Evaluating Knowledge Management Performance

Abstract

As organisations become increasingly aware that knowledge is among their most valuable strategic assets, they will be forced to re‑evaluate the way in which they engage with the source of that knowledge to underpin their sustainable development. This will create a fundamental change to established practice; a change that results in a paradigm shift from the traditional operational approach to a more strategic involvement in knowledge management. This change is promoted by the knowledge management maturity model (KM3). KM3 is founded on the idea that successful knowledge management comprises four forms of integration, namely cultural, organisational, procedural and methodical. Despite an emphasis on one of these forms by many organisations, it is understood that all forms of KM integration should be considered in parallel to implement knowledge management practices in an integrative manner. Key indicators that measure the performance of knowledge management integration are needed. They need to measure both effectiveness and efficiency. In many cases, organisations having, and actively executing, a knowledge management strategy tend to focus on the efficiency dimension because it can be evaluated more easily than the effectiveness dimension. Yet this path is fraught with danger because, as with many other aspects of business, the management of knowledge has to be effective before it may provide efficiency gains. Nevertheless, organisations require appropriate forms of measurement. Those that are unwilling, or unable, to develop effective measuring and reporting systems are likely to suffer from product or service quality decreases, lower productivity growth and a reduced ability to compete because they will be less successful in acquiring and using relevant knowledge resources. Key performance indicators that are developed to assess the progress of organisations in this compelling activity need to be aligned with one or another of the four forms of integration and may be either qualitative or quantitative in nature. The balanced scorecard concept is used to measure performance of the KM3 where the balance between the four forms of integration is the prime consideration. Each of these is represented by one segment of the knowledge management monitor (KM2) to facilitate a better understanding of the cause‑and‑effect relationships. It does so by providing structured information about an organisation's knowledge resources: how they are nurtured and how they contribute to organisational sustainability. At the same time, use of KM2 is related to organisational economy. Good economy means good resource management, which for many organisations translates to how they manage individual and accumulated organisational knowledge. This has become so important that they are looking for a more integrated way of managing the three interdependent and complementary pillars of knowledge management, which are organisational learning management, organisational knowledge management and intellectual capital management. Although these three concepts lack a unifying vision, they all relate to each other by informing one another and provide the pathway for a knowledge‑based orientation of strategic management.