The Role of Knowledge Management in Organisational Performance

An organisation's success to a great extent depends on its capability to leverage knowledge and produce value from its knowledge resources. However, shifting workforce demographics are causing challenges to organisations in this regard. A significant number of experienced employees are retiring, changing to part-time or moving from their employment. This leads to corporate memory loss. Catalysts of the problem include cost saving calls that have left companies struggling to maintain the current productive labour force in the face of dwindling labour pools due to streamlining of operations. The recent economic recession caused retrenchments across many organisations and thus loss of knowledge. The increased mobility of the younger generation of employees is not helping either. The consequences of this management challenge range from loss in efficiency, loss in time, lack of capacity to reach strategic goals, decrease in employee and customer satisfaction levels, costly expenditures of trying to recoup lost knowledge pieces ultimately resulting in the potential compromise of the company's performance. It is therefore the objective of this paper to establish if there is a relationship between knowledge acquisition and organisational performance? A knowledge management agenda has to identify success measures so as to be able to reflect on the knowledge management performance. The debate in this field is categorised along (1) Organisational processes, (2) Ecological perspectives that focus on the interaction of people, knowledge and environmental factors to do with adaptation and (3) Technological perspectives. Literature associates organisational performance with the achievement of strategic goals such as growth of sales, market share, new products development and financial goals such as return on assets, equity, investment etc. A review of knowledge management literature that concentrates on the knowledge-based theory provides insights and a strong basis to explore the nature and importance of the relationship between knowledge management and organizational performance. The knowledge based theory suggests that the ability to deploy resources successfully depends on the knowledge residing in the human capital of a firm. The survey method is being used as a strategy of inquiry in the construction and engineering industry. This sector presented a fertile area for investigation due to the diverse skills involved therein. It was decided to focus on construction and engineering companies that are listed on the Johannesburg Stock Exchange (JSE) at the time the research was to be carried out.