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 study to establish if there is a relationship between knowledge management and organisational performance. As part of the study, knowledge management was thought to comprise the key constructs of knowledge dissemination (KDI), knowledge acquisition (KAC), responsiveness to knowledge (RTK) and knowledge management practices (KMP) as identified in prior studies. Interestingly, results point to the inability of respondents to clearly distinguish between KDI, KAC and RTK constructs. It would therefore seem that the understanding that previous researches, predominantly undertaken in developed societies, relied upon to create the three constructs does not exist in the construction and engineering industry in South Africa. The three constructs were thereafter collapsed into a distinct construct called knowledge process capability (KPC). Using a respondent population of employees from companies in the construction and engineering industry in South Africa, results revealed the existence of relationships between the component-constructs of KPC and KMP with organisational performance. A similar association was depicted on the constructs of interest, being knowledge management and organisational performance. Academically, the results enrich the body of literature as it pertains to knowledge management specifically in South Africa and more so in the engineering and construction industry. Practically, the empirical evidence provides necessary impetus for greater attention and investment on the part of companies in the area, buoyed by the realisation that it contributes to the goal of better organisational performance.