Tacit/Formal Interchange in SME Hiring 1 Running head: Tacit/Formal Interchange in SME Hiring The sequence of SME hiring: Towards an understanding of the interchange between tacit and explicit knowledge

Research in the field of knowledge management seems to be split between two different types of knowledge: explicit, codified, articulated, and formalized knowledge; and tacit uncodified, socially constructed knowledge. There has been little research looking at the boundary/intersection between these two types, despite the impact they have on each other. The proposed study seeks to articulate the processes of conversion between tacit knowledge and explicit knowledge. Of particular interest are occasions when individuals and organizations routinely ignore codified knowledge for decision making in favour of “gut feel” reactions. This type of incident has been recognized in the hiring practices of smalland medium-sized enterprises (SMEs). That is, although there exist many formal and explicit guidelines, many hiring decisions are the process of more informal processes. Accordingly, managers and owners of SMEs will be interviewed about their use of tacit and explicit knowledge in making hiring decisions. Each interview will be guided by the construction of sequence diagrams demonstrating hiring document construction and use in a manner consistent with the archaeological method of chaîne opératoire. The narratives produced by the SME represents during the construction of the sequence diagrams will form a basis for discourse analysis regarding how individuals and organizations construct cognitive authority in relation to both tacit and explicit knowledge. The results have implications for improving the state of practice for knowledge discovery and codification. Tacit/Formal Interchange in SME Hiring 3 The Sequence of SME Hiring : Towards an understanding of the interchange between tacit and explicit Introduction The field of knowledge management is split into two camps: the tacit worlds of social learning advocates have called out the explicit tools of information instrumentalists in a kind of academic street brawl. Neither side, however, has made much progress in realizing the promised goals of knowledge management. While knowledge management remains a priority for many organizations (e.g., Leitner & Warden, 2004) the failure rate of knowledge management initiatives remains high (Ambrosio, 2000). The disconnect appears to be due to a lack of ability to address the interaction between tacit and social knowledge. This division between explicit and tacit is inherent is many popular knowledge management conceptualizations. While the distinction between “tacit” and “explicit” was first popularized by Nonaka and Takeuchi (1995; after Polanyi, 1967), the division resonates with other models. Wenger’s (1998) articulation of “communities of practice”, for example, depends on processes of “socialization” and “reification”; Crane’s (1972) description of academic communities describes both “formal” and “informal” communication; and Weick’s (1995) concept of organizational “sensemaking” involves both “meaning” created through the social processes of groups and “frameworks” that are imposed upon groups. Each of these dyads has two components: codified, articulated, and formalized knowledge and uncodified, socially constructed knowledge. Tacit/Formal Interchange in SME Hiring 4 The practice of knowledge management is arguably about the navigation between these two types of knowledge. Unfortunately, the conversion process is notoriously difficult and even the base states of knowledge—either tacit or formal—can be highly unstable. Weick (1993), for example, describes how social knowledge and organization can collapse under particular conditions. Similarly, the semantic instability of codified knowledge has been addressed by a variety of commentators from fields such as communications (Fish, 1998), information science (Dervin, 1983), and media studies (Fiske, 1989). In addition to the inherent instability of tacit and codified knowledge, the problems of conversion are legion. Converting tacit knowledge to formal codified knowledge continues to daunt philosophers, taxonomists, and scientists. In creating a particular classification structure or encoding scheme, the creator makes decisions concerning relevance and significance. These decisions may, or may not, assist other users in discovering knowledge. Sharon Traweek, a sociologist of science, perhaps best describes this situation: A singular focus on simplicity, stability, uniformity, taxonomy, regularity, and hierarchy can, of course, be limiting. Furthermore, every way of making sense has its cognate forms of obsession. Certainly, there is an aesthetics of purification that can linger over the ways of the mind and body... Swirling around with Occam's razor, slicing away what cannot be categorized, leaves more than order behind. (Traweek, 1996 p. 146) Attempts to impose formal knowledge into social worlds have similar difficulties. As noted by one information science researcher, providing information to individuals is not like filling a Tacit/Formal Interchange in SME Hiring 5 bucket with bricks (Dervin, 1983). Instead, the transfer of formal knowledge is dependent largely on the “cognitive authority” (P. Wilson, 1983) that individuals give to different information sources. People engage in a process of ignoring—or “blunting” (Miller & Mangan, 1983; T. D. Wilson, 1997)—information that doesn’t match their worldviews or that comes from sources that lack cognitive authority. Duguid and Brown articulate this idea for the business community: In general, people look beyond information to triangulate reliability. People look past what others say, for example, to gauge trustworthiness. Some clues might be formal and institutional: Who does a prospective client work for? What is her credit rating? Others are informal, such as dress, address, and cars. (Brown & Duguid, 2000 p. 187) Many organizations may feel that they can improve performance by establishing greater