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Knowledge management in the shipping industry

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DOI: 10.4324/9781315740027-10

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Chapter 10

Knowledge Management in the Shipping Industry

Jiangang Fei, Livingstone Divine Caesar

INTRODUCTION

While knowledge management principles have been applied to many industries, the
shipping industry in general has been slow in adopting knowledge management. Since the
industry is very much capital intensive, attention has always been on managing the tangible
assets of shipping companies. Due to the lasting skill shortage problem and concerns about
shipping safety associated with the human factor, much efforts have been made to improve
both the quantity and quality of the workforce of the industry. The very high level of
personnel mobility and difficulties in attracting new people faced by the industry challenges
the effectiveness of some conventional human resource management practices. Knowledge
management may provide the industry an opportunity to address the skill shortage problem
from a new perspective. For example, the proposed knowledge retention goes beyond
conventional human resources management practices to seek new ways of maintaining and
developing a competent and sustainable workforce given the prevailing industry-level
competition for talent. This chapter discusses what knowledge management is; why it is
important to the shipping industry; and how it may be applied. A brief discussion of the
differences and linkages between human resource management and knowledge management
is also provided.

1
2 Jiangang Fei, Livingstone Divine Caesar

WHAT IS KNOWLEDGE MANAGEMENT

While there are many definitions of knowledge management and consensus is hard to reach,
knowledge management can be described as a process of developing and applying a
systematic approach to create, capture, structure, manage, disseminate, and utilise
knowledge assets throughout an organisation to enhance organisational performance.
According to Wiig (2000), two aspects of knowledge management are vital – knowledge
assets and the process. Adequate knowledge assets provide an organisation the capability
and competence to excel in a competitive business environment while the process ensures
that knowledge assets of an organisation are constantly created, updated, and efficiently
utilised to create competitive advantages for the organisation. The identification of
knowledge assets in an organisation is the first step towards effective knowledge
management. It not only provides a stocktake of what the organisation has but also
determines what and how to manage. The knowledge management process consists of a
series of activities and actions to nurture, organise, disseminate, and apply knowledge so that
value can be created for the organisation. All areas of the two aspects must be carefully
managed to achieve the desired outcomes from knowledge management.

There are two schools of thought towards knowledge management in the literature. The first
school of thought sees knowledge management as equal to information management. The
main focus of knowledge management is on the development and application of information
technologies and systems with a belief that technology can provide all solutions. This view
prevailed in the late 1990s when information technologies achieved great advancement. The
other school of thought, however, takes a clear distinction between information and
knowledge and acknowledges that technology, especially information technology, is only
one of the means to facilitate knowledge management. The second school of thought
recognises the tacitness (Kogut & Zander, 1993) of knowledge and the complexity of
managing it and is considered as the second-generation of knowledge management with
dominant adoption (McElroy, 2003).

Compared with other management disciplines, knowledge management has a relatively

short history although the idea of ‘knowledge’ was well recognised a thousand years ago.
The importance of managing knowledge was strengthened with the realisation of
‘knowledge economy’ at the end of 20th century. Since then, knowledge management
principles have been applied, to different extent and in different scale, in businesses of all
industries, government agencies, and non-profit organisations. There have been
overwhelming benefits resulted from the shift of attention from tangible assets to intangible
knowledge and long-lasting implications to the business environment, innovations in
industries, and the development of economies.
 Knowledge Management in the Shipping Industry 3

KNOWLEDGE IN THE SHIPPING CONTEXT

Data, Information, Knowledge, and Organisational Knowledge Base

To discuss knowledge management, it is necessary to clarify what knowledge is and how it is
different from information and data. Data is a collection of facts that are syntactic and
invariant with a potential meaning to those who can interpret them. Once interpreted and
attributed with meaning, data becomes information (Hirschheim, Klein, & Lyytinen, 1995).
Distinctions can be drawn between information and knowledge based on their
interdependency from their owner and relative stability over time. While information is
invariant and independent of its knower, knowledge is embedded in people or organisations
and based at least partially on experience (Leonard & Sensiper, 1998; Sveiby, 1997).
Information tends to be relatively static in time and linear in nature, knowledge is dynamic
and evolves over time.

The relationship between data, information, and knowledge can be illustrated through a
hierarchical structure where data sits at the bottom, information in the middle, and
knowledge at the top (Knight & Howes, 2003). The hierarchical structure shows how data can
become information through a semantic and meaning-attribution process and how
information can be converted to knowledge through individual process and interpretation of
information. The structure, however, does not imply a one-direction conversion, that is, from
data to information, then to knowledge. The conversion can be reversed. In fact, in many
cases, knowledge needs to be presented in symbolic forms so that it can be articulated and
shared (Alavi & Leidner, 2001).

