The New Knowledge Workplace

by Peter J. Miscovich of PriceWaterhouseCoopers

Knowledge is power. It follows that the creation and transfer of knowledge is one of the most important challenges facing businesses in the maturing Information Age.

Knowledge work already represents 40 percent of the global economy. In the very near future, knowledge workers will be the predominant workforce. Unfortunately, over 50 percent of organizational knowledge is tacit and non-formalised. It is resident in the minds of its workers, and thus not easily captured and codified. In fact, approximately 80 percent of individual professional knowledge is lost when an employee leaves a company. Therefore, with the ongoing processes of corporate downsizing, restructuring, and employee turnover—not to mention the imminent mass exodus from the workforce of retiring baby boomers—it is more and more essential for companies to implement programs that can capture all of their employees' knowledge. But how?

In this article Peter Miscovich suggests that one way is to adopt a Knowledge Workplace program—a system that enables enhanced knowledge sharing, networking, and innovation among workers through an intelligent integration of organization, technology, and workplace design. According to our author, implementing a comprehensive Knowledge Workplace program will contribute measurably to business results. It will improve knowledge worker performance, which will lead to increased knowledge creation and sharing, accelerated learning, and greater employee satisfaction and retention. These improvements will in turn yield greater innovation, improved efficiency, increased speed-to-market, enhanced quality—and big financial dividends for the company.

Here are the details.

Organizational Structures Must Support Knowledge Workers

Knowledge is power. But to reap the full benefits of that power, it must be shared so that it can multiply. For knowledge workers to thrive their organization's structure must support how they work and the kind of work they do. This requires a fundamental change that is fully and explicitly supported by the company's leadership. At every level—organizational, cultural, technological, physical—the organization must encourage and sustain the high-quality interactions needed for knowledge workers to be effective.

While academics and some executives have advocated shifting to flatter, more egalitarian organizational structures, hierarchical corporate models continue to dominate because, at their most basic level, they fulfill the human need for order, security, and identity. Nevertheless, this general hierarchical structure is changing. More and more companies understand that in order to compete in the global economy they must be able to respond to change—to transform themselves, to innovate—quickly and efficiently.

Knowledge sharing should be a key corporate value—one that is lived every day by every employee. It must be woven into the company's business objectives and ideals. That means it must be endorsed from the top. Further, sharing information such as business plans and financial information with knowledge workers, and soliciting their feedback, is critical. It helps create a culture where employees feel respected as individuals, which increases their satisfaction and loyalty, and of course enhances their performance.

Social Networks: The Pathways of Knowledge

How is knowledge created in your company? How is it shared? In the past, companies relied heavily on information technology to capture and codify their knowledge. Information sharing, however, is also a social process. Despite the breadth of knowledge available through information technology, knowledge workers often turn to other employees for help and information. Knowledge is primarily spread within a company by human relationships in the form of social and trusted networks.

A Social Network Analysis will uncover the undocumented, often hidden pathways by which knowledge is transferred within a company. It will identify the company's intellectual assets, hidden experts, information brokers, and "silos" (human storehouses of information). A Social Network Analysis is a map of the company's true knowledge networks. Social network mapping uncovers how people learn and who they learn from—important clues in understanding how the company actually functions. As such, it can be a powerful management tool for improving performance.

Armed with this information, senior management can create a knowledge strategy. First, they should identify what kinds of knowledge needs to be shared, and by whom. This will help cut out unproductive exchanges. Second, they should establish clear knowledge sharing goals and measures. These guidelines will help workers prioritize their interactions and improve their own performance—as well as that of their colleagues. Finally, management needs to focus on building and supporting effective social networks—those that have real strategic value for the company.

HR Strategies: Engaging Knowledge Workers

Knowledge workers feel significantly less firm loyalty than the employees of the previous century, because they "own" the company's means of production—essentially, their knowledge and expertise. Unless they have meaningful ties to one firm, therefore, knowledge workers can therefore choose to move from company to company, taking their knowledge and expertise with them.

