Design/methodology/approach: The article addresses the following research question: ‘What methodology should be followed when conducting a knowledge audit for a retail bank?’ The audit followed a mixed method research methodology. A questionnaire was emailed to a sample of employees to determine their knowledge requirements and 30 senior managers were interviewed in order to obtain a strategic perspective on the knowledge management requirements of the bank.

Findings: The commitment to knowledge management was generally positive, but it varies across business units. The bank has not defined which knowledge areas are critical in order to improve its current or future performance. Specific knowledge gaps were identified and a knowledge map was compiled to indicate knowledge flow in the bank.

Implications: The article gives a detailed description of the methodology when conducting the knowledge audit. The knowledge audit attempted to address the most critical knowledge requirements of a South African retail bank. The audit helped to make the knowledge in the bank visible and helped the bank to understand the value and contribution of knowledge to the organisational performance.

Since 1990 the South African banking industry has gone through substantial changes. New bank legislation has been introduced and foreign banks have entered the domestic market (Heppes & Du Toit 2009:49). South African retail banks operate in a very dynamic and complex competitive environment and the five major banking groups (ABSA, FirstRand, Investec, Nedbank and Standard Bank) control 89.4% of total banking assets in South Africa (Datamonitor 2012). The question is to what extent the differences in economic structure in general and banking activities in particular will have an impact on knowledge management practices in the activities of the retail bank in question.

This article presents the findings of an enterprise-wide knowledge audit conducted at a South African retail bank. Anyone trying to conduct a knowledge audit and implementing knowledge management will find very little published on the actual methodologies that might be used to form the basis for instruction in this regard. As Capshaw (1999) observes, ‘often the directive to do something in support of KM is given, but there is no direction’. A search of public domain literature will find frequent mention of the requirement for what is cryptically referred to as a knowledge audit at the launch of any knowledge management initiative. However, upon closer inspection, very little of the literature investigates the topic beyond the most superficial discussion of what such an audit might entail. The knowledge audit constituted the initial phase of the retail bank’s knowledge management initiative, which was launched to develop a knowledge management strategy. The retail bank started a three-year corporate-wide knowledge management initiative in 2009. This initiative aimed to:

• Analyse and improve the way the bank creates, shares and transmits its critical knowledge.
• Understand and cross-fertilise internal and external good practices within knowledge management.
• Address the business priorities and challenges from a knowledge management perspective.

The knowledge management initiative is governed by a steering committee. The knowledge audit conducted is a valuable component of the knowledge management initiative that has been developed. Jooste (1999:25) observes that, in order to have any chance of success, a knowledge management initiative must be driven by an understanding of the strategic value it adds to the enterprise. Empirical research conducted by Schultz and Jobe (2001) and Zack (1999) confirms this. According to Wagner and Minerd (1999:53–54) knowledge isn’t power, but the good implementation of knowledge management practices is power. The objective of the knowledge audit was to identify and describe the current and future knowledge resources and requirements of the bank and, on the basis of this, to clarify the knowledge management strategy. This article addresses the following research question: ‘What methodology should be followed when conducting a knowledge audit for a retail bank?’

A knowledge audit is one of the initial steps in the formulation of a knowledge management strategy (Schwikkard & Du Toit 2004:106). ‘A knowledge audit is an investigation of the strengths and weaknesses of an organization’s knowledge, and of the opportunities and threats that face it’ (Serrat 2008a:9). The audit determines what knowledge exists as well as what knowledge needs to be created and provides an estimate of an enterprise’s knowledge ‘health’ (Perez-Soltero et al. 2007:9). The first phase of the knowledge audit provided evidence-based knowledge of the bank’s current status and served as a launching pad for an effective, rational and well-planned knowledge management strategy. In conducting the audit, it was very important to answer the following questions:

• What are the bank’s knowledge requirements?
• What tacit and explicit knowledge assets does the bank have and where are they?
• How does knowledge flow within the bank?
• What knowledge gaps exist in the bank?

Why is a knowledge audit necessary? In the knowledge economy, enterprises should provide an optimal knowledge infrastructure for its employees and ensure that all content is actual and actionable. The knowledge infrastructure consists of all tools that support capturing and accessing knowledge that is needed in both the work processes and the knowledge and learning processes (Collison & Parcell 2004:18). The primary function of a knowledge infrastructure is to activate the captured knowledge in order to enable users to apply this knowledge in their work activities (Parcell & Collison 2009:45). The quality of a knowledge infrastructure is determined by the extent it is capable of providing users with timely, accurate, correct and ready-to-use knowledge. Knowledge management should be embedded in all the business processes in the bank (Serrat 2008a:4).