control over both the tacit and formal knowledge in their organizations through processes of “knowledge discovery” or “codification” (Nonaka & Takeuchi, 1995). Increasingly, however, researchers note that imposing rigid structures may actually limit the performance of organizations. Choo, for example, notes that rigidly structuring the transformation between tacit and formal knowledge may “work against the original goals of enhancing decision behaviour, and may instead stand in the way of organizational members accurately interpreting new information and acting on the information in a rational manner.” (Choo, 1998 p. 156) Regardless of the difficulties inherent in converting between tacit and formal knowledge, these sorts of transformations happen constantly at both the individual and organizational level. By developing a greater understanding of how these transformations and conversions happen, Tacit/Formal Interchange in SME Hiring 6 perhaps we can begin to resolve some of the constraints on current knowledge management practice. Limitations of Existing Tacit and Formal Conceptualizations of Knowledge One of the limitations of the existing frameworks for understanding the interface of tacit and formal knowledge is their exclusive focus on large and homogeneous bodies such as social organizations or collections of formal documents. The process of organizing codified knowledge such as books and documents, for example, generally relies on the concept of “literary warrant” where the classification system is the product of the entire collection (Svenonius, 2000). Similarly, our conceptions of social knowledge are driven by group models such as “communities” (Wenger, 1998) and “social types” (Chatman, 2000; Pendleton & Chatman, 1998). Indeed, it seems that many of our ideas about social learning, organizational communication, and collection management have been formulated through the study of large corporate organizations such as Xerox PARC, or large document collections such as the Library of Congress. On a practical level, however, the knowledge seeking behaviour of most individuals stems from their involvement in organizations considerably smaller than these large organizations and with document collections that are considerably smaller than those of libraries. Consider, for example, the smallor mid-sized enterprise (SME). For the purpose of this study, an SME will considered to be any business organization with fewer than 50 employees. While SMEs account for 94.7% of the companies in Canada (Key small business statistics, 2003), there is comparatively little literature on either the tacit or formal knowledge practices of small firms. These firms are unlikely to have formal documentary control practices within their organizations Tacit/Formal Interchange in SME Hiring 7 perhaps due to the comparative lack of both large document collections and specialized human resources. Similarly, SMEs inherently lack the same sort of bureaucracy and institutionalized role expectations of large firms and organizations. The study of SMEs presents an interesting problem to the field of knowledge management. This conflict between the formal knowledge and tacit knowledge practices of SMEs are grossly apparent in hiring decisions. While some academics exhort SMEs to follow formal best practices involving detailed documentation (e.g., Carroll, Marchington, & Earnshaw, 1999), others recognize that the hiring process in small firms often relies on ad-hoc, and informal processes (e.g., Stines & Kleiner, 2003). Henneman and Berkley, describe this tension in their recommendations to small firms: [S]mall businesses need to view and treat their attraction practices as strategic choices to be made in order to achieve desired outcomes. This will necessitate a combination of strategic thinking and “gut feel”, combined with knowledge of research results... (Heneman III & Berkley, 1999 p. 73) Hiring decisions can serve as an arena for the conflict between formal knowledge and tacit knowledge. The hiring process is replete with a plethora of different types of explicit and formalized documentation related to topics such as tax laws, environmental and safety regulations, needs assessment, salary and benefits, equal opportunity considerations, cost estimates, personality characteristics, etc. (Stines & Kleiner, 2003). The process also deals with very specific “genres” (Yates & Orlikowski, 1992) of documents such as CVs, job descriptions, Tacit/Formal Interchange in SME Hiring 8 human resource scorecards, offer letters, acceptance letters, and insurance and tax forms (Carroll et al., 1999). While SMEs generally acknowledge the solicitation and collection of these documents, their actual use in hiring is often eschewed in favor of social devices such as personal referral. Regardless of the process used, SMEs consider hiring and retention of human resources to be among the most important issues they face (Key small business statistics, 2003). The preference for tacit knowledge over formal is evident in studies of information practices in SMEs. In a recent study of SMEs commissioned by Industry Canada (Compas Inc., 2001), the majority of the surveyed SME owners or managers stated a preference for getting information from informal sources such as clients, suppliers, or colleagues. They also, however, noted a clear preference for printed communication and documentation particularly when dealing with extraorganizational and unknown entities. The extra-organizational communication of SMEs affords an opportunity to study the interplay of social and formal knowledge. While hiring decisions are made with tacit knowledge, the formal knowledge represented by various genres (i.e., CVs, job descriptions, etc.) also serves an important role. In understanding the life cycle of the genres used in hiring—their creation, use, and disposal—and ultimately how they are either recognized as valid knowledge sources or ignored, we may shed some light on the process of interchange between formal and tacit knowledge. Tacit/Formal Interchange in SME Hiring 9