Busix

The search for skills: Knowledge stars and innovation in the hiring process

R.H. Hamilton a,*, H. Kristl Davison b

a School of Business Administration, University of Mississippi, University, MS 38677, U.S.A. b Fogelman College of Business & Economics, University of Memphis, Memphis, TN 38152, U.S.A.

Business Horizons (2018) 61, 409—419

Available online at www.sciencedirect.com

ScienceDirect www.elsevier.com/locate/bushor

KEYWORDS Knowledge stars; Dynamic capabilities; Search and selection processes; Strategic human capital; Tacit knowledge

Abstract The effective utilization of knowledge has become an important part of how firms gain competitive advantage in the marketplace. However, the recruit- ment, search, and selection processes used to obtain workers who would develop and deploy that knowledge have not materially changed for many years, with human resources (HR) frequently automating legacy procedures. We believe that the hiring processes for exceptional knowledge workers, whom we call knowledge stars, must adapt to the current business environment. Using the framework of architectural innovation, we propose that HR’s recruitment of knowledge stars should begin before specific jobs are announced, should be done in partnership with line managers, and should be done in coordination with implementation of other workplace innovations such as the development of communities of practice and participative management. We conclude by discussing how changes in the search processes for knowledge stars fit in context with some other ongoing challenges for HR personnel. # 2018 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.

1. The importance of acquiring knowledge workers

The rise of knowledge workers in the economy is not a new phenomenon. For decades, Peter Drucker suggested that specialized information would in- crease in importance for organizations seeking to gain competitive advantage, and workers who had specific information in strategically crucial

* Corresponding author E-mail addresses: [email protected] (R.H. Hamil-

ton), [email protected] (H.K. Davison)

0007-6813/$ — see front matter # 2018 Kelley School of Business, I https://doi.org/10.1016/j.bushor.2018.01.006

positions would increase in demand (Drucker, 1959, 1999). Much of the knowledge these key workers retain is learned in a tacit manner, gained from their experiences and in the socialization processes of the workplace (Nonaka & Takeuchi, 1995). Often, this specialized, tacit knowledge can- not be easily transferred, communicated, or repli- cated (Nonaka & Takeuchi, 1995; Nonaka, Toyama, & Peltokorpi, 2011; Polanyi, 1966), making it chal- lenging to develop internally and even more chal- lenging to acquire in the marketplace. Thus, as specialized knowledge becomes more critical, ef- fective search and screening processes for employ- ees with such knowledge become essential and

ndiana University. Published by Elsevier Inc. All rights reserved.

410 R.H. Hamilton, H.K. Davison

potentially game changing for many firms. This is particularly true in the search for employees we call knowledge stars, who are not in upper-level positions but whose knowledge of critical firm capabilities leads to outsized individual and firm performance. Knowledge stars fill newer technology-oriented roles like data scientist, search engine optimization specialist, and factory robotics expert, as well as more traditional posi- tions like petroleum engineer, claims adjuster, or factory foreman.

But have the traditional search and screening processes kept up with the drive for knowledge stars? One possible negative indicator is that since at least 2012, a number of CEOs have complained about their inability to find skilled workers (Coombs, 2013; Cox, 2012; Davidson, 2012; Maurer, 2017). We can expect that knowledge stars, even more than workers with general skills, will become more crucial yet more difficult to hire. While some changes have been made, we believe the under- pinnings of the search and screening processes do not reflect the impact of knowledge stars in the workplace. Moreover, search processes (i.e., re- cruitment), while somewhat less of a concern than the screening process (i.e., selection and hiring), can be too limited or isolated given strategic needs of firms in the 21st century. In the context of the development of firm knowledge and dynamic capa- bilities, we propose a new perspective on search and screening processes for knowledge stars. Using the framework of architectural innovation (Hender- son & Clark, 1990), we show how major changes may need to be made to HR protocols if firms are to identify and select employees who can provide competitive advantage.