In addition to the distinctions between data, information, and knowledge, the classification of
knowledge is equally important in discussing knowledge management. Knowledge can be
classified according to its epistemological and ontological dimensions. Epistemologically,
knowledge can be either explicit or tacit (Lubit, 2001; Nonaka, 1994; Nonaka & Takeuchi,
1995; Polanyi & Sen, 2009; Spender, 1996; Zack, 1999). Ontologically, knowledge can exist in
an individual, a group or an organisation (Nonaka, 1994; Nonaka & Takeuchi, 1995). Explicit
knowledge refers to knowledge that is structured and independent of the knower (Kidd,
1998). In organisations, explicit knowledge exists in forms of instructions, standard operating
procedures, and manuals (Spender, 1996). The tacit nature of knowledge suggests that
knowledge is deeply rooted in action and specific context and is situational and intimately
tied to the knower’s experience. Thus, it is difficult to express, formalise or share in an
explicit way (Kidd, 1998). In organisations, tacit knowledge is embedded in organisational
value and brief, culture, and routines. Since tacit knowledge is intangible and difficult to
imitate, it is considered a source of competitive advantage of an organisation (Barney, 1991;
Barney, 2001; Barney & Clark, 2007). The ontological dimension classifies knowledge into
individual and organisational knowledge. While knowledge is created by individuals,
4 Jiangang Fei, Livingstone Divine Caesar

through a spiral of knowledge creation individual knowledge is amplified and integrated

into organisational level (Nonaka & Takeuchi, 1995).

The classification of knowledge into epistemological and ontological dimensions allows

management to identify relevant enablers and barriers in knowledge creation, transfer and
utilisation. The epistemological dimension reveals the stickiness of knowledge (Szulanski,
1996), which is considered as one of the major barriers of knowledge transfer. For tacit
knowledge to be shared and transferred, a process of socialisation, externalisation,
combination, and internalisation (SECI) is suggested (Nonaka & Takeuchi, 1995). The
ontological dimension coincides the distinction between individual and organisational
learning (Kim, 1998). The integration of individual knowledge into the organisational level is
considered the most important and yet challenging task for organisations to develop
organisational knowledge for competitive advantages. The process of integration requires
commitments from both the organisation and employees.

Based on the two-dimensional classification of knowledge, a matrix can be used to illustrate

the total knowledge assets of an organisation, i.e. organisational knowledge base (Figure 10.1)
(Fei, 2009). Individual knowledge is temporal to a hosting organisation as it goes with
individuals when they leave the organisation. Organisational knowledge is, however,
independent of any individual employees. To create competitive advantages, knowledge
needs to be managed so that it is fully utilised and there is a continuing process of integrating
individual knowledge to the organisational level.
Figure 10.1 A matrix of organisational knowledge base

Individual tacit Organisational tacit

Epistemological

knowledge knowledge

Individual explicit Organisational

knowledge explicit knowledge

Ontological

The conceptualisation of organisational knowledge base as represented in the matrix (Figure

10.1) allows the components of each cell to be identified. Based on a comprehensive literature
 Knowledge Management in the Shipping Industry 5

review of knowledge-related constructs and measurement approaches on knowledge assets,

Fei, Chen, and Chen (2009) identified the major components of an organisational knowledge
base which covers both explicit and tacit knowledge and at both individual and
organisational levels. For individual explicit knowledge, academic and professional
qualifications are indications of the extent and level of explicit knowledge individuals have
obtained through education and training programs. Individual tacit knowledge consists of
skills and expertise, experience, and attitudes. At organisational level, explicit knowledge is
contained in technology and information system an organisation has developed, process
manuals, and intellectual property that has been created through operations or research and
development activities. Organisational tacit knowledge is embedded in organisational
culture, image, tacit rules, and external relationships including relationships with customers
and suppliers. A modified matrix of organisational knowledge base is presented in Figure
10.2 and its components and indicators are provided in Table 10.1.
Figure 10.2 A modified matrix of organisational knowledge base

- Culture
- Skills/expertise - Image
- Experience - Tacit rules
Epistemological

- Attitudes - External
relationships

- Academic - Technology and

qualifications information systems
- Professional - Process manuals
qualifications - Intellectual property

