Abstract
The main focus of the knowledge
management system is to understand the flow of knowledge within the
organization and to make seamless structures that will facilitate this process.
In this process, the active player is knowledge, which is considered as a
commodity that can be embedded and traded. Due to the fact that the market is
now focused on creativity and innovation, there is also an apparent demand for
knowledge management system.
This study centers on two concepts that are systematically and categorically necessary for the knowledge management system of Bank Sohar – Loan Department.Through creation of the link between technology and hierarchy, the Loan Department will generate knowledge and ideas that are necessary to enhance its processes, its products and the way it communicates with customers. This study on the knowledge management system of the Loan Department of Bank Sohar is focused on the relationship of technological structure and hierarchical structure with regards to the development of organizational culture.
Technology can be used to reduce the
gaps of the structure and to move the structure in a flexible manner. Due to
the fact that knowledge sharing is about communication, there is a need to use
technology for that purpose and not just a structural support. Lastly, the
following recommendations are made: Loan Department Close Integration &
Communication Channels.
Table of
Contents
Abstract
..................................................................................................................................................... 2
Introduction ............................................................................................................................................... 4
Overview .............................................................................................................................................. 4
Research Issues ..................................................................................................................................... 5
Literature Review ...................................................................................................................................... 6
Methodology ............................................................................................................................................. 9
Findings ................................................................................................................................................... 11
Managerial
Implications and Hierarchical Structure Impact to Knowledge Sharing Culture............... 11
Technological
Implications to Knowledge Sharing ............................................................................ 12
Conclusion &
Recommendations ............................................................................................................ 13
References................................................................................................................................................ 14
Knowledge
Management – Bank Sohar
Importance of
Technology-Structure to Organizational Knowledge Culture
Introduction
Overview
Information technologies were
developed as tools to help the management and professional processing of
information throughout the organization. With the decades that the knowledge
management system has been in existence, there have been several questions on
the dissemination of information from the bottom part of the organization to
the top management. Knowledge management helps to generate improvements in
various degree. However, with several decades on the fold, there are still
issues on how organizations can take advantage of their knowledge management
system.
The conceptual framework of KMS was
first discussed by Davenport (1997) who noted that this revolutionary concept
is about the generation of knowledge, its distribution or sharing, and its
utilization. The main focus of the knowledge management system is to understand
the flow of knowledge within the organization and to make seamless structures
that will facilitate this process. In this process, the active player is
knowledge, which is considered as a commodity that can be embedded and traded.
Bartlett (1996) noted that KMS will only function if knowledge is readily
created. In this regard, KMS is dependent on the active reaction of knowledge
within the organization, which could be tacit (experiential) or explicit (academic-based).
Over the past decades, stress had
been made on the importance of knowledge in creating the competitive advantage
of an organization. Due to the fact that the market is now focused on
creativity and innovation, there is also an apparent demand for knowledge
management system. In today's market concept, organizations are required to use
knowledge to their advantage in developing new products and in enhancing
existing processes.
Research
Issues
Bank Sohar is a top growing
financial institution in the Sultanate of Oman. Being a native financial
institution, Bank Sohar prides in its growth for the past years with the growth
of both oil and non-petroleum sectors. The financial institution offers various
products such as insurances, saving deposits, wealth management, and others.
With the advancement of technologies, the financial institution has invested
much to ensure that the organization is able to make the organization relevant
to the contemporary business environment.
This study centers on two concepts
that are systematically and categorically necessary for the knowledge
management system of Bank Sohar – Loan Department. First, technology structure
takes an important role in developing a strong KMS. Zack (1999) noted that in
the codification of knowledge for the transfer, there is a need to build a
strong infrastructure to ensure the seamless flow of knowledge. Secondly, it is
also necessary acknowledge that fact the role played by the hierarchical
structure of the organization to the knowledge management system. As much as
knowledge can flow from one point to another, there is a question on the
complexity of the structure which can affect the entire KMS.
