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Human Resource Management in the Knowledge Economy:

New Challenges, New Roles, New Capabilities


by Mark L. Lengnick-Hall and Cynthia A. Lengnick-Hall.

BOOK REVIEW
Human Resource Management in the Knowledge Economy: New Challenges, New Roles, New

Capabilities by Mark L. Lengnick-Hall and Cynthia A. Lengnick-Hall. The knowledge economy has a

multitude of characteristics that present new challenges for business; it encompasses all jobs,

companies, and industries in which the knowledge and capabilities of people, rather than the capabilities

of machines or technologies, determines competitive advantage. It is no longer enough for Human

Resource Management (HRM) to maintain a narrow operational focus, view its activities as confined to

the boundaries of its own organization, or limit itself only to traditional human resource (HR)

responsibilities. This book provides a blueprint for change for Human Resource Management (HRM)

activities and contributions in the knowledge economy. It identifies the most important features of the

knowledge economy and details four primary roles that HRM professionals must adopt to meet these new

challenges effectively. A second purpose of this book is to stimulate HRM professionals to think beyond a

simple operational focus on attracting, selecting, developing, retaining, and utilizing employees to a more

strategic focus on managing human capital and managing knowledge.

The knowledge economy came into existence as a result of the commercialization of information

and communication technologies. Knowledge, rather than the concrete characteristics of goods or

services or the mechanics of production process, is becoming the defining characteristic of economic

activities. The effective production, accumulation, and handling of knowledge are becoming key sources

of competitive advantage distinguishing business. Competition in the knowledge economy requires

succeeding on three levels: sensing, mobilizing, and operationalizing. Human resource management

plays a significant role in creating and developing the organizational capabilities needed for competing in

the knowledge economy.

HRM faces a new imperative in the twenty-first century. It must build strategic capability; expand

its boundaries; manage new roles. Strategic capability is obtained through relationships in which the

creation, exchange, and harvesting of knowledge build the individual and organizational capabilities

required to provide superior value for customers. Expanding the boundaries means that HRM

professionals use their expertise to help their organization influence the behavior of costumers,
employees of supplier firms, and individuals in firms that complement or regulate a firm’s activities. For

companies to compete effectively in knowledge economy, they must be flexible, adaptable, and

adjustable. Companies must manage their intellectual capital as deliberately and effectively as they their

tangible assets. To do this, HRM must assume new roles to meet these new challenges. The book

provides four main roles that make it possible to create those needed capabilities: human capital steward,

knowledge facilitator, relationship builder, and rapid deployment specialist.

Stewardship is a pivotal shift in HRM thinking. Human capital is the collective knowledge, skills,

abilities, and other characteristics of an organization’s employees and managers that create capacity for

competitive advantage. Stewardship is about guiding the organization without dominating it and

facilitating employees without controlling. It allows for a relationship between leaders and followers in

which each makes significant, self-responsible contributions to organizational success. The focus of

stewardship is on the people actually doing the work, making products, providing services, or interacting

directly with costumers. To fulfill the expectation of the human capital role, HRM needs to focus on three

major factors: investments, flexibility, and leveraging. Investments in human capital involve both financial

and commitment components. Flexibility refers to the depth and breadth of the human capabilities and to

the organization’s human capital readiness for meeting multiple challenges. Leveraging is about gaining

the maximum productivity targeted at accomplishing desired results from individual employees and the

collective human capital of an organization. HRM must be the primary source of information on how,

when, and where to make human capital investment. HRM must be the leader in developing individual

and organizational flexibility so human capital can be used to its maximum competitive advantage. It must

provide a broad perspective on how to combine and integrate the human capital of the organization to

achieve the maximum productivity from the resources and to create synergy for the firm.

Part of the book about knowledge facilitator defines knowledge and knowledge management, and

then describes a new role for HRM as knowledge facilitator. Knowledge is information that is linked to

potential actions because an individual is able to use it. Knowledge management is a matter of

understanding how we can get as many people as possible creating and transferring as much knowledge

as possible in the best way possible in order to have a positive impact on the costumer. The knowledge

facilitator role cannot be easily slotted into traditional HRM functions, such as training and development or

compensation. The knowledge facilitator role is much broader and requires creative integration across

traditional HRM activities. It entails both rethinking old ways of managing the workplace as well as using

innovative approaches outside the box of traditional HRM. Most important, becoming an effective

knowledge facilitator requires conceptualizing HRM as a vehicle for creating capabilities and capitalizing
on the human factor to create a community of knowledge workers. There are HRM challenges for the

knowledge facilitator role, for example the major one, how to obtain the same benefits of co-location when

knowledge and people are dispersed and co-location is impossible. What is needed is to move around

knowledge, or mobilize a “carrier” of knowledge. There are three types of knowledge carriers: information,

tools, templates, models, and machines; and people.