Ontological

Knowledge in the Shipping Industry

Formal education is the first important step for knowledge acquisition. In the shipping
industry, a large percentage of personnel, especially those in officer positions (including deck
officers and engineers), have tertiary qualifications. Formal education provides prior
knowledge for individuals to learn efficiently in the real world and to develop the ability to
explore complex issues and develop solutions in their workplace. In addition to academic
qualifications, officers on board ships are required to hold relevant Certificates of
Competence (CoC) to perform prescribed duties. The attainment of CoC requires a
combination of formal academic education and training and adequate sea time as required by
6 Jiangang Fei, Livingstone Divine Caesar

the International Convention on Standard of Training, Certification and Watchkeeping for

Seafarer (STCW). A CoC is an indication of the ability and competence of the holder to
perform prescribed tasks on board ships.

While academic and professional qualifications are considered as explicit knowledge

individuals acquire through education and training, they are also the foundation for
individuals to develop tacit knowledge such as problem-solving capability and innovation
ability. It is a commonly accepted fact that high academic qualifications do not always mean
strong ability in innovation and problem solving in workplace. The development of
individual tacit knowledge depends on the commitment and dedication of individuals in
applying explicit knowledge learned through education and training to real world problems.
Work experience as reflected by length of services, position held, types of ships and ocean
routes experienced, and exposure to multicultural workplace of seafarers is a good
measurement of tacit knowledge an individual may have. In addition, work attitude is also
considered as part of individual tacit knowledge as it has close relationship with individual
performance (Macky & Boxall, 2007). In the shipping industry, work attitude has great
implications to the wellbeing of those working on board ships and the safety of ship
operations.

At the organisational level, knowledge assets exist in both tacit and explicit forms. Explicit
knowledge assets include instructions, procedures, manuals, and articulated best practices
that can help improve organisational efficiency and safety of shipping. Information
communication technologies including information storage and retrieval, access, and
communication are an indication of the capacity of an organisation in developing
organisational explicit knowledge and facilitating the sharing of such knowledge among the
employees. Compared with explicit knowledge, tacit knowledge at an organisational level is
much more valuable and takes more time to develop. Tacit knowledge is also considered as
the only source for sustainable competitive advantages due to its rareness and inimitability.
Organisational culture, image/reputation, and external relationships are the most important
components of organisational tacit knowledge. The development of organisational tacit
knowledge depends on the commitment of top management and the willing contributions of
employees.

Table 10.1 Components and indicators of an organisational knowledge base

Classification Components Indicators

Academic Years of school, attainment of certificates, diploma or
Individual
qualifications degrees
explicit
knowledge Professional Attainment of certificates including Certificate of
qualifications Competence
 Knowledge Management in the Shipping Industry 7

Problem solving Ability to identify problems and the applications of

capability knowledge to develop solutions
Innovation ability Ability to develop new applications based on prior
Individual tacit knowledge
knowledge Work experience Length of services, positions held, types of ships and
oceans routes experienced, exposure to multicultural
workplace
Work attitude Overall satisfaction with current job, feeling of one’s
own work, value sharing, and intention to stay within
the current company or the industry
Organisational Technology and Information storage and retrieval, information access
explicit information systems technologies, and communication technologies
knowledge Process manuals Written instructions or procedures, identified and
articulated best practices
Organisational culture Hofstede et al. (1990): results-oriented vs. process-
oriented; employee-oriented vs. job-oriented;
professional vs. parochial; open vs. closed system;
Organisational
loose vs. tight control; normative vs. pragmatic
tacit knowledge
Image Organisation’s reputation known to the communities
and the industry
External relationships Formal or informal agreements/arrangements with
clients, suppliers, partners/competitors

KNOWLEDGE MANAGEMENT AND HUMAN RESOURCE MANAGEMENT

Knowledge management has its root in information management and with predominant
emphasis on information technology in some early literature. However, it has become a
common understanding now that there are distinct differences between information
management and knowledge management. Some scholars question the legitimacy of
knowledge management being an independent discipline arguing that knowledge
management (KM) has much to do with human resource management (HRM) and should be
part of HRM. Therefore, the purpose of this section is to discuss the relationship between KM
and HRM, their differences, and how both, in different ways, contribute to achieving
organisational objectives and goals.

