Instructor's Manual Knowledge Management Assessment of an Organization 6-1

Chapter 6
Knowledge Management Assessment
of an Organization
TEACHING OBJECTIVES
 To help the student understand why we need to assess KM in an organization
 To explain to the students the alternative approaches for assessing KM in an organization

KEY TERMS
The following alphabetical list identifies the key terms discussed in this chapter. The page
number for each key term is provided.

Balanced Scorecard Method, p. 95

Benchmarking, p. 94
Competitive advantage, p. 92
Competitive positioning, p. 92
Intangible assets, p. 90
Intangible measure, p. 90
Internal structure, p. 96
Knowledge advisors, p. 88
Knowledge management assessment, p. 82
Knowledge-based products, p. 91
Portfolio of investments, p. 96
Qualitative KM assessments, p. 86
Quantitative KM assessments, p. 86
Real options approach, p. 96
Return on investment, p. 86
Skandia Method, p. 96
Tangible measure, p. 90

TEACHING SUGGESTIONS
Like Chapter 3, this chapter is valuable for both undergraduate and graduate courses. At both
levels, the instructor might consider using hands-on exercises, such as Applications Exercise
#3, in class to help the students learn how to perform KM assessment.

In using this chapter with undergraduate students, the instructor might consider focusing on the
vignettes and the figures because, along with the hands-on exercises, these should help the
students’ comprehension of KM assessment. The instructor might consider providing less
coverage of the material on pages 90-94 in an undergraduate class. At the graduate level, on
the other hand, a more thorough and in-depth coverage of this chapter is essential. The
instructor might also consider using in-class brainstorming among students regarding additional
alternative measures that might be used for assessing KM.

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-2

REVIEW QUESTIONS
1. Why is it important to perform KM assessment? Identify and discuss any three
reasons.

In order to monitor the tasks and their performance by individuals within an organization,
it is vital to know if the efforts made by the individual are assisting and enabling the
organization or individual to achieve the underlying objectives.

Without this information, it becomes impossible to determine the contribution of those

efforts or whether, and where, improvements are needed.

Also, KM assessment aims at evaluating the need for KM solutions. The knowledge
derived from these solutions can help discover, capture, share, or apply, and the impact
they will have on individual or organizational performance. A KM assessment can help
establish the baseline for implementing those KM solutions, including the existing
infrastructure and technologies that can help support those efforts.

The following reasons underlie the need for KM assessment.

1. A KM assessment helps identify the contributions being currently made by KM.

2. A KM assessment enhances the understanding of the quality of efforts being put

into KM, as well as the intellectual capital produced through these efforts.

3. A KM assessment helps understand whether the costs of the KM efforts are

justified by the benefits they produce.

4. A KM assessment helps recognize the gaps that need to be addressed in the KM

efforts by individuals or the organization.

5. A KM assessment can also help in making a business case to senior executives in

an organization for additional investments in KM efforts.

2. Describe the different types of KM assessment, in terms of (a) the timing of KM

assessment; and (b) the aspect assessed.

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-3

The Timing of KM Assessment – focuses on when KM is assessed. A KM assessment

can be performed on different occasions. Three possibilities are especially noteworthy.

First, a KM assessment may be performed periodically for an entire organization or a

subunit. The objective of such an assessment is to evaluate the overall quality of KM
solutions, intellectual capital, and their impacts in order to help identify any areas that
need improvement in KM e.g., company-wide surveys.

Secondly, KM assessments may also be conducted at the start of a KM project to build a

business case for it. The purpose of such an assessment is to identify the gap in current
KM at the organization, and delineate the potential benefits of the proposed KM project.

Finally, a KM assessment may also be done following the conclusion of a KM project.

Such assessment aims to determine the impacts of the KM project, and may focus on
the entire organization or a specific subunit. It may be necessary to establish historical
KM performance in order to evaluate the effects produced by the KM project.

The Aspect Assessed: KM can directly or indirectly impact organizational performance at

several levels: people, processes, products, and the overall organizational performance.
These impacts either come about directly from the KM solutions or from the knowledge
produced and shared through the KM solutions

“The Aspect Assessed” relates to whether the KM assessment focuses on:

(a) the KM solutions,

(b) the knowledge produced or shared through KM solutions

(c) the impacts of KM solutions or knowledge on performance (including individuals or

employees, processes, products, and the overall organizational performance).

3. What are the differences between quantitative and qualitative assessments of KM

assessment? How does their use depend upon the organization’s experience with
KM?