In the end, this paper seeks to
create recommendations on how to improve the Loan Department of Bank Sohar's
knowledge management system. Through creation of the link between technology
and hierarchy, the Loan Department will generate knowledge and ideas that are
necessary to enhance its processes, its products and the way it communicates with
customers. In a sense, the goal of correlating these two important factors of
KMS will help to build a strong Loan Department without the complexity of
structure.
Literature
Review
Knowledge management has been
studied by several researchers and management experts, but only few tried to
start their analysis in defining knowledge and knowledge management. Knowledge,
according to Huber (1991), is a belief that helps to increase the capacity of a
person to take necessary actions. In this sense, knowledge is a drive physical
and cognitive activities or actions. For clarification, though information and
knowledge are often used interchangeably, knowledge is defined as an
authenticated information which is regarded as true (Vance, 1997). Maglitta
(1996) further defined knowledge as a set of information that can be used for
actions. In a sense, as applied to the
knowledge management system, knowledge is considered true, thus confirming the
notes by several researchers regarding the differences on the perceived value
of knowledge.
In this understanding of knowledge
and information, it should be noted that tacit knowledge is the processed
knowledge that is already considered true as noted by Polanyi (1962). However,
when knowledge becomes explicit, it becomes information again. Churchman (1972)
noted that knowledge resides in the person's mind and cannot be used by other
individuals when not transformed into explicit knowledge. If Churchman's (1972)
assertion is carried through, then there is a need for knowledge to be
communicated first before it will become real and useful to other people. In
this regard, knowledge management system demands for a clear knowledge sharing.
When knowledge is not shared, it does not any value at all. With knowledge
sharing, the dormant knowledge is shared and becomes part of the actions being
taken by the organization.
In a sense, the problem of knowledge
management is not on its creation, but on its capture and integration (Grant,
1996). While knowledge is readily available in the mind of a person (as it is
considered true), it is hard to convert knowledge into information that can be
shared. It should be emphasized that knowledge does not have organizational
value if the same knowledge is not shared. In a sense, the goal of the organization
is to capture and integrate knowledge to make it an asset for the competitive
advantage of the organization. In this
capture and sharing of knowledge, technology plays a vital role in creating a
seamless flow of knowledge. However, according to Brown & Duguid (1991),
even in the availability of technology or electronic support, there is no
guarantee that the knowledge management system will work properly.
In the study conducted by
Vandenbosch & Ginzberg (1997), there is a clear proof on the relationship
of technology and knowledge management. In a study of Lotus Notes,
organizational members were more willing to communicate frequently and
regularly without the support of the Lotus Notes. Ina sense, without a clear
strategy on how to use the technological advancement for the communication
system, the information sharing will not gain its proper position in the
organization system. To resolve this issue of gap between technology and
knowledge sharing, organizations have tried to create information systems that
will help in the collection of knowledge, its codification into understandable
information, its integration, and its distribution to the organization (Alavi,
1997). This condition of technology is properly applied on the organizations
that are working in the service-oriented environment.
Knowledge management gained
popularity in today's business environment because of the system's ability to
enhance the flexibility and response time for organizations in this changing
market situations. With the aid of KMS, according to Harris (1996), decision
making processes are streamlined to help craft better practices in management
of the organization's operation. To be able to formulate a better KMS, Atkinson
(2000) asserted the need of developing organizational culture that is focused
on knowledge sharing. While technology is applied, it is important for
employees to take part in the processes of the organization. When employees are
unwilling to adopt the changes being used to enhance the KMS, it will also be
impossible to expect a better KMS. In a sense, when the KMS of the organization
fails, it is not wholly to be blamed with the technological advancement
utilized, but this can also be traced with the human capital.
Atkinson (2000) stressed the need of
creating an organizational culture that will implement the KMS and sustain it.