2. Gaining competitive advantage through knowledge hiring

Research has shown how having superior knowledge can yield sustainable advantage for firms over their competitors (Barney, 1991; Grant, 1996; Nonaka & Takeuchi, 1995; Spender, 1996; Zahra & George, 2002), making the acquisition and development of human capital critical. Knowledge ultimately comes from people, and the knowledge that is developed from years of experience can be used to create and maintain competitive advantage. Knowledge in- cludes the development of relevant concepts, tech- nologies, and expertise but also the development of experiences, systems, and routines. Over time, as the organization continues to deploy knowledge, it becomes path-dependent (Ambrosini & Bowman, 2010; Zahra & George, 2002; Zollo & Winter,

2002); that is, the knowledge that gives you an advantage at point C is a function of what you learned previously at points A and B. The fact that other firms would not have the same background, training, or experiences creates inimitability (i.e., other firms cannot imitate your firm) and causal ambiguity (i.e., other firms don’t fully understand how you do what you do) (Ambrosini & Bowman, 2010; Barney, 1991; Dierickx & Cool, 1989), thereby fostering competitive advantage that may be sus- tainable. Barriers to imitation such as unique sys- tems, technologies, or reputation (Grant, 1996; Spender, 1996) are constructed in part through developing human capital (Ployhart & Moliterno, 2011).

However, a complicating factor is how much is known individually and how much is known collec- tively through socialization processes within the activities of the organization (Crocker & Eckardt, 2014; Nonaka et al., 2011; Zahra & George, 2002). For example, Groysberg, Linda-Eling, and Nanda (2008) showed that some star knowledge is not transferable to new situations because the knowl- edge context and organizational priorities are not the same. From this perspective, HR’s task in hiring knowledge stars is complex. To maximize firm per- formance, HR must hire employees that have ex- ceptional skills and tacit understanding but who also will be able to fit into the organizational cul- ture and systems. The question, then, is: Do the current search and screening processes capture the unique knowledge of the individual, and how well will the prospective employee fit in with ongoing organizational routines?

Moreover, researchers (Barreto, 2010; Eisenhardt & Martin, 2000; Teece, Pisano, & Shuen, 1997) suggested that in order to sustain any competitive advantage through effective resource deployment, firms must develop dynamic capabilities: the ca- pacity to fine-tune or alter firm capabilities in order to adapt to changes in the external environment. Dynamic capabilities are created primarily from the knowledge and skills of the people in the organiza- tion, but these are impacted by the systems the organization creates to manage its businesses (Bar- reto, 2010; Eisenhardt & Martin, 2000). From expe- rience and tacit knowledge, management knows when to change or adapt (Teece, 2007, 2014). What the firm’s resources have been in the past, when its decisions have been made, and what the particular changes were all influence the adaptation possibili- ties (Ambrosini & Bowman, 2010; Barreto, 2010).

In this context, search and screening processes should aid the organization in developing dynamic capabilities. Hiring processes should consider whether knowledge stars would be a good fit, since

The search for skills: Knowledge stars and innovation in the hiring process 411

organizational learning is often facilitated by and derived from systems and culture, and knowledge is, in turn, path-dependent (Zollo & Winter, 2002). However, the best knowledge stars to be recruited will also have an internal compass (i.e., tacit knowl- edge from previous experiences) such that outdated or faulty firm knowledge can be detected and new capabilities can be created to adapt that knowledge to new environmental circumstances. Moreover, during company transition periods or times of change within the industry environment, organiza- tions may need to hire early to ensure that key talent (with different knowledge bases) is on board for the transition phases rather than simply being on time, which, given cultural learning processes, may be too late for dynamic capability purposes.

To maneuver in times of change, Teece (2007, 2014) suggested creating virtuoso teams of what we would call knowledge stars, which have high con- textual knowledge and are able to sense and seize opportunities while transforming themselves and the organization. If firms do not take a longer-term perspective but instead hire primarily on a contin- gency or project basis (Maurer, 2017), creating a just-in-time search process (Capelli, 2011), the development of tacit, path-dependent knowledge is less likely and knowledge in the firm is more likely to be atomistic and diffused. In this context, hired guns who are hired in a reactionary rather than anticipatory manner are also less likely to assist in the development of dynamic capabilities, since a completely ad-hoc workforce will not be concerned about future changes in the firm’s strategic direc- tion. Competitive advantage is therefore much less likely to be sustainable.

Thus, given the dynamic nature of the external environments of most organizations, the search and screening processes should be focused on where the organization is headed rather than where it is cur- rently. In other words, the job of HR in this context is not to react to the organization’s need for em- ployees with easily identified knowledge, skills, and abilities (KSAs) to fill current job openings, but instead to anticipate the less-well defined skills and tacit knowledge that the organization may need for future strategic directions.