Qualitative KM assessments aim to develop a basic understanding of whether the KM

efforts are working. These assessments involve such simple tasks as informal chats
around the coffee machine with the employees about how things are going for them.
They also include more formal interviews, based on semi-structured or structured
interview guides, individually conducted with a carefully selected set of employees. Such
conversations, whether formal or not, tend to bring up anecdotes about how well the KM
efforts seem to be working, as well as examples of situations where the KM efforts did

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-4

not produce the desired results.

These anecdotes of successes or problems may concern the quality of decisions,

innovations, and technology transfer at the organizational level. In addition they may
point out issues related to career development, visibility, confidence, and staying up to
date technologically, at the individual level. Such qualitative assessments can be
performed at certain periodic intervals, at the start of a project, or at the conclusion of a
project, and may focus on the organization’s overall strategy for KM, or on more specific
aspects, such as the development of a KM system, such as a community of practice, or
an expertise-locator system.

Quantitative assessments produce specific numerical scores indicating how well an

organization, an organizational subunit, or an individual is performing with respect to KM.

Such quantitative assessments may be based on a survey, or could even be in financial

terms, such as the ROI or the cost savings from a KM project.

Quantitative measures also include ratios or percentages like employee retention rate or
training expenditures as a proportion of payroll. It should be mentioned that quantitative
measures are more difficult to develop during an organization’s early experiences with
KM.

During initial stages, qualitative assessments should be preferred, with greater use of
quantitative measures as the organization gains experience with KM. However, even an
organization with a lot of experience with KM can obtain considerable benefits from
using qualitative measurements, especially in uncertain environments.

4. Briefly describe some financial measures that can be used for KM assessment.

Two of the financial measures used for KM assessment are cost and price. Price
represents the amount a purchaser is willing to pay in exchange for the utility derived
from that knowledge,

whereas cost is the amount of money required to produce that knowledge. Both cost and
price are direct, quantitative measures of value, but there are also other nonmonetary or
indirect measures of value, such as the improvement in the quality of decisions enabled
by this knowledge.

5. Briefly describe some nonfinancial measures that can be used for KM

assessment.

One nonfinancial measure used for KM assessment is benchmarking or comparing KM

at an organization or subunit with other organizations or subunits is one method.

It is based on the recognition that best practices are often the same within a company or

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-5

even within an industry. Benchmark targets could therefore include other units within the
same company, competing firms, the entire industry, or in some cases, successful
companies in other industries.

The Intangible Assets Monitor Framework and the Balanced Scorecard Method include
some financial and some nonfinancial measures.

The Intangible Assets Monitor Framework evaluates growth, renewal, efficiency, and
stability for tangible assets (financial value), external structure (customer value), internal
structure (organizational value), and competence of people (competence value)

. The Balanced Scorecard also provides a way of maintaining a balance between short-
term and long-term objectives, financial and nonfinancial measures, lagging and leading
indicators, and external and internal perspectives. It examines the goals, metrics,
targets, and initiatives for the following four different perspectives.

6. Briefly discuss how the different impacts of KM on employees can be assessed?

Knowledge management can impact an organization’s employees by facilitating their

learning from each other, from prior experiences of former employees, and from external
sources. Knowledge management also enables employees to be more flexible, by
enhancing their awareness of new ideas, which prepares them to respond to changes,
and also by making them more likely to accept change. These impacts, in turn, can
cause the employees to feel more satisfied with their jobs due to the knowledge
acquisition and skill enhancement and their enhanced market value. Thus, KM can
enhance learning, adaptability, and job satisfaction of employees.

Dimension Illustrative Measures

Employee  Average amount of time annually spent by an employee in
learning being trained
 Average number of conferences or seminars annually
attended by each employee
 Average amount of time annually spent by an employee in
training others within the organization
 Average of employees’ annual assessment of their learning
during the year
Employee  Proportion of employees who have worked in another area
adaptability (other than the area in which they currently work) for more
than one year.
 Average number of areas in which each employee has
previously worked
 Number of countries in which each senior manager has
worked as a proportion of the total number of countries in
which the organization conducts business
Employee job  Proportion of employees who express high level of
satisfaction satisfaction with the organization and their jobs
 Percentage of critical employees retained during the previous
year

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-6

 Percentage of openings requiring advanced degrees or

substantial experience filled in the previous year

7. How can the impacts of KM on efficiency, effectiveness, and innovation be

evaluated?

Knowledge management can improve organizational processes like marketing,

manufacturing, accounting, engineering, public relations, etc. These improvements can
occur along three major dimensions: effectiveness, efficiency, and degree of innovation
of the processes, as described in the table below.

