Every day when an employee resigns from their job, either voluntarily (or involuntarily) they’re “walking out the door” with a very valuable asset. No these instances don’t require security or are considered criminal in nature. What they leave with is their institutional knowledge or memory from their last organization. This is what happens to an organization loses its best, brightest, most experienced and knowledgeable employees. What do they take with them, and what do we lose? Part of it is the organization’s institutional knowledge or history. Keep in mind, that not all employee turnover is “bad” turnover. Sometimes, there are employees that we’d like to leave sooner rather than later. But regardless of the good or bad types of turnover, what we’re finding is that these employees are leaving work with a substantial amount of work, business, and operational knowledge that’ll be difficult to replace or duplicate if internal systems to retain or document this type of knowledge are non-existent.
It’s possible that in five years, by the year 2018, we may see as many as five generations working side by side. Employers face substantial challenges dealing with generational differences. In 2012, in a human resources study done for a southwestern Texas public university, this subject of institutional knowledge was blended into a larger generational study. The study involved a survey of almost 400 Gen. X and Millennial employees and their attitudes about their jobs, the value of their job, management’s view, and the work being done to document the work that was done in the event they left. What did we really lose in terms of knowledge when these generational cohorts left their employment sooner than expected? We all know of several metrics to calculate various forms of employee turnover and their respective costs. But very few metrics or measures exist to quantify the loss (or value) of institutional knowledge, continuity, and history. What we do know is that these costs manifest in the turnover, recruitment, replacement, and training costs that many organizations face.
Multiple generations working side by side in the workplace not only affect the make-up of an organization, but also how these same organizations address engagement, values, sustainment, tenure, and build towards the retention and transfer of institutional knowledge. Today, as Boomers prepare for retirement, some Gen. X-ers and many Millennials are not remaining employed long enough to learn from their older generational colleagues. As a result, the institutional knowledge, history, and business continuity possessed by the Veterans and Boomers might vanish with little or no knowledge being retained by the Gen. X-ers and Millennials. We’re reminded that that the inability to retain and transfer institutional knowledge could result in a steady increase in employee turnover and further loss and of institutional knowledge, translating into higher costs and lower institutional efficiency.
Organizations must have plans in place in order to ensure continuity. For example, in an effort to address the loss of institutional knowledge, the U.S. Office of Personnel Management (OPM) recommended that governmental agencies focus on identifying leadership competencies among their existing employees in an effort to create a pipeline of new leaders branching towards positions that were vacant. Small organizations must also implement a plan of knowledge transfer in order to survive the loss of older generational employees. Another way to address the risk of losing knowledge as a result of Boomer retirements is to exercise a workforce assessment, documenting and identifying critical knowledge held by existing employees. What some successful organizations have done is to enlist the assistance of existing and departing retirees to serve as mentors, instead of simply showing them the way out the door. These retention methods have proven to be successful in curtailing the loss of institutional knowledge and transferring it to the younger generational groups.
A 2006 study of knowledge retention and employee turnover in the U.S. electric power industry (by Ashworth) found that valuable and skilled knowledge of Veteran and Boomer workers would be difficult to replace. This study was geared towards finding ways to minimize the effects of the loss of institutional knowledge from those leaving and find ways to work on retaining the knowledge before they left. The study found that the aging workforce was a critical and current HR issue for the electric power industry due to the potential loss of knowledge that may result from employee retirements. Ways that were suggested by which knowledge could be transferred included observation of work units, employee communications, review or work processes, finding other ways to get the work done, and adopting technology. These methods were but a few that an organization could utilize in the retention of knowledge.
For any organization, the retention of the institutional knowledge or institutional memory is an important attribute in the recruitment and retention of employees. This is especially important so for some highly skilled positions, such as in the technology fields. In these cases, the greater threat is the difficulty in quantifying and replacing these employees. While many managers worry about the level of turnover, the more important statistic should be the level and capacity of knowledge the people leaving possess. Organizations routinely sustain the loss employees, but when those employees are highly skilled, possessing knowledge not readily replaceable, the organizations suffer.
There are steps organizations can take to reduce the level of institutional knowledge that they lose with the loss of skilled employees. Specialized training, documentation of processes, and job sharing are a few of the ways to combat this loss. One of the more effective methods of lessening the loss of institutional knowledge is having the older and more experienced workers serve as mentors and trainers, allowing them to pass on their knowledge to others within the organization. In order to prepare for the loss of institutional knowledge and plan for knowledge transfer, organizations must develop strategies to ensure business continuity. This is something that many organizations I believe are not doing enough.
My 2012 survey of our Gen. X and Millennial employees were asked a number of questions dealing with institutional knowledge. They were asked them about the value of their institutional knowledge and perception of the loss that the institution would suffer if they left. They were also asked about the business process and continuity, and other skills that they had acquired while working at the institution, and what outcomes (including gains or losses) would the institution realize, if they left. The results of the survey from these questions were not as surprising. The majority of both generational groups believed that what they have learned at the institution was very important and had value. Furthermore, they maintained that this value, or institutional knowledge, would be a critical issue if not addressed by management. Both generational groups believed that their supervisors and managers would be hard pressed to find replacement employees with similar skills or knowledge. The institution did not have either a tacit or explicit formal plan to transfer knowledge. Though the responses were not surprising and had a bit of humility tied into their responses, it did bring up the question of what we’re doing to retain, acquire, or transfer this knowledge before they leave.
Additional research or studies may be necessary to really understand the importance of institutional knowledge and the methodologies by which to retain or acquire it. Aside from several articles on the subject, there’s not much published on this topic. On a larger scale, I believe that if efforts aren’t made to address the retention of Gen. X and Millennial employees, we could possibly see a large gap in the loss of institutional knowledge, continuity, and history that the earlier generational groups had or made available. This knowledge may be difficult to replace. Hopefully, additional work on this subject will bring this issue to the forefront and lead to effective implementation of plans to preserve institutional knowledge.
Andrew M. PeÃ±a is the assistant vice-president for Human Resource Services at the New Mexico State University