3. Knowledge stars

Some talent management processes have always been different from typical HR searches. Executive searches have often focused more on searching for certain precise qualifications rather than on KSAs as in lower level positions, in part due to the relative

rarity of executive skill sets. However, given that organization structures flatten as knowledge is dis- persed through the organization, there are poten- tially many more key line knowledge employees than executives (Drucker, 1959, 1967, 1999). This would mean that search and screening processes at lower levels must begin to mimic the processes at the executive level. While the salaries of key knowl- edge employees might need to be higher than those of average-performing employees, in contrast to executive compensation, the amount that such em- ployees command would be much less significant to the company as a whole (Campbell, Coff, & Kry- scynski, 2012).

Aguinis and O’Boyle (2014) and Call, Nyberg, and Thatcher (2015) discussed how, in a wide variety of contexts, certain stars in organizations provide a disproportionate amount of firm perfor- mance; or, in other words, a relatively few star performers are responsible for the development of competitive advantage (Aguinis & O’Boyle, 2014; O’Boyle & Aguinis, 2012). Call et al. (2015) con- cluded that a star’s main characteristics, besides performance, are visibility and relevant social capital. Given the wide variety of examples that Aguinis and O’Boyle (2014) and Call et al. (2015) cited, we believe that employees other than top management are crucial for gaining inimitable knowledge for the organization. This is why we use the term knowledge stars–—to acknowledge that within the organization there may be key employees whose knowledge is critical to compet- itive advantage. In their sphere of influence, these middle-level stars may not all shine as brightly as the top management stars, but they may still contribute to the galaxy of inimitable knowledge within the firm (Ployhart, 2014).

Thus, HR departments may need to maintain three types of search and screening processes: one for employees with basic skills that would continue to rely on more traditional (screen-out) search processes; another for key executives that might include outside search firms (as hiring new executives might be prompted by a need for a major change of strategy beyond the firm’s knowledge base); and a third type of process for those relatively rare (non-executive) employees with high-level skills and knowledge that would enhance firm-specific idiosyncratic knowledge and dynamic capabilities. It is this third type of search and screening process that we believe will need signifi- cant change and innovation. To further illustrate our concerns, we propose that Henderson and Clark’s (1990) model for the development of inno- vations is also applicable to innovating the process of hiring knowledge stars.

412 R.H. Hamilton, H.K. Davison

4. Modular vs. architectural innovation in the search process

Henderson and Clark’s (1990) research is often cited as a reference for the comparison of incremental vs. radical innovation (Ambrosini & Bowman, 2010; Teece et al., 1997; Zollo & Winter, 2002). Incremen- tal innovation involves modestly expanding current technology, such as developing electric fans that are more powerful or use less energy. Radical inno- vation–—such as replacing window fans with central air conditioning–—changes everything about the technology and often gives an advantage to emerg- ing competitors rather than incumbents. But in their view, modular innovation changes some of the components required within an end-user tech- nology in order to accommodate new uses and applications, but the underlying architecture re- mains the same. Conversely, architectural innova- tion changes the underlying process, while the end uses are similar to the original product or service. A modern example of a modular innovation might be very large stadium fans or fans powered by solar technology. While the power supplies would need to be different, the fans themselves would still cool the air by rotating blades. In contrast, a modern example of an architectural innovation might be the Dyson Air Multiplier, which, like the window fan, cools its surroundings via air circulation but uses entirely different systems to propel the air around it. A traditional blade supplier would not be useful for the Dyson fan.

We believe the rise of the importance of knowl- edge stars requires a different type of innovation than we have generally seen within HR systems. Traditionally, recruiting, screening, and selection have been relatively discrete processes: recruiting generates a pool of candidates; screening narrows down that pool (often to those who are minimally qualified); and those who remain proceed through formal selection processes. Search and screening processes thus have typically undergone incremen- tal or modular innovations via automating practices that were already in place. For example, incremen- tal innovations in search and screening have includ- ed posting jobs on websites instead of in newspapers and moving paper application forms to electronic versions. With modular innovation, search processes that featured job postings and job fairs to generate a pool of applicants have been replaced by reviews of LinkedIn pages. Screening processes that once focused on manually sorting resumes or creating spreadsheets that compared candidates are now often driven by the keywords and algorithms of the job websites.

