ABSTRACT
 
This paper examines five areas of human resource management and
its ability to accommodate the implementation of knowledge
management. The five areas are (1) recruitment and selection,
(2) training, (3) performance appraisal system, (4) reward and
compensation system, and (5) retrenchment. The results suggest
that the majority of Malaysian companies are still at the
initial stage of knowledge management practices.  However, more
concrete measures are expected after the groundwork of
knowledge management is completed.
 
INTRODUCTION
 
In recent years, a dramatic change in the world economy and the
use of IT have affected the way businesses and organizations
operate. One of the changes is the shift from a resource-based
view of competitive advantage (i.e. capital, labour, and raw
material) to a knowledge-based competitive advantage through
Knowledge Management (KM). This increased enthusiasm on KM is a
result of cost reduction in data management, due to the rise of
computing capabilities like the Internet, electronic
networking, and local database (Civi, 2000). This also means an
increase in an organization's feasibility on acquiring,
documenting, processing, and distributing data and information
globally.
 
The adoption of KM by businesses and organizations has
initiated the interests of researchers and academicians. Many
issues are being examined and studied, such as KM structure,
knowledge diffusion, KM implementation, KM performance
framework, and HRM strategy in KM.  Roberson and Hammersley
(2000) pointed out that the earlier stages of these studies
tend to associate KM with information technology, which was
perceived as the main driver for KM. However, technology is not
the only requirement of KM.  What is more important is the
knowledge created by human beings (Civi, 2000). This view is
also supported by other researchers and academicians such as
Filius, et al. (2000), Davenport and Prusak (1998), Mintzberg
(1989), Quinn (1992), and Robertson and Hammersley (2000), and
Soliman and Spooner (2000).
 
This paper will focus on five areas of HRM and its ability to
accommodate and implement practices that enhance the knowledge
creation process. The five areas are: (1) recruitment and
selection, (2) training, (3) performance appraisal system, (4)
reward and compensation system, and (5) retrenchment.
 
HUMAN RESOURCE MANAGEMENT AND KNOWLEDGE MANAGEMENT
 
Knowledge can be defined in many ways. A comprehensive
definition of knowledge is given by Davenport and Prusak
(1998). They said that knowledge is "a fluid mix of framed
experience, values, contextual information, and expert insight
that provides a framework for evaluating and incorporating new
experience and information. It originates and is applied in the
mind of knowers. In organizations, it often becomes embedded
not only in documents or repositories, but also in
organizational routines, processes, practices, and norms" (p 5)
However, KM has a different meaning.  The American Productivity
& Quality Center defined KM as "the strategies and processes of
identifying, capturing, and leveraging knowledge
(Manasco,1996)". Chong, et al. (2000) defined KM as "We ability
to recognize and manage the system of core competencies
required for knowledge-intensive businesses". An empirical
survey by Chong, et al. (2000) suggests KM as "a process of
leveraging and articulating the skills and expertise of
employees, supported by information technology." Malhotra
(1998) believed that KM "embodies organizational processes that
seek synergistic combinations of data and the information
processing capacity of information technologies, and the
creative and innovative capacity of human beings".
 
The implementation of KM requires a system called
Organizational Knowledge Management Systems (OKMS). Meso and
Smith (2000) define OKMS as a "system that provides for the
creation of new knowledge, the assembly of externally created
knowledge, the use of existing knowledge, and the finding of
knowledge from internal and external sources." The OKMS could
fall into two major perspectives, namely: (1) technical
perspective, which stresses the employment of a combination of
new telecommunication technologies, and (2) socio-technical
perspective that sees OKMS as combinations of technology
infrastructure, organizational infrastructure, corporate
culture knowledge, and people. In Meso and Smith's (2000) view,
the socio-technical perspective of OKMS will help generate the
sustainable strategic advantages an organization desires, by
leveraging the key source of intellectual capital, the
employees.  Many other researchers and practitioners also
express the importance of people in KM. Hence, the role of HRM
should not be taken lightly and exploration of its relationship
with KM is deemed necessary.
 
