Frances Horibe - Managing Knowledge Workers: : New Skills and Attitudes to Unlock the Intellectual Capital in Your Organization

Copyright: Frances Horibe 2015

All rights reserved. No part of this work covered by the copyrights herein may be reproduced or used in any form or by any meansgraphic, electronic, or mechanicalwithout the prior written permission of the author.

Canadian Cataloguing in Publication Data

Horibe, Frances Dale Emy

managing knowledge workers: new skills and attitudes to unlock the intellectual capital in your organization

Includes index

eBook ISBN 9780994929006

1. Knowledge workers 2. Knowledge management 3. Intellectual capital

Cover design: Deanna Fenwick

To my family but especially to my father who was my first model for a worker who put his head, hands and heart into what he did.

As is usual with any book, there are many people beyond the author who make its publication possible. There are those whose early encouragement and comments made the book better than what it would have been otherwise and also urged me to continue the long route to publication. Among those I wish to thank for that early belief in me and the book are: Claude Bernier, John Butcher, David Carlson, Chanlun Chan, Margaret Coshan, Barry Davy, Michael Desjardins, Mont Doyle, Helen Durand-Charron, Doug Gahm, Ken Henry, Brett Holt, Martha Hynna, Tony Johnston, Carolyn Levy, Michael McFaul, Diane McGarry, Mike Norman, Maureen Scott, Katita Stark.

In addition, there are those who helped to create the book by slogging through many chapters and their revisions, investing their time and wisdom in a way which I can never thank adequately but for which I will always be grateful. My very special thanks to Cliff Cullen, Stephanie Howard, Barb MacCallum and Janet Mairs for their insights and willingness to contribute their intellectual capital.

Finally, my thanks to my agent, Daphne Hart, whose belief in the worth of my book sustained me when nothing else did and to my editor, Karen Milner, and all those at John Wiley and Sons who have consistently been both pleasant and professional as they applied their special knowledge to mine.

Im sure there is a whole crew of people somewhere arguing about this definition, but at its simplest, knowledge workers are people who use their heads more than their hands to produce value. They add value through their ideas, their analyses, their judgment, their syntheses and their designs. They still use their hands, of course, but its more likely to be inputting into a computer than lifting a 50-pound sack.

The knowledge component of jobs like accounting and research is obvious and is also evident in occupations like management and sales when you think about it. For example, Xerox salespeople dont sell copiers, they sell document solutions. They have to know their customers businesses and the Xerox product line well enough to be able to propose a suite of products and services which meets individual and specialized needs.

But even jobs which have traditionally been more hands than head, like manufacturing, have changed radically. Hourly workers making Dove soap dont spend most of their time stirring vats and adding perfume. Instead, they sit at a space-age console which runs the process. They use Histograms, Pareto charts, and Ishikawa diagrams to improve product and process quality.

Knowledge workers already form a large part of any organization and their percentage is growing. It is estimated that by the year 2000, knowledge workers (e.g., sales, managerial and administrative, professional, and technical) will be 59 per cent of the workforce.

The bottom line is that knowledge workers make up the bulk of most organizations and there arent enough of them to go around. Lets look at why knowledge workers are suddenly so important.

I dont think theres a management book today which doesnt have a section called The New Economy. Thats because the new economy this flood of information coming at lightning speedreally is changing almost everything. How we buy, how we sell, what we make, when we make it, what we value, and where we live. Because information is now the driver of wealth creation, those who have it (knowledge workers) are the keys to this new way. To understand why theyre so critical, lets talk about book value.

Book value is the term used by economists and stock market types to identify the hard assets of a company such as the buildings, inventory, machines, etc. - all the things which, in an industrial society, were needed to turn out products. This has traditionally been considered a rough measure of a companys worth. Of course, it has always been recognized that there is some measure of human contribution to this equation and this was usually lumped under the heading of goodwill. That might include the value of your brand name, the experience of your people, the value of your customer base. Goodwill was the fudge factor to account for all the mushy bits which played a part in worth but couldnt be counted easily and were not so important that the imprecision was a problem.

The equation Company Worth = Book Value + Goodwill worked pretty well when most of what needed to be counted, could be. That is, when there was a more or less straight line relationship between the assets you invested (machines, raw materials) and what you got as a result (fridges, stoves).

However, over the course of the last 10 or 20 years, the fudge factor has gotten bigger and bigger. A study done by the Open Business School, the business school arm of the Open University in England, showed that in 1992, only 60 per cent of a firms worth could be accounted for by its book value. Whatever this goodwill was, it was getting more and more important.

Similarly, a study of large companies showed that their market value (what they were sold for) was 4.4 times their book value (what their assets were worth). Microsoft stock trades at 10 times book value. That is, only 10 per cent of Microsofts worth is in hard assets. The fudge factor is now the most important part of a companys valuation.

With goodwill now constituting up to 90 per cent of a companys worth, and traditional accounting methods capturing only the other 10 per cent, this changeover to the New Economy has understandably caused a lot of angst among accountants. But beyond that, it brings home the fact that wealth is being created in an entirely new way. Wealth, jobs and competitive advantage are no longer primarily a matter of machines and tools but of brains and harnessing those brains. The old economy was about congealed resources a lot of material held together by a bit of knowledge such as software; the value is not the diskette itself but the brainpower you access when you buy it.

Thus value and competitive edge are created by the knowledge your people have and how they apply it to their work. In fact, there seems to be a growing consensus that developed nations can continue to enjoy their high standard of living only by concentrating on knowledge-dense products and services. The knowledge, or intellectual capital, of your company, has become the most important aspect of your business.

This realization has sparked much attention in the business world. In a recent survey, four out of five managers believed managing knowledge is essential or important. And not just big business needs to take notice: many small businesses depend entirely on the talents of their employees. They often have little in the way of tangible assets or inventory and shallow pockets. Almost their only competitive advantage is their people.