In this context, a truly radical innovation might be to bypass the recruiting-screening-selection pro- cess entirely and outsource the workforce require- ment itself; this might be problematic for developing path-dependent corporate knowledge. But to hire knowledge stars, screening processes may need to undergo a different type of change in which the steps and processes that constitute re- cruitment/search, screening, and selection are sig- nificantly altered and reconsidered, similar to what would be required for an architectural innovation. Traditional recruiting and screening processes that focus on developing a large applicant pool and then culling the lesser qualified candidates to produce a pool of qualified applicants from which to choose are not designed to proactively target knowledge stars. Recruiting and screening may need to be more continuous and involve earlier interventions; in this context, recruitment and screening as concepts may be melded together and to some extent not continue as discrete processes. Positive and dynam- ic search and screening processes would focus on finding the rare star rather than using algorithms to eliminate the wrong persons from the applicant pool.

Later we will suggest ways in which these pro- cesses might be overhauled. First, we will discuss far from ideal current processes that organizations use to hire knowledge stars.

5. Problematic processes in the hiring of knowledge stars

5.1. Screening for minimum qualifications

Existing HR processes often assume a standardiza- tion of employee talent that is entirely out of step with the resource-based and knowledge-based views of the firm. Current selection practices are typically focused on what may be considered mass screening in which large numbers of external ap- plicants are screened for a smaller number of entry- level jobs. Such a process assumes that workers proliferate interchangeably, and are easily replicat- ed. Screening is designed to eliminate the unquali- fied, not find optimal workers. Screening and selection operations often focus on whether appli- cants possess the minimum qualifications for the job, or achieve passing scores on selection tests, and assume that all employees who meet those minimum standards are likely to be sufficiently successful. Such practices may yield employees who are interchangeable and adequate when jobs

The search for skills: Knowledge stars and innovation in the hiring process 413

are standardized and require little autonomy, but they are unlikely to provide competitive advantage. As Aguinis and O’Boyle (2014, p. 328) noted, such a model of human capital worked in firms that creat- ed homogeneous products and gained advantage via economies of scale when employees “produce av- erage value, and whose outputs are easily imitated and substituted,” but such a model is not applicable to many 21st century organizations, where stars generate extreme outcomes.

Exceptions to this scenario include assessment centers used for smaller samples of candidates in the later stages of selection. Even here, though, candidates must clear a series of hurdles narrowing the pool of applicants rather than targeting the optimal person. A multiple-hurdle approach is in- herently attractive to HR departments that must justify their return on investment (ROI) since the applicant pool will narrow at each hurdle, leading to lower costs for HR as smaller numbers of applicants are tested or interviewed at each stage. However, such an approach could create a suboptimal out- come (and, ironically, lower ROI for the firm as a whole) as the focus on cost at the HR process level leads to lessened capabilities within overall firm strategy because the process misses candidates who would bring important knowledge.

5.2. Neglecting the non-uniform distribution of human potential

We should reiterate that not everyone has equal knowledge. There is a non-uniform distribution of human potential. Some employees will have far greater skills than others and contribute more than others to the company value chain and competitive advantage, and, in turn, they may possibly demand greater rewards (Aguinis & O’Boyle, 2014; Coff, 2011). However, this means that the search process cannot focus excessively on salary goals for rare employees, which goes against human resource policies that delineate certain salary ranges for jobs and encourage hiring managers to engage in an adversarial negotiation process in order to try to pay the lowest possible price for the incoming employee. As Coff (2011) pointed out, getting someone at a low wage often means that the firm has hired a lemon rather than obtained a bargain.

5.3. Focusing on keywords could screen out knowledge stars

Another problem is that many screening procedures are often fully automated through algorithms that are built into the job websites where applicants apply. These algorithms generally rely on specific

keywords that describe the job and are intended to screen out all but those who are highly qualified for the job. Traditional screening is very effective at identifying relatively concrete KSAs needed for jobs, but this keyword centrality can result in knowledge stars being screened out. One reason for such incongruity is that competitive advantage often comes from knowledge that is non- transferable and/or tacit, and there may be no exact keywords that describe the needed skill sets. Often knowledge bases of stars are dependent upon particular–—even unique–—kinds of experiences and socialization processes (Nonaka et al., 2011). With more technological, supply chain, and process au- tomation management kinds of jobs, the KSAs that are needed may really be an amalgamation of mul- tiple types of skills and experience that are difficult to put into succinct keywords. For example, the knowledge star position of data scientist (or big data analyst) requires the skills of an artist, a technologist, and a statistician, along with the ability to communicate, collaborate, and solve problems (van Rijmenam, 2013; Morris, 2013).

