Knowledge based competition rising due to innovative HR practices

A recent workshop at the National Academies of Science showcased a series of interesting charts on global advance of HR innovations and the consequences for knowledge based competition. Titled “Policy Framework for Knowledge-Based Capital”, the workshop assembled academics and policymakers in Washington DC to examine knowledge based competion.

The charts by Kathryn L. Shaw from the Stanford Graduate School of Business School caught my attention.

Professor Shaw discussed “HR shocks” such as incentive pay, training, and teamwork, and the advance in adoption across the globe. The innovative practices critical to a knowledge based economy were “hr shocks” similar, and sometimes closely linked to “technology shocks”.

HR shocks

Other research has found that adoption of the innovative HR practices is advancing at different rates across the globe. The countries that are in the forefront, for example in incumbent workforce training, will build up a significant advantage.  Thomas Bauer compared the major European economies adoption of team-oriented decision making, increased availability of employee training, and incentive pay and found dramatic variation.

From Thomas Bauer, High Performance Workplace Practices

From Thomas Bauer, High Performance Workplace Practices

With each innovative HR practice adopted, additional incentives for knowlege based capital are put in place from the obvious (training) to the more subtle (careful hiring).  Employers that have adopted the practices have created strong incentives for workers that are educated, maintain their skills through training and information sharing, and develop sophisticated soft skills (such as teamwork) to use their knowledge in complex engagements.  Workers in slow-adopting economies have fewer incentives to maintain or improve their skills and will fall behind in global competition.