be overemphasized. Productivity Improvement is the result of managing and intervening in transformation or work processes. It is greatly improved when outputs generated from a system increase and the inputs used to generate those outputs decrease. Improved productivity results in competitive advantage and better investment decisions, among other things. There are several measures that can be taken in order to improve productivity, but for the purpose of this article we will consider knowledge management.

Introduction

According to Jyrki et al. (2003), projects are temporary endeavors with a definite time frame. The employees involved in a project and the lessons learned are often dispersed after the project ends, thereby leading to loss of organizational memory and “re-invention of the wheel” when a new project begins. Various researches have, however, shown that empowerment is the key to engineering performance in any system.

More than knowledge acquisition from a project is knowledge utilization and this is what most organizations often neglect, as the project team might no longer be together to handle other projects with similar characteristics. Although an organization might be required to document project experiences, most of these experiences remain with the employees and are not always easily accessible when the employee is not around. In order to have this tacit knowledge more widely accessible, employees must be encouraged to share with others.

To achieve increased productivity, there is need to adopt an open, trusting culture built on knowledge sharing. This change often comes from the top down. Knowledge acquired, residing in an organization, without being subjected to optimum use is wasted resource. It is important to acquire knowledge, but even more important is to effectively manage it. This paper discusses the essence of managing acquired knowledge and the benefits of its practice. It also highlights the processes involved in knowledge management and how it influences productivity.

Knowledge Management (KM)

Knowledge management is a methodological method for enhancing the capacity of a system to assemble and organize knowledge acquired through capacity-building activities in order to improve its decision-making ability and business strategy formulation process. It is an approach of discovering, capturing, sharing, and reusing both tacit (in people’s heads) and explicit (digital or paper-based) knowledge. It is the practice of formalizing the management of the intellectual asset of an enterprise.

Most organizations have their intellectual capacity trapped in the minds of employees or team members. However, those that are able to mine, tap, and share this intellectual capacity are guaranteed improved productivity and place themselves at an advantageous position against competition. Knowledge management is therefore imperative for the success and growth of any establishment. When analyzed from an action-oriented perspective, knowledge can be considered the ultimate competitive advantage. This implies that knowledge lies in action. Its potency is in its utilization for actionable decisions and execution. Managers should employ the knowledge management strategy, sharing information and working together on technology. The knowledge management process has six basic steps: collecting, organizing, summarizing, analyzing, synthesizing, and decision-making.

Fig. 1: Knowledge management process

Source: Wikipedia Wiki Classroom

Need for Knowledge Management

Many businesses are realizing that leveraging knowledge is a way of gaining a competitive advantage over the competition. As a result, the application of knowledge management systems is becoming of emergent importance. The apparent benefit of knowledge management is that everyone in an organization has access to corporate knowledge. According to Richard Artes, “the benefits of a knowledge management system can be substantial and worthwhile when all the keys are in place and everything is up”. There are a lot of other major benefits of knowledge management. Among other things, it:

  • Communicates faster and more accurate corporate policies and procedures to employees.
  • Solves problems in organizations quicker.
  • Embeds knowledge in staff, clients, projects, processes and services.
  • Eases the information accessing process for making better decisions.
  • Creates better practitioners; empowered, reflective and experiencing growth.
  • Develops competitive advantage, secures more clients and delivers more successful projects.
  • Increases profit and productivity.

Knowledge Management and Productivity

In order to improve productivity, organizations usually set in place welfare packages, which contain beneficial living and working conditions for employees. These measures are undoubtedly important but not fully effective, especially when applied in isolation. The popular saying goes “you can’t give what you don’t have.” Imagine a situation where employees of an organization are being provided adequate welfare but are not fully equipped with the know-how to satisfactorily perform their task. The outcome of this would be a group of well-catered for, well-meaning, but under-performing professionals unable to deliver on their individual tasks and the organizational productivity at large. Welfare packages and other measures are crucial to productivity improvement; however, knowledge management has to be higher on a scale of importance to them.

Knowledge management is directly proportional to productivity. As knowledge management practices are introduced and improved upon in an organization, productivity also increases. The chart below is an excerpt from the French Third Community Innovation Survey (CIS3) showing the impact of knowledge management on productivity ‘all other things being equal’ in manufacturing companies.

Chart 1: Knowledge management against labor productivity

Source: Sessi, CIS3 Survey

On a general note, the chart shows that companies without knowledge management policies had lower productivity than those with policies in place. It also shows that, of the four categories of companies, the one with the most significant difference and improvement in labor productivity was the one with no policy, culture, or alliance with knowledge or its management in place; i.e., the companies with incentive policies to retain employees, at difference 4.7k€ (where k€ is the measure for labor productivity). This goes to show that knowledge management has an undeniable positive effect on productivity and that any system run without knowledge management practices in place is operating below its achievable productivity capacity.

The reality of productivity is that it comes from the tactical use of a combination of the whole of an organization’s resource base. The resource bases include capital, IT capital, labor, etc. Knowledge management addresses this notion as it comprises the integration of management policies such as strategic decision-making, technological implementations, and firm-related cultural issues with the intent to detect, develop, communicate, and apply the skills and talents of the employee base within the firm. Organizations are gradually realizing that among their most important resources are the individuals that make it tick. The individuals or team working in an organization have sets of skills and talents that should be properly channeled into the firm’s processes. The enhancement of these skills through training, guidance, and collaboration would further improve the continuously evolving corporate structure.

The role knowledge and its management play toward improved or increasing productivity can further be explained when we compare knowledge work, manual work, and their respective productivities.

  1. Manual work defines the work while knowledge work understands the task.
  2. Manual work commands and controls while knowledge work gives autonomy.
  3. Manual work keeps strict standards while knowledge work encourages continuous innovation.
  4. Manual work focuses on question while knowledge work focuses on quality.
  5. Manual work measures performance to strict standards while knowledge work continuously learns and teaches.
  6. Manual work minimizes costs of workers to a task while knowledge work treats workers as an asset not cost.

The table below shows the differences between the productivity achieved through knowledge work and that achieved through manual work.

S/N Manual Work Productivity Knowledge Work Productivity
1. Work is visible Work is invisible
2. Work is specialized Work is holistic
3. Work is stable Work is changing
4. Emphasizes running things Emphasizing changing things
5. More structures with fewer decisions Less structure with more decisions
6. Focus on the right answers Focus on the right questions

Source: Bergstrand (2009)

The part knowledge management plays in the productivity of a system or organization is direct and positive. As it is introduced, productivity improves. The priority of any system attempting to improve its output should be to enhance their most important resource, people. To achieve this, all effort should be geared toward human capital development. Enhancing the competency of the team through knowledge management underpins improved productivity and the success of any organization.

Summary

Perhaps the most central thrust in knowledge management is to capture and make available the information and knowledge that is in people’s heads and that has never been explicitly set down. The popular saying “knowledge is power” buttresses the fact that knowledge is an indispensable resource and it needs to be properly managed for enhanced results. It is a necessary ingredient for professional competence that enhances the quality and standard of human capital development and ultimately has significant influence on productivity. Knowledge management is a universal practice; therefore all mature systems or organizations should take necessary steps toward it in order to enhance overall productivity.

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