While technology is already laid, there is another factor being noted in the
success of KMS - organizational structure. Because most organizations follow
the hierarchical structure, there is a also a question in the thickness and
complexity of the system. When the organization is thick, information (codified
from individual knowledge) may not be able to pass through. The multi layering
of the organizational structure is a problem seen that stops the flow of
information.
In creating the link, it is
important to note the fact that knowledge is considered as true by the person
who thinks about it (Vance, 1997). However, when knowledge is already codified
into information, there is now the question on how the receiver perceived the
information and processed it into knowledge. If the receiver fails to
acknowledge the perceived utility value of the information, then the knowledge
generated may not reach the top management of the organization that makes the
decision. Bohn (1994) noted that importance of perceived utility value of
knowledge to be equal between the source and the receiver of the knowledge.
Otherwise, the hierarchical structure will isolate the knowledge within the organization
and instead of utilizing it, it will just be discarded.
In the value of hierarchical
structure the organization, Guptara (1999) noted that one of the pitfalls of
knowledge management is the problem of motivation. Due to multi layering of the
organization, motivation may fall short in terms of leadership. In terms of
intrinsic motivation, multi layering does not encourage members of the
organization to take part in the decision making and policy making of the
organization. Simply, the structure of the organization stops individuals from
believing that their knowledge is important to the overall success and
direction of the organization.
Methodology
This study on the knowledge
management system of the Loan Department of Bank Sohar is focused on the
relationship of technological structure and hierarchical structure with regards
to the development of organizational culture. To be able to draw a clear
analysis of the correlation and to understand the role they play in the KMS, it
is necessary to know the thoughts and experiences of members of the
organization. With this, the researcher chose to have the qualitative research
design as its major approach. This approach allows the research to get
narratives of the respondents in a personal way to understand the process from
those who know and experience the process itself.
As the main survey instrument, the
researcher prepared an interview questionnaire. Interviews were done in two
processes. First, written interview questionnaires were sent to members of the
Loan Department who couldn't answer the face to face interview due to their
time constraint. Second, the oral interview process was done with those who
could answer the questions readily. With the aid of these two processes, the
researcher was able to collect necessary data for its analysis. Below are the
questions for the interview:
·
With the structure of the Loan
Department and the entire Bank Sohar, are comfortable in approaching senior
managers and executives if you have some ideas or knowledge in your mind?
·
Are you willing to share
knowledge with members of the organization regardless of their position in the
organization?
·
With the current technologies
used for the Loan Department, is there ease in generating ideas from other
members of the organization? Or is there a problem with the communication
channels that may hinder the process?
·
What technologies do you think
will enhance the communication channels of the organization?
These interview questionnaires were
provided to 20 respondents of the Loan Department. This research focused on
their opinions and experiences as they are the ones who constantly coordinate
with other departments of Bank Sohar.
Findings
Managerial
Implications and Hierarchical Structure Impact to Knowledge Sharing Culture
The Loan Department of Bank Sohar is
an active department because it coordinates with other divisions to discuss the
loans, credit collection, release of loans, and so on. This means that the Loan
Department can readily access the different processes followed by individual
departments. In the same manner, the Loan Department can provide an overview on
what's been wrong with other departments and what must be done to improve the
system. In the flow of knowledge, the primary concern is how managers perceive
knowledge. Managers may have different understanding of knowledge due to
informational, managerial and cultural issues. In the same manner, managers
play an active role in creating or spurring the development of the knowledge
sharing culture of the organization.
Based on this simple logical
assertion, it is important to consider the fact that the Loan Department of
Bank Sohar is maintained by several senior executives. In the same manner, the
Loan Department is also composed by several managers in the branches of the
financial institution. The Loan Department, in itself, is a complex one.
Members of respective branch Loan Department must provide their knowledge or
thoughts to their manager before the same knowledge reach the headquarter's
Loan Department head or executive. With this, it is important to note that in
the managerial implications of hierarchical structure, there is already a
problematic with regards to the conduct of knowledge flow.
