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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
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
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
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
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,
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,
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
2. HRM can also create opportunities for individuals to interact in a way that extends their
3. HRM can map social capital ties that are relevant to the various tasks and challenges
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
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
I will definitely recommend this book to all HR major students. It is relevant to human resource