Alignment of Knowledge Management and Performance Management System (Case Study: PT.X)


 
Purpose: Improve company’s performance by capturing critical knowledges of employee in each Department. 
Design/methodology/approach: Knowledge audit is used to capture the knowledge database, and Analytical Hierarchy Process (AHP) is used to obtain critical knowledge. 
Findings: The results show that there are 30 points knowledges with 3 critical knowledges in the Department of Production. 
Research limitations/implications: The study focused only on E-Print product, especially for Department of Production. 
Practical implications: Knowledge is one of intangible assets in a company. Aligning knowledge with performance management system will support the company to achieve it’s goaals and the sustainability of the company.   
Paper type: This paper can be categorized as case study paper. 
 



I. INTRODUCTION
The increase of competition in this globalization era pushes companies to make innovations and improvements to their business processes and performance. One of the important factors that affect performance in a company is knowledge. Davenport and Pruzak (1998) define knowledge as a mixture of experience, contextual value, information and views of the fundamental experts and intuitions that provide a framework for evaluating and integrating new experiences with information. In a company, knowledge is not only related to documents and storage of valuables, but also the routines of an organization, processes, norms, and practices within the enterprise. To make knowledge more valuable and useful for the company, knowledge must be well managed (Nonaka & Takeuchi, 1995). According to , knowledge management is one of the important and powerful tools for companies to manage their resources, to achieve the expected competitive advantage. Murray (2002) said, basically knowledge management is the act of managing corporate knowledge and intelligence assets that can improve performance on an organization scale and provide added value. Brooking (1997) defined it as an activity related to strategy and tactics to manage assets in the form of human resources. If concluded, knowledge management is an activity to manage process and knowledge resources in order to improve competitive advantage and performance of an organization (Wong & Aspinwall, 2006). Performance measurement is an important and crucial thing in knowledge management, because performance measurement is a foundation that enables an organization to evaluate, control and improve its knowledge processes (Pervaiz, et al, 1999, Wong, 2005. So it can be concluded that performance measurement and knowledge management are two things that have relevance, and by building a knowledge management system that is aligned with performance measurement system, a company will be able to evaluate and control its owned intelligence assets better, and improve its performance to be able to achieving the expected competitive advantage. In addition, by implementing a knowledge management system that aligns with performance measurement, the company will be able to minimize and overcome the gaps that occur between processes of knowledge on business processes and performance indicators related to business objectives . With the knowledge management system, it is expected that the company can also protect its intelligence assets from human resource problems such as retirement (retirement), hijack (piracy), and turnover (work move).   Figure 1 shows the gap in the entire organization map. Gap is exist caused by companies that have previously had a complete performance measurement system and knowledge recognition process. The contribution of the knowledge process can be measured by the lag indicators affecting the process, but there is a lack of solution in knowledge management lead indicator. The other hand, the lag indicators measure business performance that supports the achievement of strategic objectives, and on another side, there is a new knowledge process that accomplishes the knowledge bottleneck on the business process. When associated with performance measurement, knowledge management serves to boost the company's intellectual assets to achieve company goals, and improve company performance in terms of equitable distribution of information, and show how the performance of a business process within a company. PT. X should improve its performance as the increase of product demand and competition. To be able to know the fluctuation of company performance, hence must first be done evaluation or performance appraisal of company done periodically.
This study will formulate knowledge database and support the achievement of strategic objectives of the company, weighting the knowledge points so that it is known critical knowledge for the company, and set up performance indicators for each knowledge point align with the existing performance indicator. PT. X is a IT solution specialist company, especially in gas station IT needs. The formulated knowledge database focused on one of the best seller product, which called E-Print and its IT system related to reporting daily operational aspects. Based on the outputs, the company can measure the performance of internal stakeholders of the company in terms of equitable information / knowledge related to the performance of the company.

II. METHODOLOGY
This research will be conducted into several steps:

A. Problem Statement Formulation and Goal Setting
In this step, brainstorming with The CEO of PT. X will be conducted, because CEO is considered to be the one who most understand about the knowledge management and performance measurement system in existing condition. Problem Identification obtained from information gathering. After the problems and its sources determined, the next step is formulation the problem statement to be solved through this research and the the purpose of research determined as well.

B. Data Collection
Data collected is about company's condition and identify the required knowledge. The following data must be collected to be able to analyze the Company's condition.

 Identify Existing Knowledge Management and Performance Measurement Existing
At this stage, the existing performance measurement system of the company is identified. In the current condition, PT. X use Balanced Scorecard as performance measurement system. But, PT. X does not have a knowledge database.

 Knowledge Audit
At this stage, data collection is conducted (knowledge audit). Data needed are about knowledge needed in providing E-Print Products. Knowledge audit only focused on Department of Production. The methods used for knowledge audit are questionnaires and interviews. Interviews and questionnaires distributed to experts in Department of Production. Knowledge points obtained used as data processing materials.

C. Data Processing
Here are the steps performed on data processing.

 Knowledge Database and Properties
In this section, a knowledge database developed according to the existing strategic objective of the Department of Production . The development use data obtained from the knowledge audit. The creation of Knowledge Properties from each knowledge points obtained from the previous step. The purpose of knowledge properties creation is to prevent the ambiguity perception of that knowledge points.

 Identify The Weight of Each Knowledge
In this section, each knowledge points weighted by using AHP, so it can be known which knowledge has the biggest weight or critical effect to achieve the strategic objectives of the Department of Production. The results of data processing that has been obtained will be analyzed, based on strategic objectives associated with the Department of Prodduction, analysis of weighting knowledge, and the weight value assigned to each knowledge point.

III. RESULTS AND DISCUSSION
Based on the observation process, it was known that PT. X use Balanced Scorecard (BSC) as performance measurement system. Knowledge audit conducted to determine knowledges that give contribution to each KPI of Department of Production. The methods used for knowledge audit are questionnaires and interviews. Interviews and questionnaires distributed to experts in each Department. As the result, in Production Department there are 4 KPIs supported by 30 knowledge points. Knowledge is related to each strategy goal that must be achieved, so those must be owned by each employee in the Department of Production. Table 1 shows the knowledge database for Production Department.