As important management functions, HRM and KM have a fundamental common goal, that
is, to contribute to improving organisational performance through well-defined processes
and strategies in their respective areas. The development of strategies and policies in HRM
and KM must align with the overall organisational objectives and goals. The primary role of
HRM is to increase employee performance to their highest level corresponding to their
8 Jiangang Fei, Livingstone Divine Caesar

specific role in an organisation. The focus of HRM is human resource, that is, individuals.
Knowledge management is concerned with creating and using knowledge to deliver value
and sustainable competitive advantages to the organisation. The main focus of KM is human
capital and knowledge assets. HRM consists of a series of well- defined and developed
activities including workforce planning, work/job design, attraction and selection, retention
and development/training, performance appraisal, reward and compensation, and workplace
or occupational health and safety (Table 10.2). Knowledge management starts from a gap
analysis of what an organisation knows and what an organisation must know in order to fill
the strategic gap between what an organisation can do and what an organisation must do
(Zack, 1999). KM aims to facilitate the creation and capture, sharing and dissemination,
application and reuse, of knowledge in an organisation. The evaluation of performance is
concerned more with the overall outcomes at an organisational or team level rather than at an
individual level.

The relationship between HRM and KM is such that the achievement of KM objectives
requires compatible HRM practices. The facilitating role of HRM in KM has been extensively
explored, for example, Soliman and Spooner (2000), Yahya and Goh (2002), Cabrera and
Cabrera (2005), and Armstrong and Taylor (2014). The discussion of the relationship between
KM and HRM can follow the main functions of these two management disciplines.
Knowledge acquisition may be achieved through internal creation of new knowledge or
external recruitment of employees with knowledge that did not exist previously in the
organisation. For KM, recruitment does not only fill up job vacancies. It brings needing
knowledge to the organisational as well. HRM can facilitate KM through recruiting people
who have compatible values with the existing organisational culture (Robertson & Swan,
2003; Swart & Kinnie, 2003). Since individuals are knowledge carriers, the sharing and
dissemination of knowledge very much relies on the motivation and willingness of
employees. Good HRM practices such as performance and reward management should
encourage employees to share their expertise rather than hoarding what they know. On the
other hand, individual learning is encouraged if HRM supports and acknowledges learning
through resource commitment and proper rewarding.

Employee retention plays a critical role in HRM due to the difficulty to attract talented people,
high cost involved in the recruitment process, and loss of productivity associated with high
turnover (Davidson, Timo, & Wang, 2010; Hillmer, Hillmer, & McRoberts, 2004). Employee
retention may be achieved through various methods including monetary (e.g. salary, bonus,
and stock share) and non-monetary (e.g. promotion and training) rewards, effective
employee communication, teamwork, and supportive corporate culture. Employee retention
contributes to knowledge retention when it is successful. However, acknowledging the high
mobility of the modern workforce where loyalty and life-long commitment to a single
organisation is rare, knowledge retention focuses on retaining the knowledge of the
 Knowledge Management in the Shipping Industry 9

employees while they are still with the organisation rather than physically keeping these
employees in the organisation. Knowledge retention is achieved through effective knowledge
sharing and dissemination which in turn relies on compatible HRM practices as discussed
earlier.
Table 10.2 Comparison between HRM and KM

HRM KM
Purpose and strategy • Contribute to organisational performance
• Align with organisational objectives and goals
Focus Human resource Human capital and knowledge assets
Process and activities • Planning & design • Gap analysis
• Attraction & selection • Creation & capture
• Retention & development • Sharing & dissemination
• Performance & reward • Application & reuse
management • Evaluation & monitoring
• Health & safety • Legal & ethical aspects

KNOWLEDGE MANAGEMENT IN THE SHIPPING INDUSTRY

The driving force for knowledge management

The driving force for knowledge management comes from the continuous quest of
organisations for business success. From the scientific management theory of Frederick
Winslow Taylor (2004) to the bureaucratic management theory of Max Weber (2009) and to
the present management theories focusing more on unlashing individual capabilities to
develop sustainable competitive advantages, both academia and practitioners have been
constantly seeking ways for organisations to succeed in an ever competitive environment
since the industrial revolution. Along with the history of management theories, a major
paradigm shift has occurred on the view of what resource is critical to organisational success.
The days when capital and physical assets were considered the most important resource have
long gone. A knowledge society and economy has arisen since 1980s in which knowledge is
considered the only meaningful resource (Drucker, 1988; Drucker, 1994) to replace other
resources (Quinn, 1992; Toffler, 1990) and provide organisations sustainable competitive
advantages (Drucker, 1994). Knowledge management has its foundation in a resource-based
view theory of the firm (Barney, 1991; Prahalad & Hamel, 1990; Teece, 1998; Wernerfelt, 1984),
organisational learning (Hedlund, 1994; Wenger, 1998), and a knowledge-based view of
strategy (Nonaka, 1994; Spender, 1996).

