The High Cost Of Lost Knowledge

Lost knowledge affects company's performance. 

 

How?

 

In 2006, a corrosion in the Prudhoe Bay pipeline caused a “small leak” that was discovered five days later after 250,000 gallons of crude oil spilled across 1.93 acres.

 

The company had to shut down the pipeline and the Prudhoe Bay oilfield. The job of the senior corrosion engineer had been left unfilled for more than a year at the time of the massive spill.

 

When 9000 senior employees retired, the Boeing management had to shut down production for more than 3 weeks as many skilled production workers left.  Moreover, the company recruited workers from suppliers, which resulted in demands and shipments delays.

 

Eventually, they had to shut down its 747 and 737 production lines and were forced to take a $1.6 billion charge against earnings to account for high costs and penalties for the late delivery of the jets. 

 

It’s a huge mistake when managers think about the high cost of lost knowledge only when their employees retire. 

 

Today, with job market improvements and the rise of mobile workforce, many, especially younger generations, re-evaluate their current job positions, constantly seeking better work conditions. 

Having a succession plan is crucial, even more for knowledge workers, however, only after the employee had left, the managers oftentimes realize what they have lost.

We can calculate different forms of employee turnover, but we also need to measure the loss and value of knowledge. 

 

Do you know how much knowledge is lost when an employee walks out the door? 

 

Companies’ costs manifest in recruitment, replacement, training costs and the turnover, but when you lose a team member, you are losing their unique skills, knowledge and energy they brought to the work. 

 

The expertise and experience they have remains unknown, hidden, probably lost forever. 

 

When an employee leaves, he or she takes a substantial amount of work, business and operational knowledge with them, and this knowledge is difficult to replace or duplicate. 

Over years each employee builds reputation and him leaving the company can impact the morale of the team. 

 

Company’s customer support can greatly suffer as well, as employees also build relationships with customers and potential clients. 

 

Oftentimes, new employees are less productive and innovative as they lack experience of working on a particular product or project. Fresh ideas are crucial for innovation, however, sometimes innovation springs from experience. 

 

You cannot do much with either the list of contacts or a page or two of instructions if you don’t know how to use it.

 

When an employee leaves, we often lack the how, why and when. 

 

On the other hand, each person stores knowledge differently, either on their computers, software or online, however, when the project is over, the knowledge is lost. 

 

Take a look at these statistics: 59% of middle managers of large companies miss important information almost every day because it exists within the company but they cannot find it. (Accenture, Wall Street Journal, 5/14/2007). 

You might not be able to capture all deep smarts, but you do need to identify what knowledge needs to be captured and saved. 

 

What is the solution?

 

The one thing you can do to reduce the damage and prevent the high cost of lost knowledge is to create a knowledge sharing company culture. Employees are, on one hand, thirsty for new information, on the other, tend to withhold the knowledge and skills they possess. 

 

We can look into different reasons why people fear to share what they know - whether it’s personally or socially related, or it has to do with the technology they use or the organizational culture in which they work.  

 

To create and nurture an atmosphere where your employees can freely and openly share knowledge and communicate, you need a software that facilitates collaboration and knowledge sharing . But to share knowledge, learn from and teach others, the technology has to meet the needs of its users.  

 

Knowledge sharing directly impacts company culture, and fosters productivity, creativity and innovation.

 

And who is the company?

 

It’s the people who work together, share the same values and have the same goal.   

 

If you neglect the creativity and uniqueness of your team members, no collaboration technology can provide tools for leveraging and sharing knowledge.   

 

Powerful collaboration tools offer you good methods and strategy for capturing complex and unique experience, data, knowledge and deep smarts of your experts.

 

These tools help you to break knowledge silos and provide easy content creation and sharing - but, they also stimulate people to learn and perform better and be more creative and innovative.  

 

But the culture is also more than having high performers on your team -  when we talk about company culture, we also talk about the culture of the ecosystem. 

 

Companies today are either creating or becoming part of a business ecosystem. The business ecosystem provides numerous benefits - in terms of leveraging and sharing knowledge - the system maximizes the value of knowledge, provides mechanism to best utilize technology, accelerate learning and facilitate collaboration.

 

To reach competitive advantage, businesses also need to best understand the value of their knowledge and leverage it to its maximum.  

 

When you provide the right technology and create a knowledge sharing culture no knowledge can be lost.

 

Furthermore, if you are leveraging the value of your business ecosystem, you get the opportunity to direct and shape industry and economy. 

 

Paying attention to the satisfaction and engagement of your employees helps your team and company perform better.

 

The important part of their satisfaction is a knowledge sharing culture in which knowledge further increases in value - and this value of knowledge flourish in a healthy business ecosystem.

 

You can start with creating one.