In a meeting with top management, the bank’s mission, vision and business objectives were identified and the purpose and importance of the knowledge audit was discussed in detail. Managers of the bank provided documents that served as a base to understanding the bank and its processes. A presentation to top management outlined the processes that should be followed to engage them in the outcomes of the audit.

Knowledge requirements analysis: Thirty senior managers who own, maintain and use knowledge in the bank were randomly identified and individual interviews were conducted with them. A questionnaire was distributed to the 847 employees who formed the sample of the audit. The major goal of this step was to identify precisely what knowledge the employees possessed and what knowledge they would require in the future in order to meet the bank’s objectives and goals.

Knowledge inventory analysis: During this process current strengths and gaps in capability were determined. Core processes and practices that contain useful knowledge were also identified as well as products, services and operations that benefit most from knowledge management practices. Knowledge that is available and used and needed in the bank was identified when the knowledge inventory was compiled. Details of the knowledge (tacit and explicit) that exists in the core processes and where it is located in the bank were included in the inventory. Knowledge gaps – knowledge areas that need future attention – were added.

Knowledge flow analysis: Knowledge flow analysis determines how employees in the bank find the knowledge they need, identifies how they share the knowledge they have and helps in understanding how knowledge flows in the bank (Ebener et al. 2006:636). The knowledge flow analysis looked at people, processes and systems (Serrat 2008b:3). This included how employees share knowledge, how the identification, creation, storage, sharing and use of knowledge forms part of the business processes and the infrastructure available to capture and share knowledge.

Knowledge mapping: The purpose of knowledge mapping is to locate knowledge repositories throughout the enterprise (Perez-Soltero et al. 2007:11). Knowledge mapping makes tacit and explicit knowledge graphic and visual. It also has the potential to increase knowledge sharing in an enterprise (Ebener et al. 2006:642). A knowledge map was produced, which visually represents the organisational knowledge flows. This knowledge map is a navigation aid to explicit knowledge and tacit knowledge, showing the importance of knowledge.

Knowledge audit reporting: A report was compiled that documented the outcomes of the audit. It included the inventory of knowledge requirements, knowledge map and descriptions of tools and solutions to enable better knowledge management. This report was used to develop the knowledge management strategy.

In general, interviewees hold an accurate view on the definition and content of the knowledge areas on financial procedures. Employees complain about the burden caused by the need for proper financial justification of projects. The financial department finds it difficult to gain proper insights into goals, needs and activities of projects to justify the financial transactions of projects. It was stated that knowledge management cannot succeed unless it is built on a foundation of sound availability of management information. Knowledge is also needed on the bank’s customers. This was identified as one of the most serious shortcomings. Knowledge of ‘business contacts’ that employees may have in target enterprises was also perceived as being extremely necessary. Another knowledge requirement is a more informed understanding of the financial industry, current business trends and developments and best practices.

There are no incentives for knowledge sharing and there is a risk that respondents do not know there is knowledge they need to use. Internal, formal and planned meetings are the business processes most used to share knowledge whilst informal meetings (coffee and lunch breaks) are seldom used to share knowledge. Half of the respondents consider sharing their knowledge with other colleague as an advantage.

By comparing the knowledge requirements with the knowledge inventory, knowledge gaps were identified. The majority of respondents (84%) would like to improve their skills and abilities in the area of innovation whilst 52% of the employees would like to improve their skills and abilities in business processes. The most significant knowledge gaps relate to services and products, customers and industries; unstructured explicit knowledge is currently poorly managed and unavailable to all employees. Apart from a limited service and product coding contained in the bank’s accounting and administration system, no current systems cater for product knowledge. However, many services and products have detailed material describing their methodologies in training manuals and marketing collateral. The more traditional services and products offerings, and the ones that generate higher levels of revenue, are typically better documented. The knowledge gaps related to services and products would best be catered for by information profiles on the bank’s key services and products. With regard to customers, specific knowledge gaps include contact management and customer tracking. The bank’s accounting and administrative system is able to manage only very simple knowledge relating to industry trends, good practices and benchmarking. Most of the required industry knowledge would likely be contained in documents, which currently have no formal management infrastructure. Currently only limited knowledge regarding the bank’s industries is formally available. Most of the content and almost all of the insights still need to be generated.

FIGURE 1: Knowledge map.

A knowledge audit forms the basis for the formulation of a knowledge management strategy. Based on the results of the audit, it is important that the bank creates a five-year plan to implement the knowledge management strategy. This plan should include the identification of deliverables, the interim milestones and targets, the risks to managing knowledge, the impact of knowledge management, measures of success and the roles and responsibilities of employees. It is also very important to align the knowledge management strategy with the bank’s training and development agenda.

