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New software can help companies map their corporate DNA.
Joseph McCafferty, CFO Magazine
April 1, 2005
In the late 1990s, consultants and academics began talking incessantly about the ascent of the "knowledge economy." This invisible system, they posited, encompassed the collective set of ideas and innovations generated by a global workforce. As the competition for customers grew more intense—fueled, in part, by the rise of electronic commerce—companies that mined the collective intelligence of their employees would come out on top. In this gray-matter economy, originality and fresh thinking would be king, and a company's most valuable assets would be those located in the body electric.
Back in the real economy, however, a stifling recession dashed most talk of a knowledge economy, as companies went into survival mode, paring costs and shoring up balance sheets. But with the recent surge in the U.S. economy, the concept of knowledge management is staging something of a comeback. This go-round, though, companies seem more concerned with what they don't have, rather than what they do have.
The aging workforce is partly to blame. While an increase in the number of retiring workers can ease payroll burdens, it can also trigger a loss of institutional memory. Managers note that employees—particularly highly trained employees—take their job knowledge with them when they punch off the clock for the last time. Due to this silent brain-drain, managers looking to hire new workers may not know exactly what skills need replacing.
To fill that knowledge void, some companies have begun to take inventory of the abilities of their current employees. The process, often called knowledge mapping, requires the creation of a database of information about the specific capabilities of each worker, including job experiences, areas of expertise, education and training histories, and talents like communication skills. Software or search engines then bring all this information together, enabling managers to see what the organization is good at and where it needs help.
Such insight, say experts, can have a big impact on the kind of talent companies go after in the job market. More important, it can also get managers thinking about the real strengths—rather than the perceived strengths—of a business. "A lot of organizations talk about their core competencies," says Jon Walker, global leader for HR at Dow Chemical Co., "but unless they measure them, it can be difficult to know what they really are."
And when it comes to assessing core competencies, ignorance is definitely not bliss. Companies that rely on highly skilled workers—programmers, scientists, engineers—are especially vulnerable to a skills shortage. What's more, many businesses (technology and pharmaceutical companies, notably) rely on research to develop new products. Without knowing the exact expertise of workers, it can take time to match up the right set of workers for a project.
Indeed, consulting and professional-services firms use knowledge mapping to assemble more-focused—and better- rounded—client teams. "Once you understand the skills you have," says Ilene Siscovick, a senior consultant in the talent management and compensation consulting practice at Mercer Human Resource Consulting LLC, "you can be much more effective at how you develop them, and how you recruit those with new skills."
In some cases, knowledge mapping can have a direct impact on corporate goals. Take Dow, for example. Executives at the Midland, Michigan-based company are currently assessing what skills the company needs to execute its broad business strategy. Toward that goal, the $40 billion (in revenues) manufacturer of chemicals, plastics, and agro-products is undergoing a global exercise in building competency models for jobs in each geographic location and function. Explains Walker: "We're taking a supply-chain approach to talent management."
The models, which represent an ideal set of skills and expertise for each position, go well beyond job descriptions. For example, a model doesn't just indicate that an employee in a certain post should be a team player. Rather, the model describes what it means for the person to be a team player and the behaviors he or she should exhibit. Essentially, these job models are overlaid on a skills inventory. "We benchmark the models against the actuals to identify gaps," notes Walker.
The company then designs its training and development program around moving people through the models. The job models are also used for performance reviews, along with compensation, hiring, and succession planning. The key, Walker believes, is slotting workers into positions that not only match their abilities, but also their career goals. Argues Walker: "It is the only way that huge organizations can be entrepreneurial."
Of course, companies don't need to create competency models—a big task—to benefit from a skills inventory. Many companies already conduct limited reviews of employee skills, usually compiling a simple company directory or organizational chart with low-level information like education, title, and number of direct reports.
Experts say these efforts often fail to capture useful information about the real capabilities of a worker, however. And while that gap can be narrowed by examining performance reviews, the information usually isn't tied together in any meaningful way. "Until recently, quite a bit of this information was kept in various places," says Brad Smith, a talent-staffing and workforce-planning expert at Hewitt Associates LLC, a human-resources services firm. "And the different technologies that stored it didn't necessarily talk to each other."
Compounding the problem: performance reviews and statistics are generally kept by a company's HR department. Unless this information is being used to promote or hire from within, HR is often stingy about sharing it. This stinginess is understandable. Raw performance-review data is highly sensitive material. "There are moral and legal concerns about how that information is shared," says Kate Ehrlich, senior technical staff member at IBM Research.
Nevertheless, some companies are capturing employee data, bringing it together in one place, and pushing the process out to other departments and functions. "More and more companies are trying to move this away from HR and into the business units," says Smith. Performance reviews, peer reviews, so-called 360-degree reviews (where subordinates rate their superiors) can be distilled into profiles of what employees know and what skills they use in their jobs, removing the sensitive information about how well they do their jobs.
