Knowledge Risk Management in Two-Tier HRM Structures

Abstract

Differential two-tier HRM structures are characterised by their lower organisational investment (lower training and development and compensations and benefits) in second-tier employees relative to first-tier employees. This discrepancy leads to a conflict between the two tiers and negative attitudes among second-tier employees. From the perspective of knowledge risks, this study proposes that the two-tier HRM structure generates on-the-job knowledge risks, especially between the two tiers of employees. In worst-case scenarios, if there is high sector mobility, there can be high turnover rates among second-tier employees, thereby putting the organisation’s knowledge at risk. However, the types, areas and strategies of knowledge risks have not been theorised and explored in the literature. Exploratory interviews were conducted with six managers at private Pakistani banks where two-tier HRM structures are applied to investigate the associated dynamics of knowledge risks in practice. The results suggest that customer-related knowledge is the primary area and locus of risk that subsumes the network and management knowledge. However, the types of knowledge risk on-the-job are knowledge hoarding and knowledge hiding. In turnover or intra-sector mobility, second-tier employees may exhibit knowledge loss, knowledge spillover and knowledge leakage, especially in the area of customer-related knowledge.