The Need for Knowledge Management in the Shipping Industry

10 Jiangang Fei, Livingstone Divine Caesar

Since mid-1990s, extensive research has been done in almost all industries exploring a wide
range of topics in relation to the application of knowledge management principles in practice.
Compared to other industries, the shipping industry has been slow in response to this new
management discipline. The need for knowledge management in shipping arose from the
severe skill shortage faced by the industry and the predicted worsening situation in the near
future (BIMCO/ISF, 2010, 2015) due to the difficulty of attracting new entrants to fill the skill
base and the on-going outflow of highly experienced personnel from the shipping industry to
other shore-based industries (Fei et al., 2009; Fei & Lu, 2015). Personnel with extensive
seafaring experience are well sought after to occupy a range of shore-based positions such as:
management positions in shipping companies including professional ship managers, marine
surveyor, jobs associated with classification societies and marine insurance. The skill shortage
will significantly impact the ability of the shipping industry to provide adequate maritime
transport to meet the ever increasing international trade in a safe, efficient, and cost-effective
manner.

Historically, personnel movement across industries has been very high due to the shipping
industry’s unique characteristics (Moreby, 1975). The personnel movement has always been
characterised as a one-way direction with the shipping industry constantly losing its
expertise to other industries (Gardner, Naim, Obando-Rojas, & Pettit, 2001; Gardner, Marlow,
Naim, Nair, & Pettit, 2007). This problem is further compounded by the difficulty in
attracting personnel into the industry for various reasons (Dinwoodie, 1996; Leggate, 2004;
McLaughlin, 2012; Moreby, 1975). Extensive efforts have been made to make seafaring
attractive through employment branding strategy (Thai & Latta, 2010), compensation
management (Çakir & Nas, 2013), and improving work-life balance (Caesar, Cahoon, & Fei,
2015) and the overall image of the industry (Fafaliou, Lekakou, & Theotokas, 2006). More
recently attention has been paid to retaining active seafarers within the industry (Caesar,
Cahoon, & Fei, 2014; Caesar et al., 2015). The conventional approaches from a human
resource management perspective, however, cannot effectively solve the shortage problem in
the shipping industry due to, not only the high cost involved in retaining leaving personnel,
but also the initial motives of leaving being irrelevant to any retention incentives (Abbasi &
Hollman, 2000; Fei & Lu, 2015; Mitchell, Holtom, Lee, Sablynski, & Erez, 2001). This calls for a
different approach to address the skill shortage in the shipping industry.

The underlying rationale to use the knowledge management approach is to regard the high
personnel mobility in the shipping industry as an opportunity rather than a problem. As
individuals are knowledge carriers (Polanyi & Sen, 2009; Von Krogh, 1998), their movement
across organisational and industry boundaries is widely recognised as a mechanism for
disseminating tacit knowledge and skills across space and time (Almeida & Kogut, 1999;
Almeida, Song, & Grant, 2002; Cooper, 2001; Gruenfeld, Martorana, & Fan, 2000). New
employees bring new knowledge that the organisation previously did not have and is thus
 Knowledge Management in the Shipping Industry 11

considered positive to the organisational knowledge base. Out-flow of personnel, on the

hand, leads to the loss of knowledge if the knowledge of the leaving personnel is not known
to others in the organisation. Therefore, the impact of personnel mobility largely depends on
whether there are mechanisms in place to manage the knowledge flows for the best interest
of the hosting organisation. The application of knowledge management in the shipping
industry provides a new opportunity and perspective to address the long-lasting skill
shortage in the shipping industry.

From Employee Retention to Knowledge Retention

Given the high mobility of seafarers and a range of issues associated with employee retention
at an organisational level, a shift of attention is needed. If employee moving or leaving is
unavoidable, how can organisations or industries make the best use of the knowledge of their
employees while they are still around? The shift requires a change of perspective when
examining the employee retention issue. Instead of seeing employee turnover a problem,
knowledge retention advocates regard this an opportunity. Out-flow of personnel, especially
those caused by voluntary turnover, has been seen a net loss to the hosting organisation.
However, when taking a knowledge management view, personnel movement is regarded as
knowledge flow continuously moving through organisations and the industry. Thus, it
provides the opportunities for organisations to develop and update their organisational
knowledge base through knowledge retention which consequently leads to improved
organisational competitiveness. The benefit of taking a knowledge management perspective
is that knowledge retention works with the prevailing personnel mobility rather than against
it. This will further strengthen the attractiveness of the industry through well- defined and
managed career pathways.

