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134 MANAGING KNOWLEDGE WORK AND INNOVATION

manage employees. The important thing is to find the right fit between man-
agement practices and the characteristics of knowledge work processes.
One of the most important contributions to this approach comes from Han-
sen et al. (1999) who argue that there are basically two strategies for managing
knowledge. These strategies they term ‘codification’ and ‘personalization’:

• Codifi cation: ‘Knowledge is carefully codifi ed and stored in databases where
it can be accessed and used readily by anyone in the company’ (p. 107).
• Personalization: ‘Knowledge is closely tied to the person who developed it
and is shared mainly through direct person-to-person contacts’ (p. 107).

Although they do not claim that organizations pursue these strategies exclusively,
Hansen et al. argue that competitive success involves pursuing one strategy pre-
dominantly. Attempting to ‘straddle’ both strategies leads to failure, they claim.
The codification approach to knowledge demands well-trained people who are
able to exploit ICT databases and communication systems. The IT consultancy,
Accenture, represents a good example of this kind of firm.
With a personalization strategy knowledge is closely tied to the person who
developed it, and it is shared informally through person-to-person contacts.
Again a different kind of employee is required, one able to creatively develop and
apply knowledge to unique business problems. The Bain & Co and McKinsey
consulting firms are cited as good examples of this different kind of organization;
and the case in Chapter 2 can also be seen to rely more heavily on personalization
than codification.
The Hansen study focused on consulting firms, of course, and, as subsequent
chapters will make clear (see in particular Chapter 8), it is possible to question
whether their analysis emphasizes the role of individual experts at the expense
of the role of groups and communities in creating and sharing knowledge. It
may be relevant for consultancy firms employing talented individuals, but it is
doubtful whether it applies to all organizations. As far as HRM is concerned,
however, this study does make several useful contributions. First, it links both
the management of knowledge and HRM to the competitive strategy of the
organization. This analysis shows that it is not knowledge per se but the way
it is applied to strategic objectives which is the critical ingredient of competi-
tiveness. Second, this analysis highlights the need for ‘best fit’ between HRM
practices such as reward systems and the organization’s approach to managing
knowledge work. The relevant fit is outlined as follows:
In the codification model, managers need to develop a system that encourages people
to write down what they know and to get those documents into the electronic reposi-
tory . . . companies that are following the personalization approach . . . need to reward
people for sharing knowledge directly with other people.
(Hansen et al., 1999, p. 113)

It is important to note that getting the best fit between HRM practices and
different kinds of knowledge work has two facets (Fombrun et al., 1984) – internal

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