The role of relationship builder both changes and extends the focus of traditional HRM. It

changes the focus by directing attention to multiple relationships that create social capital and the

capacity for self-organization in an organization. It extends the focus of HRM by directing attention not

only to relationship within organization but to those outside the walls of the firm, as well. Furthermore, the

relationship builder role requires new activities, new methods, and new approaches that go beyond

traditional HRM practices. The role of relationship builder involves six primary expectations:

1. HRM can create opportunities for individuals to interact in such a way that they generate linkages

that are strong, multidimensional, and reciprocal for creating the level of trust and sharing

necessary to work together.

2. HRM can also create opportunities for individuals to interact in a way that extends their

information access through weak ties.

3. HRM can map social capital ties that are relevant to the various tasks and challenges

organization faces and identifies those that are strategically important.

4. HRM can be a source of support, advice, facilitation, and innovation for both formal and informal

work groups.

5. HRM can develop ongoing, long-term relationships with former and current employees.

6. HRM can focus attention on how it can improve relationships across value-chain members.

The final role of the HR professional is to obtain the “right” human talent and ensure that people are in

the right place, at the right time, able to perform the work that is needed, and able to achieve the desired

outcomes: to rapidly deploy and redeploy human capital when and where it is needed. Specific elements

of effective HR deployment changed in the knowledge economy. First, the firm’s human talent is likely to

reach beyond its employees to include both costumers and other individuals in the supply chain. The right

person for the job in the knowledge economy is someone who has task proficiencies that are not confined

to narrowly prescribed jobs. The right person is someone who facilitates peers and team performance by

helping with job problems, being a good model, and keeping the group goal-directed. The right person for

the knowledge economy is adaptable and can confront new challenges and new obstacles with grace, a

cool head, and sound judgment. Second, the right place is as likely to be in the field as it is on the
production floor. Ensure that human resources are in the right place is an outcome of effective

concentration. Three factors lead to effective resource concentration: uncompromising focus, decisive

timing, and precise positioning. Third, the right time is measured in minutes and hours rather than months

and years. HRM can contribute to a firm’s response speed in a number of ways: creating triage

capabilities, integrating technology and people, creating small wins, and developing resourceful

employees. Finally, having the ability to perform the needed work goes beyond knowledge, skills, and

abilities for specific jobs to include more general competencies. For rapid deployment of human talent to

work well, organizations need employees who can concentrate their efforts when and where needed,

sustain performance at high levels, and maintain their own well-being while doing so.

In final part of the book authors present the resource-based view of the firm and summarize points

about new roles of HRM in knowledge economy. Firm’s success or failure depends on what resources

and capabilities it has and on how these resources and capabilities are used. This resource-based view

of the firm explains in clear, managerial terms the reasons some firms outperforms others. The focus for

HR in the knowledge economy should be on making it possible for people to leverage other types of

resources, to create capabilities, and to nurture core competencies within a context that rewards both

consistency and innovation and values both persistence and flexibility. This can best be accomplished if

HR professionals embrace four new roles to create fundamental strategic capabilities: human capital

steward, knowledge facilitator, relationship builder, and rapid deployment specialist.

In my opinion, the book no doubt gives important insights into the changing roles of HR in the

21st century, and differentiates them from those performed by HR managers a decade ago. It should be

read not just by executive HR managers but by all line managers, who are key HR managers in today's

context, so that they can help in organizational capacity-building and performance excellence. The book

is both conceptual and rich in practical, outcome-based approaches to creating value for investors,

customers, managers, and employees. This book is full of excellent examples on techniques and

strategies on what HR can begin doing-right away-to help the business become more competitive. But

each company and each HR department is so different, however, that it may be challenging to apply

some of these approaches to specific situations. I think this book is for organizations that have the

resources to implement an in-depth system of measuring their HR performance. It is well written, well

researched, and well presented.

I will definitely recommend this book to all HR major students. It is relevant to human resource

study and show the model of future HRM.