This is why it is imperative that firms maintain strong, supported social networks. Forging those human relationships and commitments is a key means of retaining knowledge workers. And the benefits of doing so will flow directly to the bottom line. The largest study ever conducted on workplace satisfaction (Gallup, 1999) found that the development of social relationships was one of the most important factors in employee satisfaction and retention.

The same Gallup study also found that praise and recognition were ranked among the top five building blocks of a profitable, productive work environment. A Social Network Analysis will identify those employees who play critical networking roles. These employees need to be formally recognized and rewarded for their critical knowledge work; this will improve employee satisfaction and retention.

Additional strategies to help retain the most important knowledge workers for the long-term include, not surprisingly, offering excellent salaries and benefits, as well as other compensation programs such as stock options and share ownership plans. Other factors include non-monetary rewards such as flexible hours, and workplace amenities like a cafeteria, a gym, and childcare.

Firms should also consider cross-training their knowledge workers. Too often, companies think they have to lock their employees in to a single area of expertise. Cross-trained workers are in fact better able to communicate and to innovate, which generates greater long-term value for a firm, as well as greater job satisfaction.

To support and expand the company's new culture, the firm might give incentives to workers who demonstrate strong knowledge sharing skills. Such incentives could be either monetary or non-monetary (in the form, for instance, of public praise from firm leadership and/or a promotion for strong relationship-building skills).

It is important to add that since knowledge workers are integral to a company's competitiveness, they should be encouraged to participate in developing the firm's policies and processes—particularly those that directly affect their work. Workers who help formulate their own work practices and performance measures will automatically buy in to those processes, which will help strengthen the new culture—as it strengthens their bond with the company.

Finally, aligning a company's entire organization—its structure, social networks, culture, and human capital—with Knowledge Workplace principles requires a proactive change management program. Communication in particular becomes essential. Clear, articulate, and honest communications from senior management will help employees understand in what ways they will need to work differently and what new behaviors they will need to adopt in order to thrive in the new corporate culture.

Leveraging Technology More Effectively

While most tacit knowledge is spread through a company by human relationships, for knowledge workers to perform effectively and share what they know, they must also have the appropriate information technology in place.

A good information technology platform will help knowledge workers access information quickly and easily; codify and share their own knowledge; reduce the time they spend on repetitive or mundane tasks; organize their work in the most efficient manner; and stimulate innovation.

Arranging for ongoing IT training for all knowledge workers will help a company optimize its technology investment, first by ensuring that it actually gets used, and second by ensuring that it gets used well—in other words, that the right technology supports the right processes.

Examples of information technology that can be used to support a Knowledge Workplace include knowledge management software and portals, infrastructure (email, intranet), enterprise-wide information management, research technologies, business process integration software, and of course the Internet and wireless technology.

For a Knowledge Workplace program to be successful, it must be supported by an integrated information technology platform.

The Knowledge Workplace: The Power of Intelligent Design

The physical workplace is critical—especially to knowledge workers, who greatly value control over their own work environment. Yet employers tend to under-value how critical an enabler the workplace can be. When a workplace is designed to meet the specific needs of knowledge workers, it tends to inspire creativity and innovation, knowledge sharing and teamwork. All of which of course strengthens these critical employees' commitment to the organization.

Over the past few decades many firms have experimented with various approaches to workplace design. Unfortunately, most of these efforts have ultimately proven fruitless, because of a basic lack of knowledge about what aspects of the workplace actually improve worker performance. All too often, these designs are based on passing trends rather than on proven best practices.

In challenging economic times, moreover, the workforce focus often shifts solely to cost cutting. But this is counterproductive. Ultimately, the gains in performance generated through an effective Knowledge Workplace design will have a far greater long-term impact on a company's bottom line than would short-term cost-cutting measures.

Indeed, the real way to measure the added value of a workplace environment is by analyzing how much the new design contributes to performance, innovation, collaboration, and employee satisfaction, rather than by only calculating the cost per square foot real estate investment.

