It seems the Great Recession has caused many industries to now see a gap in their talent development. Some companies simply did not hire people for as long as six years. Some may have even laid off a percentage of their newer employees. Or, once the market turned, the newer employees left to find a different challenge.
Fast forward to today and many businesses have noticed a gap in their talent pool. Succession planning, high-potential development, having the right amount of skilled labor, preparing for retirement, knowledge management, and attracting talent are only a few of the challenges facing organizations. Different businesses have different needs, but the theme seems to be consistent.
While it takes on many forms in many different situations, one thing is critical to prepare for: knowledge transfer. According to SHRM, “It’s estimated that poor knowledge-sharing practices cost Fortune 500 companies $31.5 billion annually.” Businesses need to figure out how to get the tacit knowledge from their experienced workers into the minds of their newer employees.
Majority of Organizations Do Not Have a Plan for Effective Knowledge Transfer
In the past, time has been on the side of employers. Climbing the corporate ladder was a given and allowed younger workers to watch, learn, and grow within the organization. But now, this new-hire timeline ceases to exist. Less-experienced workers are stepping into management roles faster than ever before and need institutional knowledge and wisdom from their tenured colleagues in order to succeed.
In such a rapid and fast-paced business environment, capturing valuable knowledge and effectively transferring it to future leaders is crucial for long-term success. Organizations that develop a knowledge transfer process are the ones who will have a competitive advantage.
A now-client came to us months ago to tackle a stark reality: more than 500 years of high-value experience was expected to walk out their doors by the end of 2020. Fourteen employees – each with between 30 and 40 years of experience – were retiring, and no specific knowledge transfer plan was in place. Without an adjustment, they were about to face a catastrophic loss of knowledge capital with no ability to recover.
Theirs is not an unusual story. Express Employment reported that 57% of working Boomers say they have shared half or less of the knowledge needed to perform their job responsibilities with those who will assume those responsibilities after they retire.
Millennials made up almost half of the workforce in 2020, a shift primarily due to the 10,000 Baby Boomers who are reaching retirement age daily. This begs the question: how are companies preventing knowledge loss and preserving their knowledge assets?
Successful Knowledge Transfer Strategies
From what we see in our work, organizations employ one of five strategies to manage knowledge transfer…but not all of them are effective.
Organizations that ostrich are ignoring the problem or assuming that it won’t hit them. They look around, assume knowledge sharing will occur, and make no effort to ensure the organizational knowledge is passed on. This strategy relies entirely on hope in the face of the evidence.
These organizations assume critical knowledge transfer will just happen by putting people together. It doesn’t matter that many Baby Boomers are avoiding working with Millennials, and Millennials don’t feel comfortable speaking with their older peers and superiors. This ineffective knowledge transfer method is similar to sleeping with the chemistry textbook under your pillow to help you pass the test.
While more involved than the Osmosis strategy, the Lottery strategy relies on happenstance to expose younger workers to the decisions and processes of their more experienced peers. The theory assumes that chance encounters will be enough for a less-experienced worker to pick up the nuances of how more senior colleagues make decisions. These organizations are expecting randomness to be enough.
The organizations that employ the Old-School strategy are on the right path – they’re actively investing in efforts to retain explicit knowledge. Unfortunately, they’re using tools that aren’t responsive enough – like two-day seminars, keynote speeches, and mentorship programs – that prioritize exposure over-learning. The result is organizational confusion as the considerable investments have no meaningful impact.
Organizations that are Deliberate provide specific learning opportunities to less-experienced workers with clear learning outcomes. Deliberate organizations will use exposure, chance encounters, and structured content as part of a knowledge transfer strategy that includes coaching and performance feedback. This strategy, from our experience developing next leaders, is the only one that works.
Knowledge and Experience Aren’t Easily Transferred
It is nearly universal that some of an organization’s best people are what is called “unconsciously competent.” In other words, they really don’t know how they know everything they know! (You may want to read that again.)
I use the example of driving a car. You get in the car, turn the key, and drive. Fifty miles later you arrive and have accomplished literally hundreds of micro-tasks along the way. You’re not even conscious that you are accomplishing these small things that lead to your safe trip home.
Likewise, some of your best folks accomplish hundreds of micro-tasks along the way and have no conscious memory of doing them. Like driving the car, it’s just what they do.
Now, here comes the rub. Since these are your best folks, there is a tendency to ask them to be mentors of new talent. On the surface, it’s a brilliant idea. In practice, it can be a fatal mistake.
Train Your Trainers
Since your unconsciously competent and experienced folks don’t know how they know what they know, how can they possibly pass along what they know if they don’t know how they know it. (I’m pretty certain you’ll need to read that one again!)
While I am making light of it, do not fall into this trap. All you may be accomplishing is frustrating your knowledge holders and, also, your new talent. Your newer talent will ask questions, and rightfully so. Your experienced folks will not know how to answer and will become frustrated. They will also start to believe the new talent is either lazy or stupid! This may be harsh, but we see it more often than not.
If you are using your experienced team to train the next generation, they must be trained on how to train. More often than not, experienced folks do not have the skill to effectively verbalize what they know and how they know it.
Across the board, across the country, and around the world knowledge transfer is a topic of conversation at every level of an organization. Do not make some of the common mistakes and think knowledge and experience can be transferred so easily.
Develop Your Strategy
Developing a strategy for knowledge transfer is crucial to ensuring that you are capturing the knowledge of your retiring team members before they head out the door. It is paramount. And your employees know it.
So much so Boomers have reported that they are wanting to share knowledge with those who will fill in their positions, however, face impenetrable roadblocks because their organization does not have a formalized process in place.
In Critical Knowledge Transfer, 53% of C-suite respondents said the knowledge-related costs of losing key employees falls somewhere between $50K-$299K per employee. Another 11% estimated it was more than $1 million. Others couldn’t provide a figure, saying that the cost was “incalculable” or “priceless.”
Knowledge transfer must be a development priority for your team. After all, when you combine top-tier talent with institutional knowledge you will be maximizing the potential of your future leaders.
Further, by fostering a culture of open dialogue, this will only help to enhance the relationship among employees in the organization, which will positively impact your company culture. It’s a win, win, win all the way around.
Solutions 21 offers individual, team, and organization-wide leadership solutions — programs, training, coaching, and services to strengthen your culture, giving your company the competitive advantage to withstand an ever-changing environment.
Contact us today to learn how you can invest in the future of your organization.