It can be concluded that managers and leaders of organizations face a difficult task of managing organizations due to intensive information flow in the current knowledge era, Competition has been on the rise in the business world. Therefore, change is not a choice that the firms have to make. Instead, it is a necessary step for the firms to survive in their respective industries. For this reason, there has to be a body that is responsible for such changes. However, such changes are based on the information that a firm obtains in the course of its daily operations. This is what narrows it down to the management of knowledge. In many cases managers mismanage the incoming information which results in massive losses and mistakes that cannot be undone. Therefore, the success of a firm does not only depend on the physical capital available. Human resources are also a factor that cannot be exempted from the list of successful production. Therefore, this essay delves into the importance of human capital, with special reference to the management of information.
Knowledge is power since it opens the door to opportunities and advancement. The sector that has shown the most development in this regard is the telecommunications sector. Invention of internet enabled information and knowledge circulate freely within various organizations around the globe. This globalization has brought numerous modern trends. Therefore, companies have a task to adopt the new developments. Otherwise, they might lose relevance in their spheres of operation. This trend has created the need for people who can manage the acquisition of knowledge in the firms. Management has two main uses in organizations. First, it helps an organization to be more efficient. This is mainly seen in the delivery of results. The better the management of the knowledge that comes in, the better the results that it delivers in form of goods and services. Secondly, the management of knowledge is vital in helping an organization to be more effective. This concerns the impact that the business and organizational activities have on their stakeholders. Therefore, it is a topic that is worth discussion.
Taking the evident globalization into account, most of the companies are vulnerable to numerous challenges. These are the challenges posed by unpredictable and highly competitive business environment as seen in the world. This global business environment can be seen from the liberalization of markets, high production of goods and services, improvements, advancements and changes in the information and communication industry, organizational structures of companies that are flexible, as well as partnership development. In such cases, the companies are forced to form new tactics and techniques to handle the changes. It is evident that application of old methods may lead to unsuccessful operation of a company, therefore, a company may be exposed to a huge menace (Bergeron 2003). More specifically, organizations are, thus, forced to develop techniques that can be used in the improvement of quality, as well as functionality of their products. The other vital fact is that the companies have to come up with new ways of reducing the costs of their goods and services in order to meet the customers’ demands which show a continuous trend of getting more and more difficult to handle.
The information age was preceded by the industrialization age. During the industrialization age, the most important factors of production were the tangible ones. This included the capital that used in production of goods and services. Therefore, the most successful businesses were the ones that were more exposed to these tangible resources. Tangible resources, in their turn, include buildings, equipment etc. On the other hand, those businesses that had limited access to the same registered little or no progress. On the contrary, in the knowledge era, there are businesses that exist in the market with the limitation of these very resources. For example, there are people who come up with a new idea in the market. These ideas make their businesses more successful as compared to others existent in the market. For this reason, knowledge has become the most important resource in a business. Therefore, availability of intellectual resources has become a major topic of discussion (Lilley & Amaral 2004).
At the moment, most of the company leaders have noticed that the value and size of their assets increase with the increase in the intellectual resources. In the last century, most of the assets of firms were tangible assets. In fact, this accounted for about 60% of the total business assets. However, now, the assets of most firms are termed as intangible. This accounts for about 80% of the total assets of most of the businesses. The trend shows that most of business leaders have discovered that the intangible resources are the ones of primary importance. This explains why most of the efforts made in the internal environment of the business are aimed at human capital, in other terms referred to as intellectual capital. For example, most of the companies have continually invested in education of their employees so as to ensure that the employees are dynamic, innovative and prepared for the occurrences that are likely to happen in the future. It also keeps the employees up to date, with regard to the developments that occur in the business world as well as keeps their services relevant to the objectives of the firm (Montano 2004). Education of employees is not the only activity, aimed at bettering the intellectual capital, that the firms engage in. There is also continuous training of business employees so as to equip them with the necessary skills in the actual field. Therefore, the employees are able to come up with the business ideas, as well as manoeuvring the knowledge obtained to meet the objectives of the business. Other activities in the same pursuit are grading of employees in systems that are created in the firms and organizations. Rewards are given to the employees that are seen to perform their tasks best. System of rewards is used in the improvement of quality of services offered by the employees. The above are just a few ways in which the investment of organizations in human capital can be proven.
