Reinventing HR to Manage Knowledge

The year is 2005. In the human resources department of a multinational corporation, a senior member receives an urgent phone call from a manager in Kuala Lumpur. She is desperate to find a company expert who speaks Russian and French, has experience in excavations and geological research, and most importantly is available immediately.

Consulting the results of the company's ongoing social network analysis, the HR staffer locates a senior engineer in the Paris office who appears to be the hub of activity around knowledge about excavations and geological research. This has been confirmed in several sophisticated exit interviews conducted during the last year, in which engineers who were leaving the company identified this man as not only a fount of information but an easy person to work with.

Back from the future

If this scenario sounds nothing like your company's HR department, you're not alone. Despite mounting pressure on human resources groups to play more strategic roles in managing knowledge, most companies haven't evolved beyond the traditional model yet, mostly for cultural reasons.

"As a field, human resources has been talking about moving in a more strategic direction for at least five years," says Scott Tannenbaum, president of the Group for Organizational Effectiveness, a consultancy in Slingerlands, N.Y. "There has been some progress if you're talking about automating HR functions, but we're not very far down the road."

Proponents of a "new" HR see it moving from being an administrative function to an active contributor to corporate profits. For that to happen, some services that HR professionals have traditionally handled--such as supplying benefits information and claims forms--must be delivered electronically on a self-service basis so HR can focus on other activities.

"Human resources departments have traditionally rewarded people for what they know about things like the monthly health insurance rate for a family of four in Chicago," says Lynne Schneider, a senior consultant with Watson Wyatt Worldwide of Washington, D.C., which advises companies on HR and human capital issues. "They now need to reward them for providing professional services. It's the right thing to do for the business, but it doesn't happen by decree."

Why HR

Ironically, human resources as a discipline is naturally suited both to performing and advocating KM activities. After all, HR is charged with tracking a variety of information about its company's employees. And by working closely with an organization's business managers, HR can apply knowledge to ensure that a company's human capital is put to its best use. "The work of the human resources department overlaps completely with core knowledge management challenges." says David J. Dell, research director at The Conference Board Inc., a research network and business membership organization in New York.

The upshot is that HR workers will have to learn to redirect themselves and their corporate culture toward sharing, collaboration and cross-functional teams. The first step will be to educate HR staff about knowledge management, with which it traditionally has had little contact, according to Nancy Dixon, a consultant with Common Knowledge Associates in Washington, D.C.

According to a 1999 Conference Board survey of human resources executives, only 33 percent of respondents considered knowledge management critical to their future business success. However, Dell notes that his group's current research indicates some positive changes in the attitudes of HR leaders toward knowledge management. He explains the shift as a response to demands by corporate leadership that HR promote a corporate culture centered on sharing information.

According to Tom Casey, a partner with Unifi Network in Boston, external market factors are also forcing changes in human resources organizations. According to recent research conducted by Unifi, a division of PricewaterhouseCoopers LLP devoted to human resources consulting, the shortage of knowledge workers--especially those with technology skills--remains chronic in corporations despite the recent economic downturn. In addition, turnover among such workers exceeds 30 percent per year. Says Casey, "Human resources managers...have to shift their focus to deal with the issue of knowledge transfer and get back to the basics of attracting, retaining and placing the best people."

First steps

At the moment, most large companies are still focused on making their HR processes more efficient. For example, since 1994 senior HR executives at General Motors Corp., the auto manufacturer, have been looking for ways to streamline benefits administration and other processes that have traditionally defined human resources. One result is an intranet portal through which the company's 14,000 production and hourly workers and its 60,000 salaried employees can check the status of their 401K plans or make changes to their healthcare benefits.

In addition, GM is outsourcing some traditional HR functions, including payroll and its 401K plan. The result, according to Dick O'Brien, GM's executive director of employee benefits in Detroit, is that fewer people can serve the employees in less time than before; GM's human resources staff now has 85 people, down from 6,000 a decade ago.

GM's ultimate goal is for HR to use knowledge to help employees deal with issues such as breaking down cultural barriers across the increasingly far-flung organization and supporting, training and retaining an increasingly fluid and mobile workforce.

So far, GM's most notable progress has been in reducing bureaucracy. As part of a new initiative called Go Fast, HR staffers track a range of processes--from hiring new machinists to establishing a manufacturing facility in South America--with the aim of removing barriers to rapid implementation. They continually analyze these processes, which are logged electronically, to determine where overhead can be stripped out. Another part of this program lets line-of-business managers approach HR with ideas for entirely new processes. HR then assists those managers in obtaining the necessary approval. "Understanding the processes themselves is a key component of making them better," says O'Brien. "At its core, though, Go Fast is simply about helping employees get things done."