Three principles underpin the advocacy for knowledge retention in the shipping industry.
Firstly, knowledge is the ultimate resource for sustained competitive advantage (Barney &
Clark, 2007). The shipping industry is a capital-intensive industry and financial resource for
example, is critical for every shipping company. However, the success of a shipping business
relies more on how the available resources are deployed and managed to create sustained
competitive advantage. While most resources are imitable and thus cannot lead to sustained
competitive advantage, knowledge is difficult to be imitated (Kogut & Zander, 1992) and
once integrated into an organisational level, it becomes a competitive advantage. Secondly,
knowledge is embedded in people which means individuals are knowledge carriers (Argote
& Ingram, 2000). When individuals move, the knowledge carried by them moves. The final
principle is organisational learning (March, 1991). Individual learning advances
organisational learning through interaction with shared mental models (Kim, 1998). To create
and maintain competitive advantage to succeed in the volatile shipping market, it is
important for shipping organisations to develop their unique knowledge assets.
12 Jiangang Fei, Livingstone Divine Caesar

Acknowledging the high personnel mobility in the shipping industry and the fact that
individuals are knowledge carriers, a framework can be developed to illustrate the flows of
knowledge as personnel move among shipping organisations and across industry borders
(Figure 10.3). Applying the concept of organisational knowledge base (OKB) developed by
Fei et al. (2009), the key to creating a competitive advantage is to develop the organisational
knowledge base. As discussed early in this chapter, a shipping organisation has a dynamic
knowledge base consisting of individual knowledge (carried by employees) and
organisational knowledge in the form of routines, instructions, procedures, organisational
culture, and other tacit knowledge that has been embedded into the day-to-day
organisational operations. The outward arrows in Figure 10.3 represent the knowledge flow
from individuals to the organisation and is retained within the OKB while the inward arrows
represent new knowledge individuals learned and developed during their employment in
the organisation. When employees work in different positions in a shipping organisation,
they bring with them their skills and expertise. Individually, employees use their knowledge
to fulfil their duties and contribute to the organisation. At the same time, they also learn from
performing various tasks, applying their prior knowledge to solve current problems, and
even creating innovative ideas. The purpose of knowledge retention is to retain as much
personal knowledge as possible before they leave the organisation. This can be achieved
through encouraging and facilitating knowledge sharing and transfer among seafarers in the
workplace, e.g. mentoring programs as well as structured processes such as briefing (Hoegl
& Schulze, 2005) and exit interviews (Mishra & Uday Bhaskar, 2011). A well-managed
knowledge retention process allows more knowledge to be shared and transferred from
individuals to the organisation, and eventually integrated into the organisational level.

Since knowledge retention does not focusing on physically retaining employees within the
organisation, it provides several advantages to the retaining organisation as well as the
shipping industry in general. Knowledge retention does not usually use monetary measures
thus less costly than traditional employee retention, especially in times of seafarer shortage.
The principles of knowledge retention do not deter personnel mobility, rather, they leverage
the mobility for mutual benefits. Furthermore, knowledge retention encourages learning at

Organisation

Competitors OKB
Competitors

Education
Education institutions
Institutions Knowledge Flow
Other industries

Other Retirement
industries OKB
 Knowledge Management in the Shipping Industry 13

both individual and organisational levels. It not only benefits organisations, but also
improves individual skill base thus their employability. With knowledge retention, the
movement of personnel within the shipping industry and across industry borders is no
longer seen as a problem. It becomes an opportunity for the shipping industry to improve its
image and thus making seafaring more attractive to the young generation.
FIGURE 10.3 KNOWLEDGE FLOW AND KNOWLEDGE RETENTION (ADAPTED FROM FEI (2009))

