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Article
Publication date: 31 December 2018

Rada Massingham, Peter Rex Massingham and John Dumay

The purpose of this paper is to present a new learning and growth perspective for the balanced scorecard (BSC) that includes more specific measures of integrated thinking…

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Abstract

Purpose

The purpose of this paper is to present a new learning and growth perspective for the balanced scorecard (BSC) that includes more specific measures of integrated thinking and value creation to help improve integrated reporting (<IR>). Practical, relevant definitions of these historically vague concepts may improve intangible asset disclosures (IAD) and increase uptake of the<IR> framework.

Design/methodology/approach

The paper is conceptual. The authors use organisational learning to theorise about the learning and growth perspective of the BSC, within the context of the practice of IAD.

Findings

Several criticisms of IAD, the<IR>framework and the BSC have acted as barriers to implementing the<IR>framework. The improved version of the BSC’s learning and growth perspective, presented in this paper, addresses those criticisms by redefining the concept of integrated thinking (learning) and more fully connecting that learning to future value creation (growth). The model is designed to be used in tandem with the<IR>framework to operationalise integrated thinking. A new BSC strategy map illustrates how this revised learning and growth perspective interacts with the other three BSC perspectives to create long-term shareholder value through the management and growth of knowledge within an organisation.

Research limitations/implications

Organisational learning is an important source of competitive advantage in the modern knowledge economy. Here, the authors encourage further debate on how to report and disclose information on intangible assets, driven by a new conceptual strategy for organisational learning that fully supports the BSC’s capacity to help integrated thinking and future value creation for the<IR>framework.

Practical implications

From its roots as a performance measurement system, the BSC has become a widely used strategy execution tool. The<IR>framework has struggled to gain traction, but still has value in exploring intangible assets and its disclosure from a systems thinking perspective. The model is designed to bring an explicit understanding of how to improve integrated thinking for the<IR>framework facilitating better measurement, management and reporting of human and structural capital. By doing so, the new model enables a firm to use the BSC to engage with<IR>more effectively, which should also be useful for practitioners given the widespread use of the BSC.

Originality/value

The analysis of the BSC’s learning and growth perspective reveals two dichotomies – one between resources and growth, and another between systems and capability. The revised perspective resolves these dichotomies with clear, forward-focused measures of learning and intangible asset growth, and multiple vertical and horizontal connections between the perspective’s four constructs. The authors demonstrate practical paths to value creation through a range of strategic impacts.

Details

Journal of Intellectual Capital, vol. 20 no. 1
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 21 February 2018

Peter Rex Massingham

Knowledge loss caused by employee exit has become a significant corporate risk. This paper aims to explore how to measure the impact of knowledge loss. The paper is based…

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Abstract

Purpose

Knowledge loss caused by employee exit has become a significant corporate risk. This paper aims to explore how to measure the impact of knowledge loss. The paper is based on empirical evidence from a five-year longitudinal study.

Design/methodology/approach

This paper is based on a longitudinal change project for a large Australian Research Council Linkage Project grant in the period 2008-2013. The method was a single case study using a critical realism paradigm. The project was a transformational change programme which aimed to help make the partner organization a learning organization to minimize the impact of knowledge loss. The partner organization was a large Australian Government Department, which faced the threat of knowledge loss caused by its ageing workforce. The sample was 118 respondents, mainly engineering and technical workers. A total of 150 respondents were invited to participate in the study which involved an annual survey and attendance at regular training workshops and related activities, with a participation rate of 79 per cent.

Findings

The results found that knowledge loss has most negative impact in terms of organizational problems including low productivity (morale), strategic misalignment of the workforce (capability gaps), resource cuts (stakeholders unhappy with performance), decreased work quantity and quality (inexperienced employees), work outputs not being used (customers mistrust), longer time to competence (learning cost) and slow task completion (increased search cycle time). The second most significant impact was increased sense of risk associated with work activities and declining capacity to manage the risk. The third main impact was decreased organizational knowledge base: knowledge loss creates knowledge deficit which is unlikely to be filled over time, as shown by the knowledge accounts of surviving employees which remained stable overall. The two remaining measurement constructs – psychological contract and learning organizational capacity – improved, which suggests that the negative impact of knowledge loss may be addressed with appropriate knowledge management.

