Cultivating Knowledge Transfer
Demographic shifts as well as the impact of the recession have the potential to cause a critical knowledge loss in the workplace. A company's sustainable long-term growth requires a formal and proactive strategy -- supported by senior management and woven into the cultural fabric of the organization -- that maximizes knowledge retention and knowledge transfer.
By Tom Stypulkoski
Many observers point to the huge number of baby boomers approaching retirement as the potential cause of a talent-management crisis. While this event is important, there are other major global demographic shifts and labor-force educational trends that are contributing to a workforce upheaval that will affect the ability to retain workers who hold critical explicit and tacit knowledge.
HR leaders need to understand -- and prepare for -- the upcoming talent dilemma if their organizations are to achieve future business objectives.
First and foremost, the dilemma is tied to the baby boomer generation -- 76 million strong and about 45 percent of the U.S. workforce -- who fill many of the nation's most skilled and senior jobs. Between 2008 and 2020, tens of millions of them will reach retirement age -- and not just in the United States, according to the Washington-based Corporate Executive Board.
Retirements pose an even more critical problem internationally, where the aging of the populations in various countries has intensified due to low birth rates and dramatic declines in younger populations. In some of our key global competitors for talent, such as Japan and some of our European allies, the percentage of 65-year-olds is expected to exceed 50 percent by 2020.
Another significant, but relatively unnoticed, trend is the erosion of U.S. international leadership in education at a time when technology has heightened the need for highly skilled workers.
In the 1990s, the United States was ranked first in both the percentage of 25- to 34-year-olds with bachelor's degrees or higher, and the percentage of high-school graduates. By 2005, we slipped to 7th and 20th, respectively, according to a June 2008 Workforce Forecast by the Society for Human Resource Management.
These issues alone would pose significant dilemmas to HR executives, but they are combined with the worst recession since the Great Depression.
The United States has had five recessions since the 1970s, with two lasting less than one year and two ranging from 16 months to 22 months. The current recession is now 23 months old and projected to continue at least several months longer before sustained economic growth is achieved.
During recessions, companies are inevitably forced to produce more with fewer people. This was much easier to achieve in the '70s through the '90s, when the country was enjoying technology-driven productivity enhancements significant enough to bridge headcount reductions.
We have now reached a saturation point. Our workforces are already exceedingly thin, workers are already stretched to the limit and technology is not evolving fast enough to compensate for workforce capability lost to layoffs.
Over-worked employees, particularly high performers, could prove catastrophic in this highly competitive labor market, especially with the much more mobile and work/life-balance-minded Gen X and Gen Y populations.
It will be increasingly critical for organizations, both domestically and abroad, to retain employees as well as embark on innovative and effective strategies to manage workforce knowledge, should those efforts fall short of expectation.
Past Practices Insufficient?
The central goal of any comprehensive workforce-planning strategy must be a focus on knowledge-transfer productivity -- effectively and efficiently conveying vital information from employee to employee in a way that keeps projects going at full speed, even in the face of employee attrition.
The goal is simple -- to continually identify, evaluate, transfer and sustain the information deployed by "critical knowledge holders," or CKHs. A CKH is defined as any employee who has knowledge that is either important or critical to a company's strategic objectives, unique in the market, requires substantial training to obtain and/or is very company-specific with important tacit knowledge.
Unfortunately, many companies are not yet up to this challenge. A 2008 Knowledge Retention Survey by the Seattle-based Institute for Corporate Productivity found that 30 percent of companies acknowledge they retain knowledge poorly or not at all, and just 49 percent say they do a fair job.
In addition, 78 percent of companies say they do not have a specific person or team responsible for knowledge retention, and 61 percent don't have a formal knowledge-retention initiative underway, according to the survey.
Effective and meaningful management processes to transfer knowledge should include these key initiatives:
1. Conduct ongoing workforce demographic analyses and turnover/retirement projections.
2. Train management to identify CKHs and prioritize knowledge transfers.
3. Use the information gathered from the two items above to generate talent-gap analyses tied specifically to long-term strategic objectives.
4. Start knowledge-retention processes to enhance current workforce capabilities and maximize planned and unplanned CKH displacements, utilizing technology to expedite knowledge transfer.
The information generated in steps 1 and 2 will enable companies to map the existing talent and knowledge to plan strategically for short and long-term gaps. The key is changing the HR mind-set to focus on the needed knowledge and skills identified by the gap identification instead of headcount.
This approach allows organizations to understand how expanding the knowledge of existing workers can fill strategic planning needs, offer opportunities to existing workers and minimize labor expenses.
It will require in-depth planning between HR and functional management to:
* Pair CKHs with employees designated to fill identified knowledge gaps.
* Evaluate pairings to determine the most effective way to transfer that knowledge.
* Manage vacancies effectively.
* Evaluate transfer processes using feedback from both CKHs and learners.
When determining which transfer processes should be implemented, it's best to avoid a one-size-fits-all approach in the name of administrative simplicity.