According to Armstrong (2000), HRM can be viewed as an
extension of personnel management, that is "concerned with
obtaining, organizing, and motivating the human resources
required by the corporation (Armstrong, 1977)", with greater
emphasis on strategic management. The reason for strategy being
highlighted is that new changes around the world have led to
the need to re-position both organizations and personnel
management. Based on his experience as a personnel director of
Book Club Association in the 1970s and 1980s, Armstrong (2000)
suggests that the role of HR in the context of learning
organizations or KM, is "to facilitate the dissemination of
learning through workshops, projects and conferences and,
later, to take responsibility for co-ordinating the preparation
of business plans which incorporated the outcome of the
learning activities". Soliman and Spooner (2000) viewed the
role of HRM in managing human resource knowledge as an
identifier of knowledge gap(s) and facilitator in filling the
gap(s), apart from mapping out the human resource knowledge.
They have outlined the HRM roles in eight strategies of human
resource knowledge management. These eight strategies are:
 
1. Alignment of knowledge management with business directions,
 
2. Identification of the benefits of knowledge management
efforts,
 
3. Choosing the appropriate knowledge management programme,
 
4. Implementing a know-how strategy,
 
5. Creating supportive environments for knowledge management
programmes,
 
6. Using of enabling technologies for the knowledge management
programme,
 
7. Creating the knowledge management team, and
 
8. Creating knowledge management leadership.
 
 
METHODOLOGY
 
The question survey technique was used to solicit the data. Six
different sections of questions were developed in the
questionnaire, which are: (1) Recruitment (selection), (2)
Training, (3) Employee Involvement, (4) Performance Assessment,
(5) Compensation, and (6) Retrenchment. For the first section,
several behavioural factors and non- behavioural factors are
stipulated and respondents were asked to indicate the
importance of these factors in selecting employees. The factors
investigated are shown in Table 1.
 
The second section covers the areas where training is
conducted, and the approaches taken during training. The latter
is adopted from Bramley (1990). Table 2 documents the training
areas investigated and statements pertaining to training
approaches.
 
The third section investigates the degree of matches between
characteristics of performance appraisal system proposed by
Scholtes (1993) with the surveyed companies (Table 3).
 
In the fourth section, the seven dimensions of successful
reward plans proposed by Hale and Bailey (1998) are listed in
the questionnaire, and respondents were asked to indicate their
degree of matches between their company compensation system
with those proposed by Hale and Bailey. Table 4 documents the
seven dimensions developed by Hale and Bailey (1998).
 
Finally, the section on Retrenchment attempts to discover the
condi6ons or circumstances a company will release their
employee from duty. Ten situations are listed in the
questionnaire, which are shown in Table 5.
 
The questionnaires were answered by managerial personnel of
Malaysian companies located in the Federal Territory and the
Klang Valley. A total of 300 sets of usable questionnaires were
successfully collected and analysed. The companies were grouped
in terms of paid-up capital (in Ringgit Malaysia): less than 5
million (53.9%), 5 to 20 million (19.4%), 21 to 50 million
(7.2%), 51 to 100 million (4.4%), and greater than 100 million
(15.0%). In terms of sector, they are: Manufacturing and
Processing (30.8%), Banking, Finance, and Insurance (12.2%),
Research, Consultation, and Training (8.0%), IT- related
(9.8%), other services (27.6%), and others (11.6%).
 
RESULTS
 
On the behavioural aspect in employee selection, many companies
emphasized interpersonal communication skill. This is shown by
a high mean score of "ability to communicate effectively" and
"able to work in team or group efficiently" (see Table 1).
Interest or affinity of applicant towards job exhibited during
the selection process is another important behavioural factor
that was considered important by the companies. In terms of
non-behavioural factors, applicants who possessed knowledge
currently required by the companies were highly preferred.  On
the whole, the weightage on behavioural factor compared to the
non-behavioural factor is much higher during the selection
process.
 
The training and development of employee deal more with
knowledge of documentation of processes and procedures, problem
solving skills and techniques, and industry and business
knowledge (see Table 2). However, training related to
creativity, information communication technology and customer
relationship management was not extensively covered. The
principles and rationale of training were thoroughly covered
during the training. In addition, all parties in the companies
expressed support for the training by encouraging the trainees
to practise and apply what they learned during training.
 
The results on performance appraisal suggest that the majority
of companies valued the practice of providing useful feedback
to employee after the performance appraisal (see Table 3). The
practice of giving feedback that is not relevant to work was
strictly contained by the majority of the companies and
unconstructive comments or judgements on employees were
shunned.  This is also supported by the fact that another
important aim of performance appraisal was to direct the
employees toward attainment of critical business goals.
 