Supporting Knowledge Work Styles

Just as knowledge workers vary according to function, status, and level of mobility, so should their work environment support their individual needs. It is wise to be wary of one-size-fits-all choices. A generic open space plan may well appear to be cost-effective, but it often impedes information sharing and teamwork because it limits privacy and can compromise confidentiality.

Some companies strive to provide their employees with the most workplace flexibility possible, adopting an activity-based approach that offers knowledge workers multiple work settings to use on an as-needed basis. These spaces, which include small private offices, group offices, brainstorming areas, and libraries, are based upon work activity rather than hierarchy.

Other, nontraditional settings such as the home, car, airports, and satellite offices are also embraced and supported as alternative work settings.

Neighborhoods, Interaction Zones, and Environmental Conditions

Knowledge transfer is very physical. And as knowledge work becomes more and more complex and judgment-based, face-to-face contact becomes much more critical.

Clustering business units together in close proximity on the same floor can enhance collaboration. Twenty-five to forty people have proven to be the most effective number of residents in a workplace neighborhood. It is also beneficial to mix hierarchies together to improve the flow of knowledge across various levels and business units.

Multiple studies have shown that physical proximity is essential to creating and sustaining collaboration among workers. Innovation is fundamentally a social product. Ideas arise out of casual conversations as much as they do out of formal meetings. A successful Knowledge Workplace program, therefore, encourages the use of "interaction zones" for both collaborative teaming and spontaneous interactions. By providing such social spaces, and by locating key groups adjacent to one another, companies can help create conditions that contribute to exciting innovation.

Finally, the workplace design should provide for fresh air, natural light, and visual and acoustical privacy: a healthy work environment that enhances worker performance and satisfaction. Recent studies at the Rensselaer Polytechnic Institute have shown that natural sunlight in the workplace dramatically increases employee alertness and concentration.

Other research has shown that a lack of bright light exposure during the day may disrupt the human circadian system, leading to feelings of depression; poor sleep quality, tiredness, and even illness. The basic human needs for fresh air, natural light, and good acoustics are essential to creating a high-performing workplace.

Conclusion

Only by integrating the basic components of the Knowledge Workplace—organizational and cultural change, information technology, and workplace design—into a comprehensive, integrated program, will a company be able to enhance the performance of its knowledge workers and generate significant benefits. These include:

Increased knowledge creation

Greater networking and knowledge sharing

Enhanced collaboration

More innovation

Accelerated learning

Employee satisfaction and retention

Reinforced cultural values

These benefits will, in turn, generate demonstrable bottom-line benefits, including enhanced revenue, greater cost reduction and efficiency, improved speed-to-market, new product innovation, enhanced customer satisfaction, increased retention, increased return on investment, and ultimately greater shareholder value.

Of course, it takes time to build a company culture of shared knowledge, shared development of ideas, and innovation. However, the expenditure of time, money, and effort will be more than compensated by the significant benefits of a successful and sustained Knowledge Workplace program.

Peter Miscovich is a Partner at PricewaterhouseCoopers' Advisory Services Practice in the New York office. He develops comprehensive workforce and workplace strategies for major corporations and financial institutions seeking to maximize workforce and workplace effectiveness. As corporations transform and evolve either through growth, acquisition, consolidation, or merger-related activities, Peter develops integrated strategies and programs that maximize and leverage the opportunities that are presented through change.

Peter also directs human resource, finance, real estate and technology initiatives that support long-term business and organizational objectives. Peter has successfully directed multi-disciplined teams in the development and implementation of large-scale workforce and workplace programs for many major Fortune 500 companies. These programs include integrated workplace strategies, corporate real estate development, organizational and process improvement reviews, knowledge worker effectiveness programs, business case development and long-term strategic planning efforts.

Peter serves as a professional advisor to the MIT graduate school and is a founding member of The Conference Board Change Management working group. He is a founding member of the International Workplace Studies program at CornellUniversity, and maintains professional research affiliations with Carnegie Mellon, Cornell, Harvard and MITUniversities.

For more information, contact Peter Miscovich.

Tel: +1 646 471 3289

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