Knowledge Management and a Sustainable Workforce

A sustainable workforce maintains a dynamic balance of in- and out- flows of personnel and
ensures that adequate knowledge and skills are developed and retained with continuous
update to meet industry and organisational needs. As illustrated in Figure 10.4, the constant
movement of personnel across organisation and industry boundaries creates both challenges
and opportunities. The key to developing and maintaining a sustainable workforce is to
attract talented people, retain them, and facilitate learning at both individual and
organisational levels. For the shipping industry, attracting talented people requires the efforts
of all stakeholders to promote the industry through portraying a positive image of the
industry to the public. While there are many important factors affecting employee retention
in general, two factors, work-life balance and wellbeing, are considered critical for employee
retention in the context of shipping (Fei & Lu, 2015). Due to the increasing applications of
new technologies and introduction of international conventions, learning at both individual
and organisational levels are imperative to keep abreast of the industry needs. Learning at
dividual level occurs when individuals take structured training programs or apply newly
acquired knowledge (e.g. through observations) into practice. Organisational learning is best
facilitated when there is a culture of knowledge sharing and application. Among a range of
management approaches, the development and provision of diverse career pathways play a
significant role in attracting and retaining talented people, especially in the shipping industry
where career options have always been considered lacking. In addition, a knowledge
retention approach not only promotes learning. It supports and strengthens the development
and management of career pathways for current and future employees thus further
increasing the attractiveness of the industry.

It is clear that personnel movement across organisation and industry boundaries does create
challenges to organisations and industries in general. The increasing employee mobility can
be attributed to the decreasing organisational commitment, eroding employee loyalty, and
pursuing employment flexibility by the young generation. Taking a knowledge management
perspective, the movement of people brings opportunities for organisations to develop their
competitive advantages. This approach can also make a significant contribution to
developing and maintaining a sustainable workforce.
14 Jiangang Fei, Livingstone Divine Caesar

Career
Pathways

Organisation or industry boundary

Organisation or industry boundary

Sustainable Workforce
• Attracting
• Retaining
• Learning

Knowledge
Retention

FIGURE 10.4 A SUSTAINABLE WORKFORCE IN THE SHIPPING INDUSTRY

CONCLUSIONS

Knowledge management is a relatively new discipline. The adoption of its principles varies
significantly across industries with the shipping industry being one of the slow movers. The
argument for knowledge management in the shipping industry is multifaceted. Firstly, the
competition for talent goes beyond organisational level and becomes an industry goal and
priority. The development of transferable skills among individuals and their desire for career
flexibility make the modern workforce extremely mobile. The outcomes of competition for
talent at an industry level will significantly affect the industry’s ability to innovate and
prevail in the rapidly changing socio-economic environment. A knowledge management
perspective helps the shipping industry reflect on many of its inherited practices which may
impede the development and applications of knowledge assets.

Secondly, a knowledge management perspective changes the way we see current problems
and challenges in the shipping industry. The skill shortage has been caused by a range of
factors including upstream factors such as attraction and recruitment; downstream factors
such as competition for experienced seafarers from shore-based industries; and internal
factors such as retention and development. A knowledge management approach may
improve attraction and recruitment through providing potential candidates various career
 Knowledge Management in the Shipping Industry 15

pathways. Recognising the mobility of the workforce, a knowledge retention approach works
with personnel mobility and leverage the knowledge flows associated with the movement of
people. This approach encourages and facilitates learning at both individual and
organisational levels, thus increasing the competitiveness of the industry.

Finally, applying knowledge management principles may contribute to the development of a

sustainable workforce for the shipping industry. A sustainable workforce requires dynamic
flows (both in- and out- flows) of knowledge and skills and can constantly update and
develop new knowledge and skills to meet the industry needs. With its emphasis on
intangible resources, knowledge management promotes learning, facilitates knowledge
sharing and dissemination, and improves utilisation of knowledge assets to create
sustainable competitive advantages. The development and maintenance of a sustainable
workforce is the key for the shipping industry to continuously operate in a safe and cost-
effective manner.

Discussion Questions

1. Think about your current workplace or an organisation that you are familiar with,
what are the key knowledge assets in the workplace or the organisation?
2. What frameworks or models are available for the identification and measurement of
knowledge assets? Which one is suitable for your current workplace? Why?
3. Why is knowledge management important to the shipping industry? Can you find
some examples of knowledge management applications in the shipping industry or
other industries?
4. How can HRM and KM complement each other to contribute to organisational
objectives?
5. How a sustainable workforce may be developed and maintained in the shipping
industry and what is the role of KM?

CASE STUDY

Straits Ship Management Pte Ltd is a Singapore-based private company. The company has 25
employees and provides crew and technical management services for ship operators. In the
last 15 years since its establishment, the business had one major change five years ago when
the business was expanded from only providing crew management to the technical
management area and the total number of employees almost doubled as a result. Out of the
25 employees, 20 of them have extensive seafaring experience and some of them still hold
16 Jiangang Fei, Livingstone Divine Caesar

valid certificates of competence. The company has been providing management services for
ship owners operating dry bulk carriers and general cargo ships with 82 ships and about
3,000 qualified seafarers under management. The business has been growing in the last 10
years albeit in a slow rate. There are opportunities for the company to increase its existing
client base and even expand to other sectors such as container and tank shipping. Expansion
has also been the intention of the business owner (also acts as the Chief Executive Officer),
Mr Lim, in the last three years, including setting up a new office in Shanghai. However, there
are some major challenges that Mr Lim has to address.