Regarding the compensation and reward system, the majority of
companies rewarded their employees based on the employees'
ability to achieve the company's critical business goals (see
Table 4). The second important element of the compensation
system, "reward for measurable competencies", is in parallel
with the first mentioned above. However, the system was not
communicated to the employees effectively, and the system
failed to match company culture. It is also found that not many
companies could significantly instil the joy of working in
employee in performing duties and responsibilities.
 
Finally, an employee will be laid off if he or she discloses
information to outside parties, and destroy company
relationships with customers and suppliers (see Table 5). In
contrast, an employee will not be retrenched if he or she is
unable to perform his or her task effectively, and the company
is willing to train them. This is reflected on the low mean
score of "unable to follow predetermined procedures and
documentation". Employees who did not contribute their ideas or
actively communicate with their colleagues were not penalized
for the act. On the whole, the issue of employees' ethical
conduct was strongly emphasized in retrenchment practices
compared to their capacity or ability in performing their
duties and responsibilities.
 
DISCUSSIONS
 
The results discussed in the previous section suggest that many
companies were starting to establish the foundation of KM
implementation.  Such a move was apparent in the screening and
selection process of new employees. In particular, the results
in this paper suggest that employers value people that have
good interpersonal communication skill, are capable of working
as a team, and possess knowledge that is relevant to company
needs. By recruiting these people into the company will help
build a pool of strong human resource that is ready for
knowledge creation and application. This recruitment practice
has been viewed significant to KM by Mayo (1998).
 
Other signs that suggest that knowledge is gaining importance
in Malaysian companies are: (1) rewarding employees that
contribute net, knowledge to company,(2) greater weight on team
performance than individual performance during performance
evaluation, and (3) tight control of knowledge and information
through company's retrenchment policies. The fast and second
exercises act as a stimulus for the creation of a
knowledge-sharing culture. The third exercise reminds employees
of the consequence of exposing the company's critical knowledge
to external parties.
 
However, it seems that many employers felt that their existing
pool of human resource lacked the required skills and expertise
for implementation of KM. This situation is understandable, as
before the Asian Currency Crisis, the prosperous business
environment had made employers less harsh and demanding on
their employees. However, as the business environment became
more demanding and stiff, companies and employees needed to be
more efficient than before in order to survive. As a result the
focus of current training is placed on enhancing employees'
basic skills and expertise. The principles and rationale of
training are being emphasized in order to give the trainees a
complete picture of their future role in the company's
operation.
 
Companies realized that providing training alone would not be
sufficient in preparing their current employees for KM
implementation. Various kinds of support and incentives were
given to the employees to ensure the success of employee
transformation. For example, the reward and compensation of
employees strongly hinged upon employees' individual ability in
meeting critical business goals. In other words, employees must
quickly equip themselves with the necessary skills and
knowledge that are critical to the attainment of the company's
goals. Top management and other parties in the company also
encouraged trainees to apply what they had learned in training
in daily operations. Performance appraisal is another area that
was designed to direct employees to meeting the company's
goals, whether as a team member or an individual player.
 
CONCLUSIONS
 
The findings of this study suggest that Malaysian companies are
still at the infancy stage of KM. The very prerequisites or
inputs of KM, employee's skills and expertise, need further
improvement and preparation in order to embrace the coming
knowledge-era. Nevertheless, there are signs showing that many
are giving more attention to the issue of knowledge, especially
in the recruitment process. It is expected that more concrete
measures that induce KM implementation will be carried out by
the surveyed companies when their current employees and
technology infrastructure are ready. The measures that could be
considered by companies include mentoring of new employees,
introducing incentives that encourage knowledge-sharing,
establishing good communication plans on the implementation of
KM, emphasizing team performance, and giving more attention to
employees' creativity.
 
The measures outlined above are only some basic guidelines of
KM. One particular issue that needs to be seriously attended to
is the sentiment of withholding information or knowledge which
is perceived more pertinent spreading or disseminating it
(Warren, 1999). To address this issue requires the
establishment of a company culture that appreciates knowledge
sharing and open discussion to resolve problems and reduce
failures. The more important questions that need to be answered
before a formal attempt of KM are:
 
* What strategy is pursued by the company?
 
* What type of knowledge is needed to support the decided
business goals or strategy?
 
* Which area of the company does this knowledge reside?
 
It is important to note that the aforementioned measures are
not "new" models or rules of HRM Or implementation of KM.
Following Armstrong (2000), it is believed that the practice of
KM in HRM has long existed before the knowledge trivia. It is
the enhancement of some areas in the company that are needed to
support the implementation of KM.