Ironically, if HR personnel try to depict a job with as many keywords as possible, the accumulation of disparate words describing skills will screen out potential candidates. The negotiation process be- tween hiring managers and HR personnel could also exacerbate a keyword bloat if the hiring manager is not able fully to express what is needed (especially with respect to tacit knowledge). As a result; HR would create a stream of keywords that do not directly correspond to the skills an excellent candi- date would have. Additionally; keyword develop- ment may be left to lower level HR staff who may not have sufficient knowledge of the job or the organization’s strategic needs to know the right keywords. Finally; applicants must then guess the exact keyword sequence that defines their capabil- ities.

5.4. The wrong type of innovation

If there are problems with the current search and screening processes, how should those processes be altered to identify knowledge workers? We believe that firms that have adapted the problematic prac- tices illustrated here have completed incremental or modular innovation, where the use of keywords and screening for minimal competencies has essen- tially automated previous, now outdated, practi- ces. To use an analogy, traditional search and screening involves searching for a bunch of similar needles in a haystack, but that is a difficult way to search for a single, unique star needle. Instead, an architectural innovation is needed. Rather than

414 R.H. Hamilton, H.K. Davison

developing better haystack sifting devices (e.g., selection tests), firms would go directly to the needle manufacturer with precise needle specifica- tions. This would be architectural innovation.

That invites some questions: What would an architectural innovation look like in an HR search and selection process? What are the systemic changes that might be necessary to recruit rare employees? We believe that the key to obtaining rare talent is to focus on searching for skills. In Section 6, we present our suggestions for restruc- turing hiring processes highlighted by the need to identify the stars in firms that contribute to com- petitive advantage and explore how firms can use social capital to recruit, hire, and retain them. Figure 1 illustrates our proposed differences in current processes vs. architectural innovation in search and selection.

6. A lifecycle process: Knowledge stars and social capital

The most important architectural change in hiring knowledge stars should be to make the process dynamic and iterative instead of linear; HR systems need to approach hiring knowledge stars in a life- cycle and relationship context, creating ongoing processes. If the search process for knowledge stars starts when line managers suddenly determine there is a need and then fill out a requisition to the HR department–—or, possibly worse, if it starts when HR completes a standard yearly workforce requirements analysis of the types of

Figure 1. Innovations in HR

jobs needed–—the best-qualified person may not be available and the available persons may not be a good fit. Instead, it is more likely that a form of profile-matching iterative and continuous approach will find the star.

6.1. Identify areas where knowledge stars add the most value

The first requirement to make this process work is for HR managers to be familiar with the areas of the value chain (Porter, 1985) in which the firm gains sustainable advantage. The areas where firms add value in their strategic process are the areas where dynamic capabilities are most likely to impact the firm and where the knowledge of stars is likely to be most needed. For example, a manufacturer that emphasizes operational capabilities might need knowledge stars in the areas of logistics or robotics while a brick and mortar retailer might need buyers, store designers, or augmented reality specialists. Importantly, however, competitive advantage re- quires value creation areas to be idiosyncratic (Bar- ney, 1991; Teece, 2007), such that firms in the same industry might not require the same types of stars. For example, some e-commerce retailers might have a greater need for logistics experts while others might have a greater requirement for search engine optimization specialists and others data scientists.

6.2. Promote the company while looking for knowledge stars

Once these types of positions are identified in a firm, instead of HR issuing a job description, the

I

Figure 2. A comparison of traditional search/screening flow process vs. a search for stars

The search for skills: Knowledge stars and innovation in the hiring process 415

iterative search process would start by soliciting feedback and referrals from knowledgeable stake- holders (e.g., customers or colleagues at supplier firms) who could understand and anticipate both future needs and the firm’s strategic direction (see Figure 2). Then, rather than making a specific job announcement, HR would focus on promoting the company (e.g., via social media) to targeted types of knowledge stars–—all before any specific job is announced. Meanwhile, as more knowledge stars become more familiar with the desirability of work- ing with the firm (the new recruitment), line man- agers and HR managers would work together to finalize job descriptions for skills that might be needed, in part informed by the feedback of the stakeholders. The exact parameters of the positions might need to be flexible, given that the critical

knowledge areas might be in flux in a changing external environment.

