Organizational Structure and its Influence on Knowledge Management

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Organizational design is one of the factors that will greatly influence the implementation of a knowledge management process .

Harley's manager and union members found that organizational structure gives huge barriers to realization of company's future. So Rich changes Harley's organizational structure from command - control decision making into employee-driven structure and it's minimal. Employee should decide on the specifics of the boxes and lines for the organization and the structure should derive from real organizational functions.

Rich and colleagues come up with idea about circle organizations. The philosophy behind the circle organization was to get the right people, together at the right time, to do the right work right. . This circle organization represents shared leadership and cross-functionality at work in Harley-Davidson.

The circle organization based on three core processes, Create demand; include marketing, sales, public relations, customer services and styling. Produce product; include manufacturing, engineering, purchasing, logistics, etc. Provide support; include finance, HR, legal, information services, and so on. Leadership and strategy council (LSC), coordinator of other three circle.

Figure 1 Circle Organization

Arrows pointing to stakeholders area means it's the external focus for the company. Meanwhile, arrows pointing across the circle indicate recognition of interdependence. This scheme encourages the employee to seek the right people to work with to get the work done. The command-control position was replaced by the coach or facilitator in each group. Employees communicate and share ideas inside and between the circles, knowledge buyer and seller change their idea how to solve a problem, new ideas were generate during the discussions.

Employee Engagement

One of factors influencing successfulness of Knowledge Management initiative is employee's engagement to the organization. When employee feel the organization is belong to them and their contribution is recognized by the company, employee will be encouraged to share their knowledge and actively participate to company's business strategy. Bob Hayward in his website share some benefits of employee engagement in the organization:

Better performance

Knowledge worker whom engage in his job tend to work smarter. They always looking for ways to improve their performance. Work in effective and efficient way. It means better quality, innovations and lower cost.

Better communication

Engaged employee communicate to share ideas, information and knowledge. Knowledge sharing is in his blood. He actively plays roles in knowledge market.

Greater customer satisfaction

Customer is a king. Engaged employee will seek how he could meet customer needs. Customer satisfaction is his target.

Better team working

Employee has personal responsibility to deliver business agenda. He works in the team to achieve organization's vision.

Greater commitment

Employee has a pride and really cares about the company's future, because company's future is also his future.

Lower employee turnover and greater ability to recruit great people

One of serious problem in organization is high employee turnover. Without proper knowledge management system, knowledge could walk away out the door together with employee. Organization has to reinvent the wheel every time employee goes out. For engaged employee, they do not easily leave the company. They feel happy working there. Good employee usually has good networking; it will lead them to propose the company great people to join them.

Rich and his teams clearly have vision how to engage their employee to the company. Harley did some activities to encourage the employee engagement:

Established Performance Effectiveness Process (PEP)

PEP gives individual opportunity and responsibility to determine function of his work unit and how individual can make difference in company's future. PEP is the smallest entity of company's vision that will evolve iteratively and it's a participatory process that will lead to the whole company business process. PEP can be used for several activities, such as:

Performance Evaluation

See individual from other perspective. Know his position based on others judgments. Participated in defining performance measures, understood how their colleges perceived them and how to improve their performance in the eyes of their college. Based on this performance evaluation, company should extract weakness of their employee. So the company knows which subject should be learned by the employee.

Career Development

Many employees like status quo. When company trying to make major cultural change, they do not want to change and hate to be changed.

PEP was tailored by the HR department to become basic for career development.

Encourage personal knowledge.

Executive share everything in their mind. They are creating model to their employee to share what they found in their work place.

Maximize employee participation.

Individuals know clarity how he or she can make a difference. It's good for company as well for the individuals. In their employee handbook, Harley Davidson has commitment to create a working environment designed to maximize employee contribution and provide resource and opportunities to develop their knowledge.  Nonaka's Ba

PEP does not succeed in its first month or even first year of implementation. It emerged over several years, with continuous improvement in all aspects.

Compensation

Harley compensates people not only from performance but also on how they demonstrate their capabilities. Harley found that they should not compensate the employee only with money. Because we should have much money to do that, said Lee.

Harley has two primary goals: 1) to make a larger part of employees' compensation at-risk or variable and 2) to compensate all employees in essentially the same way by creating standard pay components across the company.

Hear the employees

Harley Davidson is an employee driven organizations. They were changing their culture from command control - top down company into more participatory. Most people want the same thing from their company. For them working motivation is not only money. What Harley's employee really seeks are rewards and recognition in nonmonetary realms. They seek opportunities to be heard, organization's evidence of contribution, involvement in decision making and problem serving process. They want to know every single aspect in organization and understand what is going on. Employee seeks total experience in their working place.

The company really heard and takes necessary action to response the employee's idea. Harley's facilitate sharing session on what they expect in the organization. The employee proposed 49 things to the company. Some of the items can be done immediately and the others need approve from the board. But Harley really engages to his employee satisfaction, and this will bring the employees to do the same thing for the company.

Lifelong Learning

Harley's leaders, both union and management leaders have commitment to encourage and facilitate intellectual curiosity in the organizations. Intellectual curiosity is result of looking somebody else doing the task and reason why he doing in that way.

Company serves the employee by providing skills and knowledge they need.

The most significant step toward Harley learning culture was from Awareness Expansion III activities. One of participant said "We're learning from each other, and we're increasing our understanding of our respective business".

Successfulness of AEIII leads to AEIV. AEIV has purpose to learning from each other.

Presentation on some topics.

AEIV collaborate with MIT-based Organizational Learning Center. This Research group headed by Peter Senge, he is an organizational theorist and consultant.

Harley Davidson provides some formal learning program to its employee.

Harley Davidson Leadership Institute

Tuition reimbursement programs at Graduate and Undergraduate levels

Degree Program with Marquette University

Lifelong Learning Centers

Motorcycle U - Harley Davidson University

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