How failing to retain institutional knowledge is costing your business millions
Institutional knowledge refers to the collective information that an organisation and its employees retain. However, the prospect of ‘knowledge sharing’ in the corporate environment is often met with resistance from employees. But now more than ever, prioritising knowledge retention and expertise within your organisation is critical.
IDC, a global market intelligence firm, discovered that some of the largest US companies lose at least £31.5 billion a year by failing to share knowledge.
Thankfully, there are steps you can take to rectify these issues before it is too late.
What is institutional knowledge?
Institutional knowledge is information, in any form, that an organisation and its employees retain. It can be viewed as a ‘blueprint’ of collective knowledge within a company which can be further broken down into two categories: implicit and explicit.
Explicit: knowledge which is easily articulated and obtained, often through written documents or the media. It may be easy to store, however, it must be regularly updated so the information stays relevant.
Implicit: knowledge which isn’t as easy to store or convey to others. As it mainly refers to how explicit knowledge can be utilised in the workplace, this type of knowledge is often lost due to employee turnover.
Institutional knowledge importance: what are the risks regarding knowledge loss?
So, where does the problem lie? Companies aren’t necessarily doing anything ‘wrong’ by not sharing knowledge. They’re just not thinking ahead. Essentially, businesses should always consider the bigger picture. If an experienced employee were to leave the organisation, you need effective processes in place to create a healthier working culture. The last thing you want is to burn out your remaining employees by dumping the excess workload on them.
There are bound to be consequences when we lose valuable knowledge from our team; it is, unfortunately, an inevitability. Below are just a few of the risks that your organisation is exposed to when there is a gap in knowledge amongst a team. They demonstrate why institutional knowledge is so important - you don't want these risks to become a reality.
- Onboarding new employees becomes more challenging due to less effective training material
- Less efficient processes become standard
- It becomes harder to find relevant information
- Reduced productivity leads to a monetary loss
- Decreased company performance
- Unsatisfied customers
Having worked in the Life Science sector for over 6 years, Tim Akin has first-hand experience of the negative implications that occur when knowledge retention is neglected within a business.
“At my previous laboratory, we thought we had a great system for the maintenance of our instrumentation. One analyst was responsible for ensuring our instruments were always running in top working order. We didn’t prepare for the eventuality that the analyst would leave our organization. That left us struggling to operate efficiently and resulted in longer turnaround times for analysis reports, not to mention costly and rushed training for new instrument technicians to get us back on track.”
“We didn’t anticipate the risk of losing that knowledge until it was too late.”
What’s more, Oxford Economics predict that it costs a whopping £30,000 to replace a member of staff and train the new employee. Most of this amount originates from the loss of productivity during the onboarding process.
Can your organisation truly justify this monetary loss?
Understanding the severity of failing to retain knowledge within your business allows you to ask yourself the following question: what part of our process do we need to fix, to better prepare for the future?
How can we retain institutional knowledge?
- Succession planning and internal hiring
- Knowledge management through documents, internal wikis, webinars
- Embrace a ‘learning and sharing’ culture
- Regular team meetings with the business’s current affairs
- Distribute a knowledge bank
The solution: automate your processes
With 75% of businesses stating preserving knowledge is vital to their success over the next 12 months, making your system the ‘knowing’ part of your processes is a definite way to retain knowledge within your organisation. Now, when someone leaves the business, they don’t take valuable information with them, as it is all uploaded virtually.
Using a Quality Management System (QMS) allows for a clear and concise approach to information exchange. Essentially, employees only need to learn how to operate a system, making for an easier method of onboarding and a simpler way of operating on a day-to-day basis.
Benefits of integrating a QMS into your organisation
- Increased ROI
Centralised information keeps your entire business on the same quality agenda. As a result, productivity is increased due to formalised processes which, in turn, increases your ROI.
- Standardising document procedures simplified
For common quality processes, set procedures with defined needs and outcomes not only increase efficiency but also help to identify any issues. Put simply, this feature makes routine tasks easier and allows corrective actions to take place to rectify any problems that arise.
- Onboarding made easy
Using a QMS allows for efficient employee transitions with little to no training; not only will the thorough documentation of processes and knowledge reduce delays, but a healthy culture will be created with a steady, dynamic workflow.
- Efficient communication with the wider business
Clearcut processes and information that are visibly accessible to teams across your organisation keep everyone on the same page. Documenting key knowledge by using your Subject Matter Experts to your advantage means that employees are less likely to be distracted by questions from other teams.
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