Furthermore, it must be noted that
the manager has the authority and responsibility in bringing together the
players of the Loan Department. But due to the geography of the scope, the Loan
Department executive is directly bumping against the managerial implications of
each branch. This just proves that the structure of the organization affects
the development of a knowledge sharing culture. When the structure is thin and
is simple, it is easy for members of the Loan Department or the branch's loan
officer to contact the executive of the Loan Department to suggest certain
information that can help to streamline processes and improve the way the
department communicates or interacts with its customers.
Technological
Implications to Knowledge Sharing
According to Courtney et al. (1997),
most of the times KM system failed because of omitting the unimportant. While
investments were made on technology, Bank Sohar has not utilized technology to
build a network within the organization. The focus of the bank is to ensure
that customers are provided for with speedy processes through technology.
However, it fails to realize that in a service-oriented organization, there is
a need for the empowerment of employees who are essential in delivering the
service to customers. As a result, technologies are just used in a vertical manner
to reach customers and not horizontally to reach departments and members of the
organization.
Mainly, technological issues stem
from the question on horizontal connection. If done, it will build a question
on security. When information is passed from a branch to another, security may
become a strong point of debate. However, it must be noted that in the sharing
of knowledge (through information) to another person, communication channels
may be already available. Bank Sohar already has its internal email
communication system, its own telecommunication channels, and its own forums.
However, employees of the Loan Department are not able to use this to share
knowledge because of the isolation. They just keep on sharing financial figures
and reports, but there is no policy for a demand of sharing important knowledge
to the Loan Department executive.
Secondly, there is a need for the
Loan Department to formulate parameters on codifying knowledge into information
that can be shared with other members of the organization. With the aid of
these parameters, information will not be isolated or killed by managers of
each branch even before reaching the top management of the Loan Department.
This means that the Loan Department is already built for sharing and with the
parameters, employees will be encouraged to share knowledge with executives
without fear of scrutiny from their direct branch manager who may have other
perceived value of knowledge.
Conclusion
& Recommendations
Based on the analysis of the information
provided by the respondents of this research, there are three important things
being concluded. First, while hierarchical structure of the organization may not be eliminated due to
the complexity of functions, there is a direct link between structure and
technology. Technology can be used to reduce the gaps of the structure and to
move the structure in a flexible manner. Second, technology is better explained
in terms of communication impact, rather than just being tools in the KMS. Due
to the fact that knowledge sharing is about communication, there is a need to
use technology for that purpose and not just a structural support. Technology
must be used a personal communication tool to allow the flow of information
from one person to another because systems are always dependent on people.
With this, the following
recommendations must be considered to improve the flow of knowledge in the Loan
Department of Bank Sohar and to build a knowledge culture within the financial
institution to create a sustainable environment.
Loan Department Close Integration. A clear problem of the Loan Department is the fact that it is not
directly linked with its loan officers. Due to the fact the each branch is
handled by a manager, the Loan Department has to rely on the information
provided by the manager, rather than getting information from the loan officers
of the branch. According to Hutchins (1997), there is always a need to get
information from those who know the process and will need the decision. By
creating a structural line between the Loan Department and the loan officers of
each branch, the department will be able to create a better KMS.
Communication Channels. Existing technologies should be used for the organization's Loan
Department. In this regard, the loan officers of the branch are oftentimes
limited to the vertical process. To improve the process, it is important to
make the most of the horizontal process. Rather than having the manager
communicating with the Loan Department, it is time for the Loan Department to
get a chance to communicate with the loan officers. The branch manager should
allow this process to ensure better KMS for the organization.
It is always necessary for the Loan
Department to build a strong correlation between structure and technology. It
is time for the sustainable environment of Bank Sohar. KMS should be able to
grow and develop into a better one from time to time and must not stop upon
reaching its apex.
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