In a general sense, management of knowledge is the process by which organizations get value from their intellectual capital and other knowledge-related assets. Management of knowledge is initially done by discovering the information that the employees, customers and other parties involved. The second part of the process is sharing of this information with other companies, employees and departments in the same organization in order to obtain the most important and vital information from the above mentioned parties. After the acquisition of this knowledge, the next vital step for the company is understanding of the same. Therefore, management of knowledge is an activity that takes place every day. The main part is the transfer of information to the decision making departments. The decisions made by the latter ought to be informed ones. Without incorporation of the knowledge that has already come in, the decisions that a firm would make would be inaccurate. Therefore, acquisition of information has to be followed by its proper distribution. This includes the departments whose decisions are most affected by this acquired knowledge or information. In its turn, proper information management requires human capital so as to ensure that all resources are directed to the correct destinations (Thompson & Messick 1999).
There are numerous advantages that emanate from the ability of an organization to come up with a well created knowledge management system. First, it ensures that every employee is able to fulfill the missions of the firm. In fact, the number of employees of the firm may be higher than the number of objectives that a firm has. Therefore, they might be thought of as a negligible effect on the overall performance of a firm. However, general success of a firm is measured by small successes achieved by each employee. That is every department in an organization is vital to the general success of the same. Therefore, the information acquired should not just be handled by the management of the organization but it should be shared to all the employees of the firm. (Davenport & Pruzak 2000).
The highest levels of management are the most important in knowledge management. In this century, there are numerous ways in which firms can acquire information. Most of this information might have little or no relevance to the general production of these firms. However, this does not rule out the fact that there is vital information that comes into a firm. In fact, there is no firm that can survive without the entry and inflow of information, since nowadays, knowledge is the single key that can ensure a firm is able to compete its rivals. Therefore, there is need for the management of an organization to make decisions on which information can be processed (Hislop 2005). The employees can be engaged in the inflow of information. However, they cannot be actively involved in the decision making process. This is where the first level of the usage of human capital comes in.
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Knowledge management does not only involve the management of the very resource. It also includes the processes that are involved in the usage and application of this resource. First, there is a need to analyse and study the existing knowledge in the relevant topic. Consequently, the relevant parties should ensure that they compare the old knowledge with the new one, hence, deriving suitable conclusion. After the decision has been made, an organization is to decide whether this new knowledge is worth applying. For this reason, a team to estimate the benefits coming from application of this knowledge has to be established. Following the assessment, firms can make decisions on whether to adopt these new ideas and pieces of knowledge. There should also be a need to measure the performance encouraged by application of such information. This determines whether there will be continued use of the same in the times to come (Lilley & Amaral 2004).
Therefore, apart from all other departments in a firm, it is clear that the one on knowledge management is the most important since it ensures that all the other resources are efficiently utilized. Therefore, every firm should have a department that is solely meant for this purpose. This way, the firm may ensure that it keeps up with the changing times eliminating the problem of irrelevance. The other problem that can be eliminated by the same is the problem of competition from other firms in the industry. Therefore, this is a factor that has the ability to increase the competitiveness of a firm. The above discussion provides a proof that intangible resources are more important in a firm, as compared to tangible ones. On this list, human capital can be considered to be at the top (Davenport & Pruzak 2000).
From the essay above, it is clear that there are many factors vital to the success of a business. However, enormous changes in business thinking and development of technologies have brought about globalization. Therefore, all organizations that want to survive in the competitive market should develop a way of adapting to these new trends and dynamics in business. This essay shows that the decisive factors of production in a firm are the intangible resources. Of all other resources, knowledge is known as the strategic resource. For this reason, it has the ability to change the firm and transform it to a real success. However, this issue requires effective and efficient management. Therefore, the importance for a firm to invest in human capital as a way to ensure efficient coverage on the issue of knowledge management could not be underestimated.