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Incentives for knowledge management

Since knowledge sharing usually entails a change in the way the business of an organization is conducted – often, it entails a shift from vertical “look up and yell down” modes of behavior to horizontal knowledge-sharing behaviors – it is important that the relevant behaviors are reflected in whatever incentive systems are in place in the organization. Thus, it is important that the value of knowledge sharing be reflected in the on-going personnel evaluation, periodic merit review or pay bonuses of the organization, so that managers and staff can see that knowledge sharing is one of the principal behaviors that the organization encourages and rewards.

It is important that knowledge sharing be designated as one of a small number of core behaviors, that are rewarded in the performance review system. Getting agreement across a large organization to focus on knowledge sharing, as one of a small number of core behaviors is not easy, and even when accomplished, does not have any instant effect. In the short run, there is often cynicism and posturing, but the experience of organizations, particularly the large consulting firms, is that over time such a change sends an unmistakable signal throughout the organization, which does accelerate the intended behavioral change.

In practice, informal incentives, in the form of recognition by management, and visibility within the organization can often be more powerful incentives than the formal incentive system.

While the establishment of formal incentives is important for the long-run sustainability of a knowledge management program, it is easy to over-estimate the value of incentives. The absence of formal incentives in the early days of knowledge sharing can become a pretext for not implementing the program. The establishment of rewards for individual knowledge sharing activities can signal the importance of knowledge sharing, but also run the risk of creating expectations of rewards for behavior that should be part of the normal way of conducting the business of the organization.

Inspiring vs incenting

In the long-term, however, the establishment of incentives through the regular personnel and reward system of the organization can establish a clear value framework that confirms that knowledge sharing is not a mere management fad, but rather part of the permanent fabric of the organization.

How do you establish a clear value framework? How do you inspire staff to want to share knowledge, even in contexts where that hasn't been the practice? Incentives won't get this job done.

Instead, leaders must inspire people to want to do things differently. How do you do that? That's the subject of Steve Denning's latest book: The Secret Language of Leadership.


Stephen Denning, The Springboard: How Storytelling Ignites Action in Knowledge-Era Organizations. Boston, London, Butterworth Heinemann, October 2000.

Stephen Denning: The Leader's Guide to Storytelling (Jossey-Bass, 2005) chapter 8.

Stephen Denning: The Secret Language of Leadership: How Leaders Inspire Action Through Narrative (Jossey-Bass, October 2007)

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