Given that the whole point of knowledge management is to improve the performance of your organisation and to help it to achieve its objectives, the best and most logical approach is tie-in measurement of knowledge management with your organization’s overall performance measurement systems. This can be done either at an organisational level, or for individual projects and processes.
However, one limitation of this approach is that if knowledge management practices are made an integral part of work, you cannot be sure of the relative contribution of those knowledge management practices to the success of a project or process, versus other factors. In view of this, O’Dell and Grayson (see Resources and References below) recommend a two-pronged approach that seeks to measures both outcomes and activities.
Measuring outcomes focuses on the extent to which a project or a process achieves its stated objectives. The success of the project or process serves as a proxy measure for the success of the knowledge management practices embedded in it. In other words, knowledge management is seen as an integral tool for improving a project or process, rather than as a separate thing. For example, outcomes might be measured in terms of the reduced cost of a process, improved efficiency, the reduction in time taken to do it, the improved quality of delivery, etc.
Measuring activities then shifts the focus onto the specific knowledge management practices that were applied in the project or process. What were the specific knowledge management activities behind this practice and what was their effect? In measuring activities, you are looking specifically at things like how often users are accessing, contributing to, or using the knowledge resources and practices you have set up. Some of these measures will be quantitative (‘hard’) measures such as the number and frequency of hits or submissions to an intranet site per employee. However these measures only give part of the picture – they do not tell you why people are doing what they are doing. Hence to complete the picture, you will also need qualitative (‘soft’) measures by asking people about the attitudes and behaviours behind their activities.