Capturing the knowledge of employees who are leaving also is a priority assigned to HR. For employees who are retiring, the standard exit interview remains in place. But the company has also instituted programs called GM for a Career and GM for a Time to identify earlier on which employees will probably only be with GM for a few years. Making such determinations affords HR an opportunity to understand what sort of knowledge is in the heads of those likely to move on fairly soon. "We're still working this out, but we know we have to better understand the dynamics of a less stable workforce," O'Brien says.

In the midst of these changes, he asserts that the biggest challenge for GM's human resources management is to equip its staff with new skills. GM has created a program called HR Skills for Success to teach human resources employees how to deal with organizational and management development. "Initiatives like HR Skills can be hard to quantify, but much more than dollars are at stake here," says O'Brien. "We're talking about major cultural changes." In short, HR will have to break out of a departmental mentality and work with people across the organization and beyond its local geographic boundaries.

On two fronts

Other companies are attempting to address the strategy issues even as they automate HR processes. Two years ago Vicki Chvala, vice president of human resources for American Family Mutual Insurance Group of Madison, Wis., set out to remake her department. Her goals were to automate HR processes related to benefits administration and to create a class of internal human resources consultants called HR Business Partners. To address the first goal, American Family built a portal for employees and first-line managers who have to deal with HR tasks related to hiring and evaluating employees.

As for the HR Business Partners, Chvala planned to have them work directly with top managers in other divisions of the company on business issues ranging from knowledge transfer to staffing to divisional reorganization. This represented a radical shift for the entire HR department, according to Keith Anderson, American Family's director of people strategists. "For years, we built our processes, deliveries and systems for our own needs," he says. "Creating the role of the business partner meant changing that perspective completely."

As part of the effort, American Family's HR group launched an internal branding campaign to change how employees perceived its role within the company and to keep them abreast of new services.
The campaign started with a series of internal focus groups to determine how employees perceived HR. "The feedback we got was that HR did a good job with the basics, but there was a strong feeling that it was difficult to find the human resources person with the right information," says Russell Evansen, American Family's HR brand and content manager.

After its fact-finding efforts, HR came up with a slogan called No Barriers. With help from Hewitt Associates LLC, an HR management consulting firm, Evansen and his team developed a detailed internal plan to promote the No Barriers brand. They sent out flyers to each employee in which Chvala explained where the HR department was and the direction it intended to take, posted news stories on the company intranet about the progress of the HR overhaul and even set up promotional booths in the corporate cafeteria. "We approached this as if we were a company rolling out a new brand," Evansen says.

Promotional efforts and teamwork notwithstanding, however, Evansen admits that the transition has been tough for some members, particularly the traditional human resources generalists. Management helped some of them to find other jobs within the organization; others ended up leaving the company.

Those who chose to stay were put in a call center called AskHR, where they provide answers to employee questions on benefits and other administrative matters. Other HR professionals now are learning consultative skills on the job.

American Family's culture increasingly promotes cross-functional teams. Business managers are slowly warming to having an HR person involved in their decisions. One success so far, according to Anderson, has been the reorganization of the company's 700-person personal insurance lines division. A team of HR consultants has been involved from the beginning of the process. They handle the organizational work and staffing strategies behind the divisional overhaul, working closely with vice presidents and other upper-level managers to make sure the new structure can meet business needs. The goals in this case include eliminating duplicate processes and positions while generating more leads and sales.

Anderson notes that more such successes will be the key to long-term acceptance of HR's new role within American Family. "Overall the managers and executives have been receptive to the new HR consultants, but this isn't something where you just flip a switch--it's a transition process," he says.

A new model

Consultants predict that the future will see a sophisticated and pervasive use of KM techniques in the service of employee recruitment and retention, and the capture and dissemination of tacit knowledge.

According to Common Knowledge's Dixon, social network analysis (SNA) will be at the heart of the new HR. SNA is a means by which companies find their so-called hubs of knowledge, the individuals to whom others consistently turn for expertise or personal contacts pertaining to their jobs and the company culture. Dixon suggests using these human information hubs as both recruitment tools and starting points for creating online communities of practice.

Of course, many such communities exist today. According to the Society for Human Resources Management, a nonprofit professional organization, 91 percent of HR professionals already rely on employee referral as a recruitment tool. But Dixon proposes a more methodical approach. "Social network analysis is a fairly scientific process to identify who is getting knowledge from whom," she says. "But it's really about making better use of knowledge, which is something human resources could be much more involved in."

Emphasis on knowledge transfer can grow through advocacy by HR. For example, Dixon suggests reorienting the exit interview to focus on an employee's tacit knowledge as he or she is walking out the door. For example, instead of asking someone why she is leaving the company, a more valuable set of questions might include who her closest colleagues were, what role she played on her team, what kinds of questions she asked or was asked by her colleagues on a typical working day, and which projects she considers her favorites or the most successful.

It should be obvious that such initiatives will demand change from HR executives and their staffs. Departments that make the adjustments could find themselves in the center of their enterprise's business even before 2005.

CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues