Knowledge Management : A new Role for HRD Managers

T V Rao

Chairman TVRLS and Former Professor IIMA

Founder President National HRD Network

Bill Gates had put it once, “Our Primary Assets which are our software and software developing skills do not show up on the balance sheet at all. In fact less than 3% of Microsoft Value is accounted for by tangible physical and financial assets”.

Strangely when we calculate the market value of Indian companies like Infosys, TCS, WIPRO etc. more than 95% of their market value is accounted for by what may be called as in-tangible assets or better called as “Intellectual capital” which does not figure out on their balance sheets. Infosys initiated to capture the human asset value by making some calculations of estimated earnings of their employees across a five year period taking into consideration their career progression etc.  For most organizations in the modern economy the tangible assets in terms of land, buildings, cash in hand and other tangible assets account for a small part of their market value and “Intellectual Capital” accounts for a major part of their market value. Knowledge capital is one of the important components of this so called Intellectual capital which is not captured on the balance sheet but is captured by the market value of the company.

HRD Managers have a great opportunity contribute to this Intellectual capital much more than any other managers. Unfortunately this is little realised by the MBAs, Managers, CEOs and the HRD managers themselves and our HRD continues to be in a pathetic state by virtue of attracting and developing the right talent.

As Thomas Stewart, Journalist, has put it in Fortune, Intellectual Capital is Intellectual Material- Knowledge, Information, Intellectual Property, and Experience – that can be put to use to create wealth.  Managing Talent and Managing Knowledge have become imperatives of the new millennium.  It is in this context Knowledge capital becomes a critical factor of Intellectual capital.

Knowledge Capital relates to technology or technical know how in various aspects of business, finance, customers, markets, systems and processes, people and so on any aspect of the organization for its functioning and building competitive edge. It consists of Knowledge coming  from new experiences, every day experiences, problem solving, experimentation, new projects, markets, mistakes, Expressed in terms of new services, revised processes, best practices , tacit knowledge like mobilizing Collective Intelligence etc.

Knowledge Management (‘KM’) comprises a range of practices used by organisations to identify, create, represent, and distribute knowledge for reuse, awareness and learning. It has been an established discipline with a body of university courses and both professional and academic journals dedicated to it. Most large companies across the world have resources dedicated to Knowledge Management, often as a part of ‘Information Technology‘ or ‘Human Resource Management‘ departments, and sometimes reporting directly to the head of the organisation. As effectively managing information is a must in any business, Knowledge Management is a multi-billion dollar world wide market.

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