have embraced the notion that to operate effectively in today's economy, it is necessary to become a knowledge-based organization. But few truly understand what that means or how to carry out the changes required to bring it about," (Zack 2003). Moreover, knowledge-based organizations may differ significantly from their product- or service-based counterparts in terms of organizational structure and organizational culture. When people, not products signify revenue production, an organization's culture will become less hierarchical and more egalitarian because employees, not quantifiable items, are the lifeblood of the company. Because employees within a knowledge-based organization tend to be highly skilled and well-educated they will prove valuable as long-term assets. A knowledge-based organization will tend to reflect egalitarian social values and the workforce will be diverse. .

             Therefore, employee relations and human resources become keys to the success of a knowledge-based organization. Incentive plans and profit-sharing are some of the ways knowledge-based organizations encourage employee loyalty and long-term commitments. Even when knowledge underlies the goods and services offered to consumers and clients, the employees form the core capital of the company. As Zack (2003) notes, "products and services are only what are visible or tangible to customers - they're the tip of the iceberg." In such a scenario, an organization is less structural and more cultural in appearance. Team building and teamwork replaces individually-driven projects in a knowledge-based organization. A company might hold regular meetings or parties to encourage social interaction and collaboration. Communication between employees is more transparent and free-flowing than in traditional organizations because an increase in knowledge in one department usually means an increase in knowledge in another department.