The knowledge audit has provided insights into the current strengths and weaknesses in the areas of knowledge management and organisational learning. The bank is highly experienced in supporting external parties in their knowledge development and learning. Respondents report that employees reinvent the wheel in different places in the bank and spend too much time finding out what the bank already knows or what is available. Respondents expressed the assumption that this creates efficiency and quality risks. The interviews demonstrated that employees see much room for improvement. The lack of a knowledge management strategy has led to several business unit-specific initiatives, some of which are keen to implement a solution as a matter of urgency. Whilst the commitment to knowledge management is likely to be positive for the enterprise knowledge management initiative, the risk exists that the business units will drive their own initiatives forward in isolation if their knowledge requirements are not met quickly by the enterprise-wide initiative. Initial efforts should be focused on the development of an enterprise-wide knowledge base – a one-stop solution for all employees as users – that will provide insights about the employees, customers (and potential customers), industries and services and products. This knowledge base must provide a single point of access to all the knowledge required by the users. Once the knowledge management strategy is formulated and implemented, the knowledge management initiative can be broadened to incorporate more sophisticated knowledge management solutions.

As previously stated, few methodologies to conduct a knowledge audit are described. The knowledge audit conducted for the retail bank can be described as an audit that provided evidence-based knowledge of the bank’s current knowledge status and served as a launch pad for an effective, rational and well-planned knowledge management strategy.

Collison, C. & Parcell, G., 2004, Learning to fly: Practical knowledge management from leading learning organizations, Capstone Publishing Limited, West Sussex.

Datamonitor, 2012, South Africa: Country analysis report, Datamonitor, New York.

Ebener, S., Khan, A., Shademani, R., Compernolle, L., Beltran, M., Lansang, M.A. et al., 2006, ‘Knowledge mapping as a technique to support knowledge translation’, Bulletin of the World Health Organization 84, 636–642. http://dx.doi.org/10.2471/BLT.06.029736

Hellstrὃm, T. & Husted, K., 2004, ‘Mapping knowledge and intellectual capital in academic environments: A focus group study’, Journal of Intellectual Capital 5(1), 165–180. http://dx.doi.org/10.1108/4691930410512987

Heppes, D. & Du Toit, A.S.A., 2009, ‘Level of maturity of the competitive intelligence function: Case study of a retail bank in South Africa’, Aslib Proceedings 61(1), 48–66. http://dx.doi.org/10.1108/00012530910932285

Jooste, A., 1999, ‘Knowledge in action: Making sure that your knowledge management initiatives don’t crash and burn’, Proceedings of the 2nd South African Knowledge Management Conference , pp. 25–36, Wits Business School, Johannesburg.

Paramasivan, T., 2003, ‘Knowledge audit’, Chartered Accountant November, 498–506.

Parcell, G. & Collison, C., 2009, No more consultants: We know more than we think, John Wiley & Sons, Hoboken, NY.

Perez-Soltero, A., Valenzuela, M.B., Sanchez-Schmitz, F.M.R., Palma-Mendez, J.T. & Vanti, A.A., 2007, ‘A model and methodology to knowledge auditing considering core processes’, The Icfal Journal of Knowledge Management 5(1), 7–23.

Robertson, J., 2002, Benefits of a KM framework, viewed 31 August 2013, from http://www.intranetjournal.com/articles/200207/se_07_31_02a.html

Schultz, M. & Jobe, L.A., 2001, ‘Codification and tacitness of knowledge management strategies: An empirical exploration’, Journal of High Technology Management Research 12(1), 139–166. http://dx.doi.org/10.1016/S1047-8310(00)00043-2

Schwikkard, D.B. & Du Toit, A.S.A., 2004, ‘Analysing knowledge requirements: A case study’, Aslib Proceedings 56(2), 104–111. http://dx.doi.org/10.1108/00012530410529477

Serrat, O., 2008a, ‘Learning lessons with knowledge audit’, Proceedings of the Malaysian Evaluation Society’s Third International Evaluation Conference, Malaysian Evaluation Society, Kuala Lumpur, 31 March – 01 April.

Serrat, O., 2008b, ‘Auditing knowledge’, Knowledge Solutions 13, 1–3.

Stevens, L., 2000, Knowing what your company knows: A knowledge audit is a necessary precursor to a new KM initiative, viewed 15 July 2013, from http://www.destinationcrm.com/km/dcrm_km_article.asp?id=475

Wagner, C.G. & Minerd, J., 1999, ‘On the frontiers of wisdom’, Futurist 33(9), 51–57.

Zack, M.H., 1999, Managing codified knowledge, viewed 02 August 2013, from http://www.cba.neu.edu/~mzack/articles/kmarch/kmarch.htm