Reward systems: How an organization can encourage knowledge sharing
As discussed in the previous post, knowledge is power. It is human capital that employees possess that can help an organization create and sustain a competitive advantage. Asrar-ul-Haq, Anwar, and Nisar describe knowledge as the “lifeblood of an organization” and a “crucial element for the survival of organizations in today’s dynamic and competitive area” (p. 2). Organizations have not only recognized this value, but they have recognized that tacit knowledge, a type of knowledge that is difficult to transfer, is critical for organizational success. The first step for an organization is to recognize the value of tacit knowledge. The second and most important step is the ability of the organization to encourage their employees to engage in knowledge sharing. Since organizations cannot create knowledge, only employees can, it is critical that organizations have in place the necessary strategies to encourage employees to share their knowledge as well to store that knowledge for future employees to be able to access.
Knowledge sharing not only places the organization at a competitive advantage but according to International Data Corp. (IDC), Fortune 500 companies lose at least $31.5 billion per year by failing to have their employees share knowledge effectively. Part of this loss is due to the employees “reinventing” the wheel by repeating other’s mistakes, not understanding the entire process, or wasting time searching for information to accomplish a task. As they say, “time is money,” and according to a SearchYourCloud survey, it takes workers up to eight searches to find the right information and an average of 2.5 hours per day (or 30% of the workday) searching for information. Therefore, organizations can work to reduce the time it takes for employees to search for information by creating a culture that fosters knowledge sharing. However, it does not matter what type of environment the organization creates; it must first find strategies that can motivate employees to want to share their knowledge.
One strategy that organizations can use to encourage their employees to engage in knowledge sharing is through the use of a reward system. A reward system can include monetary and non-monetary incentives, such as bonuses, flexible work arrangements, public praise or recognition, gift certificates to dinner or movies, or even additional vacation time. While rewards could be intrinsic or extrinsic, organizations should develop their reward system that targets their employees’ extrinsic motivation. Employees who are extrinsically motivated to share their knowledge will continue to do so if they can continue to receive a reward for their contribution to the organization.
Employees are often hesitant to share their knowledge as they believe their knowledge places them in a unique advantage and provides with them with better job security. Therefore, providing individual employees with a reward when they engage in knowledge sharing is a great way to motivate employees. Rewarding individuals for their contribution to knowledge sharing can be easily monitored because the manager has the opportunity to evaluate the contributions made by the individual employee. This puts the employees at easy and makes them both comfortable and confident that their contribution will be recorded. These contributions can serve as a criterion in the annual performance evaluation of the employee and can be used as a baseline to evaluate their contribution and determine if the employee has earned a reward.
Team members working together have the capacity for increased productivity, team support, increased motivation, morale, and even individual accountability. Encouraging teams to work together to share knowledge and solve organizational problems is another way to reward employees. The Ford Motor Company, for example, implemented a plan where all employees at every level come together, as a team, to share their ideas on how to retain its competitive edge. This gives each employee the opportunity to provide their input and gives Ford the opportunity to recognize those teams that have exhibited a strong contribution to the organization through the process of sharing their ideas and knowledge.
A reward system is a great opportunity for an organization to demonstrate that they value their employees
The organization is responsible for developing strategies that can motivate their employees to want to engage in knowledge sharing. At the same time, the organization needs to develop clear criteria for the knowledge that they expect their employees to share. Stan Garfield, in his article 16 Reasons Why People Don’t Share Their Knowledge – and what to do about it, shares why employees are not sharing their knowledge. According to Stan, one particular reason why employees are not sharing is that they do not know what they are supposed to do. Without clear communicated goals on how and why knowledge sharing is critical, employees may remain hesitant to share their knowledge, irrespective of the reward. Also, keep in mind that research has shown that while employees appreciate one-time bonuses, public recognition for their participation in knowledge sharing is sometimes more important.
WRAPPING IT UP
The type of incentive that the organization can offer is dependent on the organization itself. Some organizations will find that monetary incentives work best for their employees, especially those organizations where the majority of their employees are hourly. Other organizations may find non-monetary incentives to be most effective; for example, those organizations in the tech or software development industry where salaries are above the median base salary. Either way, here are some essential items to keep in mind:
- Be consistent: The value of the award must be consistent across all departments. If one department has access to a higher incentive award than another department, employees will be more hesitant to share their knowledge.
- Always recognize the employee: It does not matter if the employee receives the award or not, always recognize their contribution to the organization. This will lift their morale, morale of others and encourage more knowledge sharing.
- Give time to share: Employees should not have to “steal” time or work outside of their scheduled time to share knowledge. One suggestion is to setup weekly, monthly, or quarterly meetings where employees can come together, during working hours, and engage in knowledge sharing and creative ideas to improve organizational performance.
Ultimately, not all organizations have the financial means to offer a reward incentive system to employees, although such systems have shown to create a significant value in encouraging knowledge sharing. Nevertheless, when an organization can offer these types of rewards, there is an increase in organizational performance, employee performance, employee morale, an environment of learning, an environment of trust, and competitive advantage of the firm. Once organizations have been able to access this crucial knowledge, they must work to develop a system to capture and store this information so that other employees can access it at a later time.