Other information is then gathered through extensive surveys and added to create a robust profile. The key, experts say, is tying it all together. For the moment, companies appear to be using a hodgepodge of ERP systems, data warehouses, intranets, collaborative networks, and disparate software to pull employee data together, store it, and provide selective access to it.
Down the road, expect vendors to come out with all-in-one packages to handle the entire skills-mapping process. "Companies have wanted to do this for a long time," notes Kathy Battistoni, a partner in Accenture's human-performance practice. "But the enabling technology is finally catching up."
Technology alone cannot surmount all hurdles, however. In truth, some employees may not be thrilled with having their abilities boiled down into a 12-field HR file. Such an analysis may pigeonhole workers, thus limiting their chances to do tasks that don't fit the pigeonhole. Often, those are exactly the kinds of tasks that help human beings to grow.
What's more, workers aren't always good judges of their own talents. "High performers tend to rate themselves lower than others," says Ehrlich. "Others may rate themselves too high." And when co-workers do the rating, they can rate only what they see—the skills that are used on the job. That doesn't get at a whole set of hidden attributes that could prove valuable to a company.
Perhaps the biggest problem, though, is that workers don't always want to share what they know. In businesses where employees are rewarded for knowledge, staffers may be reluctant to share their insights with others. "In cultures where knowledge is power, there can be resistance to these efforts," concedes Battistoni.
A number of products now on the market help employers skirt this delicate issue. The software susses out worker expertise by examining documents, files, and correspondence. Some programs, for example, crawl through E-mail to find out what employees are talking about. One application, ActiveNet from Tacit Software Inc., in Palo Alto, California, can create a profile for each worker by mining information in an employee's E-mail, instant messages, hard drive, and other digital formats.
"These systems work really well when you have a less-formal, ad-hoc need to manage knowledge," notes Battistoni. "They are also much less labor-intensive and are constantly updating themselves."
Maybe so. But so far, many companies have been reluctant to use these sorts of search agents, mostly because of concerns about worker privacy. Grants Battistoni: "People become very uncomfortable when you start talking about things like searching through E-mail and hard drives."
Are You Published?
Rocketdyne Propulsion & Power isn't crawling through workers' E-mails to identify experts. But the Canoga Park, California-based subsidiary of The Boeing Co. is using similar technology to create an "experts network." The division (which is being sold to United Technologies Corp.) worked with Bellevue, Washington-based AskMe Corp. to create a customized version of the vendor's AskMe product.
The initiative at Rocketdyne came about after a company survey found that workers made an average of 10 phone calls to answer all but the simplest questions. With AskMe, employees can post inquiries to the system, and the software helps identify colleagues who are most qualified to answer them. The program then stores the correspondence for future reference.
So how does the software come up with the appropriate expert for a question? By examining past correspondence, papers, and E-mails that users voluntarily publish to the system. "The appeal for experts is that they don't have to keep answering the same questions all the time," says Kiho Sohn, site lead for knowledge management at Rocketdyne. Another incentive is more tangible: compensation is also influenced by how much workers publish to the system.
Sohn says the network is helping create a culture at Rocketdyne that utilizes system thinking. "Employees realize they need to share what they know," he says. "The company benefits—and they benefit."
Joseph McCafferty is news editor at CFO.
While identifying an employee who possesses a particular knowledge or skill-set can be a boon for projects, finding such a worker fast can be difficult to pull off. Why? Because of how knowledge often flows through a corporation, which is to say, rarely through recognized (or formal) channels. Typically, corporate knowledge moves through informal networks often called "social networks."
Currently, IBM Research is working to identify how social networks work and how they can be leveraged. Says Kate Ehrlich, senior technical staff member at IBM Research: "There is a big difference between the people who are formally supposed to have certain skills and the people who actually have them." The idea here: much of the knowledge sharing that goes on at a company happens between workers who know one another. Ehrlich also says that all companies house hidden social networks. Uncovering these networks, IBM believes, can create opportunities to foster collaboration and knowledge sharing.
"Finding people is about seeking out certain skills, but making use of those skills is more about relationships," says Ehrlich, adding that much of the collaboration at a company goes on around the coffee machine. "It comes out serendipitously in conversation," she says.
As multinational companies become more dispersed—and with the trend toward outsourcing still going strong—social networks can get boxed in. "Oftentimes, there are people who have important skills but they aren't known, so they aren't utilized," says Ehrlich. IBM and others are now experimenting with technology to facilitate social networks online. How? Through chat rooms, blogs, and other virtual destinations where workers with similar interests can exchange ideas.—J.McC.