The focus should be to optimize the knowledge transfer, not to standardize the process. Classroom training, one-on-one mentoring, communities of practice, lessons-learned sessions, knowledge audits and targeted interviews are examples of common knowledge-transfer processes.
However, knowledge transfer can only be effective if the knowledge holder and knowledge learner are comfortable with the mechanisms chosen. Some people, for example, assimilate knowledge better in a free-flowing group brainstorming environment, while others work best in more formal training sessions.
HR and functional management need to take into consideration the type of skills being transferred, the amount of critical explicit versus tacit knowledge involved, the employee mind-set and the generational differences. No matter what transfer process is implemented, however, utilizing technology should be viewed as a priority to ensure the consistent capture of vital institutional knowledge for future use and reference by the knowledge learners.
At PG&E Corp. -- which was identified in The Business Case for an Aging Workforce Plan by the Corporate Leadership Council as a best-practice organization for effective workforce planning and knowledge-transfer practices -- the company not only generates retirement projections, but it educates management on internal and external circumstances and events that can affect actual retirement outcomes. Examples of such events are planned business transformations, forecasted unemployment rates and overall forecasted market performance of retirement-account investments.
This allows managers to better qualify retirement projections as they go through their CKH identification process and gap analysis versus strategic planning talent requirements. Then, their supply forecasting kicks in, assessing future availability of talent based of detailed information gathered on projected talent loss risk and a specific analysis of the organization's ability to attract and retain employees with identified critical skills.
Rolls-Royce is another company that utilizes best practices for knowledge retention, according to a 2008 article, Retaining Today's Knowledge for Tomorrow's Work Force, by the Houston-based American Productivity and Quality Center, which cited the company's two-step approach to CKH identification.
Rolls-Royce first identifies and then verifies the knowledge areas that are truly critical to the company. It then identifies those knowledge holders. A variety of approaches are used to accomplish this, with structured knowledge audits, lessons-learned reviews, communities of practice, and knowledge modeling being the most common.
Michelin North America, another best-practice company cited by the APQC, takes a slightly different approach to identifying key knowledge areas and holders.
Once they identify the critical areas, they evaluate the degree to which that knowledge area is well understood and implemented. Using an evaluation process that assesses business impact versus quality of results, Michelin's business segments determine and prioritize the knowledge areas that need to be targeted for retention and transfer strategies.
The takeaway is clear: Best-practice companies that maximize knowledge retention and knowledge transfer utilize a formal and proactive long-term strategy that is supported by senior management and woven into the cultural fabric of the organization.
Because companies face unplanned attrition as well as planned, processes must be implemented on an ongoing basis to minimize productivity losses.
This
graph
depicts the typical loss of engagement and productivity when an employee gives notice, through a typical job vacancy, and with an initial bump in productivity when a new employee is hired. But the productivity curve then flattens over a period of months until full effectiveness (shown as FEE in the chart) is achieved.
While the learning curve will obviously depend on a job's complexity and technical requirements, it could take six months to a year for a critical knowledge holder to become fully productive.
If only half of the terminations of a 1,000-employee company with a 10-percent voluntary-turnover rate are holders of critical knowledge, it would take about eight months -- or 250 working days -- to reach full effectiveness. That would equate to 50 fewer employees totaling 12,500 days of less than 100-percent productivity.
By accelerating the learning curve to fill the gaps left by terminations, companies can generate dramatic improvements in productivity and ensure that everyone stays on track in achieving the company's strategic objectives.
Companies also need to apply the same knowledge-transfer techniques to counter job disruptions caused by layoffs, internal transfers, restructurings and acquisition integrations. By doing so, they can maximize the application of their institutional knowledge and increase their ability to generate a sustainable competitive advantage.
It's also vital for HR leaders to initiate programs to train the management team in effective knowledge-gap analysis. Each manager must develop workforce-assessment skills and be able to identify critical knowledge holders. They must become adept at evaluating what institutional knowledge is important and how urgent it is to capture it.
Investing in effective management training will drive consistency in the development of a critical-knowledge-holder database that will enable human resource leaders to generate successful talent-gap analyses.
The next two decades will be a decisive period for companies looking to increase their market share, especially as we exit this recessionary period. Generating a sustainable competitive advantage will require the implementation of strategic workforce planning that successfully integrates technology-supported knowledge transfer capabilities.
Only then will organizations be able to maximize the productivity of their knowledge workforces in an extremely competitive and shrinking labor market.
Tom Stypulkoski is president of
Knowledge Visions
, an organization (formerly known as Strategic Visions LLC) that provides leading-edge services and systems applications for assisting companies in implementing and maximizing knowledge retention and transfer capabilities. Tom has more than 30 years of human resource experience in management and executive positions of Fortune 100 companies such as Novartis Pharmaceuticals Corp., Automatic Data Processing, TRW, Best Foods International and Sovereign Bank.
December 1, 2009 Copyright 2009© LRP Publications
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