Page 454 -

Future Challenges for KM 437

will have better results if it provides incentives for its members to improve said insti-
tution. One that provides no or little incentive will suffer from weak morale.
Incentive is very much a double-edged sword. For example, corporate policies with
the goal of encouraging productivity — especially of the extreme incentive variant
popular during the 1990s — may not have the intended effect. For example, stock
options, intended to boost CEO productivity by tying CEO compensation to company
performance, have been blamed for many of the falsifi ed earnings reports and public
statements in the late 1990s and early 2000s. Throughout the 1990s and 2000s, many
corporations have sought to increase individual incentives by increasing the sizes of
bonuses (to the point where they exceed salaries, sometimes by a factor as high as
ten) for star performers while also laying off large proportions of their workforce,
hoping to cultivate fear-factor-related gains. The most extreme version of this is forced
ranking, a scheme by which workers are annually ranked and a set proportion (usually
between 10 and 15 percent) automatically fi red. The results of these programs are
mixed, but in extreme cases, usually negative.
While competition among fi rms often has benefi cial results, lowering prices and
encouraging competition within fi rms has almost uniformly negative results. Designed
to encourage production, extreme incentive schemes actually create a cutthroat
working environment where offi ce politics dominate and actually overshadow the
productive goals of the company. An example of this is the now-deceased Enron
Corporation. According to Callahan (2004) , the environment at that company was so
cutthroat (as a result of extreme incentive management) that employees feared leaving
their computer terminals, worried that co-workers might steal information for their
own purposes.
There are obviously some issues with KM as it is applied in many organizations.
Care needs to be taken so that the application of this effective approach is accepted
and supported. It is NOT the information collection but the processes and systems
that must be acceptable to those involved. Business issues as well as people issues are
involved and a simple framework might be helpful in understanding and rolling
forward. Remember, nobody ever washes a rental car, so address issues of ownership
and involvement as you progress.
Denning (2000) points out that since knowledge sharing usually entails a change
in the way the business of an organization is conducted — often, it entails a shift from
vertical “ look up and yell down ” modes of behavior to horizontal knowledge-sharing
behaviors — relevant behaviors should be refl ected in whatever incentive systems are
in place in the organization. It is important that the value of knowledge sharing be
refl ected in the on-going personnel evaluation, periodic merit review, or pay bonuses