Research limitations/implications

The research is based on a single case study in a public sector organization. While the longitudinal nature of the study and the rich data collected offsets this issue, it also presents good opportunities for researchers and practitioners to test the ideas presented in this paper in other industry contexts. The complexity and range of the constructs, concepts and scale items is acknowledged. Tables have been used wherever possible to help the reader access the findings.

Practical implications

Knowledge loss is perhaps the greatest corporate risk facing organizations today. This paper provides a method to measure the impact of knowledge loss. Managers may use this to assess the significance of the risk and use this as a business case to take action to minimize the impact of knowledge loss.

Originality/value

Prior research has found knowledge loss has caused decreased psychological contract, lost organizational memory, inefficiency and ineffectiveness and declining capability; however, these concepts are discussed in broad terms only. This paper addresses the need for measurement concepts which helps us understand the nature of the impact of knowledge loss. Five knowledge loss concepts are developed: knowledge resources, psychological contract, learning organization capacity, risk management and organizational problems. The results are based on a large-scale longitudinal study providing empirical evidence of change over a three-year period, situated within the context of a research intervention, i.e. knowledge management programme.

Details

Journal of Knowledge Management, vol. 22 no. 4
Type: Research Article
ISSN: 1367-3270

Keywords

Article
Publication date: 7 April 2014

Peter Rex Massingham and Rada K Massingham

The paper examines ways that Knowledge Management (KM) can demonstrate practical value for organizations. It begins by reviewing the claims made about KM, i.e. the

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Abstract

Purpose

The paper examines ways that Knowledge Management (KM) can demonstrate practical value for organizations. It begins by reviewing the claims made about KM, i.e. the benefits KM can provide to organizations. These claims are compared with traditional firm performance metrics to derive a criterion to measure the value of KM. Seven practical outcomes of KM are then presented as methods to persuade managers to invest in KM. These practical outcomes are then evaluated against the value criterion. The paper is based on empirical evidence from a five year longitudinal study.

Design/methodology/approach

This paper is based on a longitudinal change project for a large Australian Research Council (ARC) Linkage Project grant in the period 2008-2013. The Project was a transformational change program which aimed to help make the partner organisation a learning organisation. The partner organisation was a large Australian Government Department, which faced the threat of knowledge loss caused by its ageing workforce. The sample was 118 respondents, mainly engineering and technical workers. A total of 150 respondents were invited to participate in the study which involved an annual survey and attendance at regular training workshops and related activities, with a participation rate of 79 per cent.

Findings

This paper provides a checklist from which to evaluate KM in terms of financial and non-financial measures and seven practical outcomes from which to identify the organisational problem which may be addressed by KM. Lead and lag indicators – what needs to be done and what will result – are also provided. Managers may use this framework to identify the value proposition in any KM investment.

Research limitations/implications

The research is based on a single case study in a public sector organization. While the longitudinal nature of the study and the rich data collected offsets this issue, it also presents good opportunities for researchers and practitioners to test the ideas presented in this paper in other industry contexts. The seven practical outcomes also vary in the maturity of the empirical evidence supporting KM ' s impact. Strategic alignment, value management, and psychological contract, in particular, are still under-developed and could be areas for specific further research testing the ideas presented here.

Practical implications

This paper argues that investment decisions regarding KM may benefit from focusing on significant and on-going organisational problems, which will connect KM with firm performance and demonstrate financial and non-financial impact. The seven practical outcomes were evaluated against measurement criteria and against KM ' s claims. Overall, common themes were time and cost, as well as capability growth and performance improvements. Financial impact was mainly found in cost savings. Non-financial impact was found across the seven practical outcomes. It provides management with a checklist to make investment decisions regarding KM.