From an HR perspective, the most significant architectural change is that the hiring process would become reciprocal and iterative rather than sequential. Recruitment and search–—and to some extent selection–—and training and development might not be discrete processes. More line manager involvement (Mitchell, Obeidat, & Bray, 2013; Si- kora & Ferris, 2014) would be required prior to and during earlier stages of hiring. HR and line managers alike would need to be developing social capital (Nahapiet & Ghoshal, 1998) in order to attract and retain the highest skilled employees. For example, line managers might engage with knowledge stars at trade group meetings and in interactions with customers or other stakeholders. Social capital

416 R.H. Hamilton, H.K. Davison

engendered from long-term interactions would make the knowledge star, once hired, feel comfort- able in the new workplace and should also lead to lower attrition due to fewer unmet expectations (see Buckley, Veres, Fedor, Wiese, & Carraher, 1998), feelings of poor fit with the job demands, or with the corporate culture (e.g., Schneider, 1987). A classic example of this can be found in the hiring processes of the Big 4 accounting firms, which for years have heavily recruited at the top schools for accounting through sponsorship of stu- dent activities.

6.3. Develop innovative ways of finding candidates

With these promotion steps, recruitment of knowl- edge stars would be a longer process and the search for specific job openings more truncated. The no- tion of a truncated search goes against how many HR departments operate. They are often driven by a fear of discrimination lawsuits. Unfortunately, such a concern may discourage HR from trying to hire the best and brightest knowledge stars, leading HR to winning battles and losing wars. That is, if the screening processes do not result in the firm’s hiring employees with exceptional knowledge, how can the firm develop dynamic capabilities (Teece et al., 1997) to sustain competitive advantage? However, we believe that legal compliance and the continu- ous search for stars are not mutually exclusive goals. One way to meet both goals is to develop strong stakeholder relationships with Historically Black Colleges and Universities (HBCUs), women’s colleges, or other institutions with substantial mi- nority populations. Firms might also develop strong ties with industry groups, particularly those tar- geted for specific demographics (e.g., Society of Women Engineers, National Society of Black Engi- neers). Moreover, developing such relationships could enhance diversity. Talented individuals of underrepresented groups may not stay on the job market very long. Thus, a traditional just-in-time hiring process might miss such individuals, as they would not be actively seeking employment. But a careful process of relationship building over time could ensure there are candidates when the need arises. As Konrad, Yang, and Maurer (2016) sug- gested, a strategic human resource management approach can complement a diversity and equality management program.

The recruitment process will often need to be even more creative in terms of locating employees. For example, Cisco successfully recruited passive job seekers for years at art fairs, home-and-garden shows, and microbrewery festivals–—the places

their employees frequented (Nakache, 1997). In this way, Cisco built networks at non-work sites where they knew potential applicants with interests similar to those of their current employees might be found–—all before a job was actually posted. Face- book posts programming puzzles as a way to flush out talented software engineers that they might not find through more traditional recruiting sources (Anders, 2011). Users who solve the puzzles in elegant and effective ways are targeted for recruitment. This approach illustrates architectural innovation be- cause these puzzles are not selection tests for inten- tional applicants, but rather, behind the entertainment facade lurks a screening process for talented programmers who would not have applied through traditional avenues. Similarly, Google, McDonald’s, Marriott, and Wells Fargo have report- edly recruited frequent customers (Sullivan, 2012), who would be somewhat familiar with firm processes and culture. Again, recruiting outside of traditional venues or applicant pools represents architectural innovation that views recruiting as a bigger picture of “What kind of skills are we recruiting for the long term?” rather than “Where can we find people who want to apply for an opening right now?”