Dimension Illustrative Measures

Efficiency  Reduced ratio of manufacturing costs to annual sales
 Shortening proposal times
 Quicker decisions
 Faster delivery to market
Effectiveness  Enhanced customer service
 Improved project management
 Fewer surprises due to external events
 Percentage of customers reporting complaints about
products/services
Innovativeness  Percentage of all current products/services introduced in
the previous year
 Greater number of patents per employee
 Organizational changes precede, rather than follow,
competitors’ moves
 Number of new ideas in KM databases

8. How do the measures of the direct impacts of KM differ from the measures of its
indirect impacts?

KM can impact overall organizational performance either directly or indirectly.

Direct impacts concern revenues and/or costs, and can be explicitly linked to the
organization’s vision or strategy. Consequently, direct impact can be observed in terms
of increased sales, decreased costs, and higher profitability or return on investment.

Indirect impacts, on the other hand, come about through activities not linked to the
organization’s vision or strategy, revenues, and cannot be associated with transactions.
Indirect impacts include economies of scale and scope, and sustainable competitive
advantage.

The following table provides some examples of possible measures of these direct and
indirect impacts KM can have on overall organizational performance.

Illustrative Measures
Direct  Revenues: Increase in total revenues per employee compared to the

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-7

Impacts previous year

 Costs: Increase in total annual costs per employee compared to the
previous year
 ROI: Increase in ROI compared to the previous year.
Indirect  Economy of scale: Average (across all products offered by the
Impacts organization) change in total cost per unit sold as compared to the
previous year.
 Economy of scope: Average (across all products offered by the
organization) change in the number of different products a
salesperson can sell as compared to the previous year.
 Economy of scale: Average (across all products offered by the
organization) of the difference between the price of the organization’s
product and the mean price of competing products.
 Economy of scope: Difference between the average number of
different products produced in the organization’s manufacturing plants
and the average number of different products produced in the
manufacturing plants of its main competitors.
 Competitive advantage: Difference between return on investment for
the organization and its key competitors.
 Competitive advantage: Average number of years existing customers
have been buying the organization’s products/services.
 Competitive advantage: Percentage of top customers ending sales
contracts in the previous year.

APPLICATION EXERCISES
1. Visit a local area firm to study its KM assessment process. Determine how it
decided on the type of KM solution it uses.

This answer depends directly on the specific organization studied. However, the focus of
the answer should be on: (a) when KM is assessed, (b) how KM is assessed, (c) what
aspects of KM are assessed?

2. How would you conduct KM assessment at the firm you visited? Describe the
suggested approach in some detail, making sure to connect this approach to the
approaches described in this chapter.

This answer would depend on the nature of the specific organization. The student could
select one of the approaches discussed in this chapter or a combination of more than
one approach.

3. Study how knowledge is managed at either your family physician’s office or your
dentist’s office through 15-minute conversations with a few individuals that work
at that office. Then recommend an approach for assessing KM at this office.
Discuss the suggested approach with some senior employees (e.g., the family
physician or the dentist) at this office, and seek their feedback concerning your
suggestions.

This answer also depends on the size and nature of the specific organization. However,

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
 Instructor's Manual Knowledge Management Assessment of an Organization 6-8

some potential areas to focus on are: explicit knowledge regarding the patients; tacit
knowledge regarding the relationships between symptoms, medical problems, and
treatements; explicit and tacit knowledge regarding the emplyees. The recommended
KM assessment approach should incorporate the assessement of KM related to these
and other aspects.

4. Visit any three organizations of varying sizes and different industries. Examine
how these organizations perform their KM assessments. For each organization,
discuss how the KM assessment approach relates to the KM assessment
approaches discussed in this chapter.

This answer depends on the three organizations. A specific answer is not possible here.
However, the focus of the answer should be on: (a) when KM is assessed, (b) how KM is
assessed, (c) what aspects of KM are assessed?

5. For each of the organizations you visited in Question 4 above, examine how
consistent the organization’s KM assessment approach is with the
recommendations in this chapter. Which organization seems most consistent with
the recommended approach? Of the three organizations, is this organization the
one that has the most experience with KM?

Again, this answer depends on the three organizations. A specific answer is not possible
here. However, the focus of the answer should be on: (a) when KM is assessed, (b) how
KM is assessed, (c) what aspects of KM are assessed? Moreover, organizations that are
more experienced with KM would be more likely to use a KM assessment approach that
more closely resembles the recommended approach.

This study source was downloaded by 100000856566723 from CourseHero.com on 11-07-2022 03:28:22 GMT -06:00

https://www.coursehero.com/file/36844997/BecerraIMdoc/
Powered by TCPDF (www.tcpdf.org)