Originality/value

The decision whether to invest in KM begins with methods used to evaluate any organisational project. Managers must determine first whether necessary funds are available; and then whether the project is worthwhile. The standard method for evaluating a project ' s worth is return on investment (ROI). However, calculating ROI for KM investment is problematic. Unless KM can be proven to directly improve performance in financial terms, managers may struggle to see its ROI. The paper begins by reviewing the claims made about KM, i.e. the benefits KM can provide to organizations. These claims are compared with traditional firm performance metrics to derive a criterion to measure the value of KM.

Details

Journal of Knowledge Management, vol. 18 no. 2
Type: Research Article
ISSN: 1367-3270

Keywords

Article
Publication date: 13 April 2015

Peter Rex Massingham and Leona Tam

The purpose of this paper is to examine the relationship between human capital (HC) and value creation and employee reward. HC is an important component of intellectual…

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Abstract

Purpose

The purpose of this paper is to examine the relationship between human capital (HC) and value creation and employee reward. HC is an important component of intellectual capital (IC). There is growing interest in how IC can be used to create organizational value. This paper addresses the need for critical analysis of IC practices in action. Based on data gathered from three annual surveys at Australia’s second largest public sector organization, the paper introduces psychological contract (PC) as new HC factors, and develops a method to measure HC in terms of value creation (work activity) and employee reward (pay). The findings have practical implications for managers in using the paper’s HC measurement to achieve strategic alignment (SA) of the workforce.

Design/methodology/approach

The research was based on data gathered from three annual surveys (2009-2011) of staff at Australia’s second largest public sector organization. A total of 248 questionnaires were completed. Three independent variables conceptualized HC: first, employee capability (HC1); second, employee satisfaction (HC2); and third, employee commitment (HC3). Two dependent variables were tested: work activity and pay. The data collected in this study was analyzed through the use of bivariate correlation and linear regression using SPSS software.

Findings

The paper’s major finding is that HC1 (employee capability) and HC2 (employee satisfaction), had a direct positive relationship with the importance of work activity. The paper’s second finding was that only HC1 has a direct positive relationship with the pay. However, HC3 (employee commitment) had a direct negative relationship with the importance of work activity. Further, HC2 and HC3 had no relationship with pay. The research project organization (RPO) achieved SA with employees’ capability and motivation; as well as employee capability and pay. However, inequities emerge in terms of employee commitment and value creation (work activity) and in the PC factors and pay.

Research limitations/implications

While the research findings are limited by them being based on a single RPO, this is offset to some degree by the longitudinal nature of the study and the size of the RPO. It also presents opportunities for further research, particularly in terms of further testing of the new conceptualization of HC in other organizations and industry settings, and investigation of the failed hypotheses: PC and pay; and employee commitment and work activity.

Practical implications

While strong PC employees are being asked to do important work, they are not always being paid at the rate of colleagues doing similar work. This will create perceptions of distributive justice, which will make those with strong PC unhappy, thereby decreasing their PC, disrupting the SA of the value creation, and lead to employee turnover. Managers can address this problem by using the HC method outlined in this paper to introduce methods such as merit increases and variable pay. While this is problematic for public sector organizations often constrained by having to fit salary awards, innovative organizations are increasingly considering more flexible pay systems.

Originality/value

The paper introduces a new conceptualization of HC, and two proxies for organizational performance: pay and work activity. The paper addresses calls for IC in practice research to make the field more relevant for practitioners. The HC model introduced will allow managers to act on IC measurement by linking HC value with adequate pay, increasing motivation, commitment, and productivity, leading to increased innovation and reduced employee turnover.

Details

Journal of Intellectual Capital, vol. 16 no. 2
Type: Research Article
ISSN: 1469-1930

Keywords

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