6.4. Create social capital with current employees

Given that engendering firm social capital is a criti- cal factor in the search for knowledge stars, HR departments should also consider instituting online internal communities of practice (Brown & Duguid, 1991; Davenport & Prusak, 2000; Lave & Wenger, 1991) where workers share best practices to spread knowledge within the firm, aiding in the develop- ment of a learning organization. These kinds of communities can help organizations retain compet- itive advantage and develop dynamic capabilities, but for the HR manager, these communities may also influence knowledge stars to communicate to friends and colleagues outside the firm how inter- esting and intellectually challenging their jobs are, thereby propelling and shortening future recruit- ment and search processes. Similarly, participative management principles and decentralized decision making (Evans & Davis, 2005) should also impress employees’ peers outside the firm. Such practices suggest that their employers trust them. Without a trust relationship, skilled employees are subject to poaching (Kochan & Litwin, 2011). As an organiza- tion develops feelings of trust among employees, the company not only retains its knowledge stars but also begins to develop a reputation in the external environment as a company that is respon- sible and worth working for.

The search for skills: Knowledge stars and innovation in the hiring process 417

Such an architectural innovation as we propose here requires a significant rethinking of the tradi- tional way HR is practiced. For years, HR depart- ments told applicants that their application would be kept on file in case a job opportunity opened up that met their skill set. In the search and screening innovation proposed here, that statement would be turned on its head. Line managers would keep track of knowledge stars in their industry while consider- ing if there might be–—or should be–—a position where the stars’ skill sets might be useful to add to the knowledge and capabilities of the firm. In some respects, this approach mimics a leadership development or talent inventory approach in which the skills of a firm’s current employees are tracked. IBM has taken this approach even further by tracking employees’ social networks to aid the composition of project teams (see Baker, 2008). Such internal approaches to talent management might be ex- panded to include external knowledge stars’ skills, expertise, experience, and networks to assist fu- ture hiring or other kinds of partnerships (e.g., contracting).

7. The criticality of HR adaptation

The dynamic capability perspective suggests that firms cannot know exactly what kinds of firm capa- bilities will be required for competitive advantage in the future, but it also suggests that having the ability to adapt becomes critical (Teece, 2007, 2014). Having the right employees in key positions will be essential to recognize when change is need- ed within the path-dependent processes of the organization. Hiring processes that focus on screen- ing out applicants instead of guiding them in will likely fail to bring in the knowledge stars who would help the firm adapt. The hiring processes that ex- clude knowledge stars will result in the firm’s me- diocrity or even demise.

The approach proposed here would begin by forming relationships with knowledge stars long before their talents are required, and it might be particularly attractive to millennials who bring rare knowledge and skills to the workplace. Millennials, in particular, want to feel that they are included, contributing, and making a difference (Ashgar, 2014; Pew Research Center, 2014). From a firm performance perspective, a sense of purpose and task significance would be particularly important to millennials, which the approach to screening pro- posed here would foster. Moreover, the develop- ment of communities of practice and participative decision making within the firm would address the millennial need for open communication and a

team-based workplace culture (Stewart, Oliver, Cravens, & Oishi, 2017).

Certainly moving to a more qualitative and con- tinuous analysis of applicants is a tall order for the harried HR manager. However, this is only one of what we believe will be a series of earthquakes that will shake up the HR function. For example, the rise of big data in HR means that there will be more data, and thus more to analyze. The good news is that big data analytical tools will allow for some automation of the types of processes we consider here (e.g., as discussed above with respect to IBM; Baker, 2008). However, these tools should not sim- ply be used to perpetuate modular-change process- es in searches. In that regard, HR managers must:

� Determine the types of jobs and types of knowl- edge stars that might require architectural inno- vation in the search processes by being consistently in tune with the firm value chain and strategy development processes;

� As an outcome of the above, understand where and how HR needs to be a strategic partner (Mitchell et al., 2013; Sikora & Ferris, 2014) and where a continuous, back-and-forth informa- tion flow between HR and business units is need- ed; and

� Determine how the coming inundation of data availability (van Rijmenam, 2013) might create new jobs and career paths that necessitate fur- ther changes in the screening process.

In this new world of talent management, if firms are to continue to produce competitive advantage through knowledge acquisition and retention, the 21st century search and screening processes must cease to be a series of linear hurdles to be leaped and instead must become more like pathways to the right positions. In this context, HR will need to take on the role of cultivator or shepherd of future talent rather than simply a buyer of fin- ished products. We believe successful HR depart- ments should embrace this new direction in talent management.

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