The greatest challenge to Mr Lim as the CEO and the business owner has been the high
personnel turnover since the establishment of the company. On average people only stayed
for three and half years before they left with the longest serving people being Mr Lim’s two
friends who helped him establish the business 15 years ago. This represents over 30 per cent
of employee turnover per annum. Due to the strategic location of Singapore, there are
numerous shipping businesses opening every year. The competition for ship management
experts is fierce. Recruiting experienced personnel has always been difficult and expensive,
especially at management level (e.g. operations manager and fleet manager). Since managers
and operators sometimes develop and maintain their own respective clients, the departure of
these people often results in the loss of clients as well. This has been also the main reason for
the slow growth of the business. As the CEO, Mr Lim has tried many human resource
management strategies such as providing attractive salary, generous end-of-year bonus, and
rewards for highly performing staff. These strategies have had only marginal effect and have
not fundamentally improved the turnover rate and the skill base of the company.

The other major challenge comes from the crew management. While the company manages
about 3,000 qualified seafarers, every year significant effort is made to recruit new crew due
to the loss of large number of seafarers. The high mobility of qualified seafarers in the
shipping industry is considered as a normal phenomenon. It does add high cost and cause
disruptions to ship management companies such as Straits Ship Management Pte Ltd. Due to
the very weak linkage between seafarers and the crew management department of the
company, no commitment from either side exits. This weak linkage results in very limited, if
any, mechanism from the human resource management toolbox to effectively manage a large
number of very mobile and qualified seafarers. If the company intends to expand to other
shipping sectors, the initial recruitment and the on-going maintenance of the seafarer
workforce will be a great challenge.

To properly address the two major challenges, Mr Lim approached a consulting company
and was recommended to consider using a knowledge management approach. The rationale
behind the recommendation is that the competitive advantages of Straits Ship Management
Pte Ltd can be only derived from its knowledge assets, that is, the expertise of the managers
 Knowledge Management in the Shipping Industry 17

and operators in developing and maintaining their client base, providing customised services
to the clients, the company’s ability to retain the key relationships developed and managed
by individuals, and the competence of the seafarer workforce. The company is currently
vulnerable to the loss of key relationships with clients resulted from the departure of key
personnel and to the very high personnel mobility of the seafarers. It has been suggested that
the following activities are to be undertaken:
• Conduct an audit of knowledge assets that Straits Ship Management Pte Ltd currently
has;
• Develop strategies to integrate personal knowledge into organisational level so that
the company is no long vulnerable to the loss of key personnel;
• Develop strategies to improve the linkage of seafarers and the company including
supporting training, providing alternative career pathways, and offering a more
balanced work-life for seafarers;
• If an office is to be set up in Shanghai, propose the best way forward from a
knowledge management perspective.

Discussion Questions of the case study

Based on the suggested activities above, complete the following:

1. What tool(s) may be used to identify the current knowledge assets of Straits Ship
Management Pte Ltd?
2. With the tool(s) you identified, what are the current knowledge assets of the company?
3. Given the silo mentality of personnel in the company, how can individual knowledge
be retained and integrated into the company level?
4. Given the high mobility of qualified seafarers, would the effort in providing training
opportunities, career pathways, and more balanced work-life be effective in
maintaining and developing the seafarer workforce for the company? Why?
5. What is the best way to provide qualified personnel to operate the Shanghai Office
from a knowledge management perspective?

FURTHER READINGS

Wherever possible and appropriate, please provide a list of further readings. The list should
be numbered and in the same style as the reference list of this chapter (please refer to
information below).
1. McLaughlin, H. L. (2012). Seafarers and seafaring. The Blackwell Companion to Maritime
Economics, 11, 321.
18 Jiangang Fei, Livingstone Divine Caesar

2. Fei, J. (2009). Knowledge Management in the Shipping Industry: The Effects of Human
Mobility on the Organisational Knowledge Base and Effective Knowledge Transfer Practices–
A Perspective from China. University of Tasmania.
3. Gardner, B. M., Marlow, P., Naim, M. M., Nair, R., & Pettit, S. J. (2007). The policy
implications of market failure for the land-based jobs market for British seafarers. Marine
Policy, 31(2), 117-124.

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