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Apr 25, 2012

I watched “60 Minutes” a few weeks ago and one segment really caught my attention.

A group of men, most in their late 50’s and early 60’s that had worked at NASA for years were interviewed. Now with the end of the space program, they are jobless. It was a very emotional discussion, and several of them wept during the interview.

These were men that had literally grown up with the space program — most with 25-35 years at NASA. Today only a handful of people are left.

If NASA wanted to send a man to the moon or Mars today, it couldn’t do it. All the knowledge and experience is gone. NASA would literally have to start from scratch.

“Lost Knowledge” of the Boomer Generation

How did a world-class organization like NASA lose the ability to recreate one of the greatest achievements in the history of mankind?

This year the oldest of the Baby Boomers (born between 1946 and 1964) are turning 66. About 10,000 Boomers will reach age 65 every day for the next two decades. We will now begin to see these people leave the workforce. Sure, the current economic downturn is causing some Boomers to delay their retirement, but sooner or later they’ll decide to retire (according to UNC Executive Development 2011).

David DeLong calls knowledge that is not stored, retrieved and transferred “lost knowledge.” The Boomers will take a lot of critical knowledge with them when they leave, says the author of Lost Knowledge: Confronting the Threat of an Aging Workforce (he’s also a research fellow at MIT).

Experts divide critical knowledge into two parts: explicit and tacit.

  • The explicit kind refers to information that can be easily explained and stored in databases or manuals.
  • Tacit knowledge is much harder to capture and pass on because it includes experience, stories, impressions and creative solutions. Tacit knowledge is also much harder to get from people because it accumulates over years of experience, and they may not even know how to verbalize it. Sometimes they don’t even know they have it, says Dorothy Leonard, professor emerita of business administration at the Harvard Business School.

Why ignore the older by hiring the younger?

Tacit knowledge is a big problem, and makes up the majority of “lost knowledge.”

Boomers have a unique character trait. Through the years they have kept a vast amount of knowledge about their jobs to themselves. It has been part of a “job protection” syndrome throughout their careers. It added value and importance to them. The thinking was that if an employee was the only one in a department/organization that knew something important, then he or she was valuable. Even today some Boomers have the belief that younger employees should “pay their dues” and learn by trial and error like they did.

The focus today is all about recruiting young employees. David DeLong says:

This focus on recruiting junior staff fits a pattern we have seen for several years. Many companies become fixated on attracting younger employees, completely ignoring how they might get more out of the resources they have in their mature workforce.”

The fact that older employees have been laid off and are not considered “hire-able” today only compounds the problem.

Simply adding more and younger employees is not the answer even though they are cheaper. You can’t throw people at a project. You can’t expect them to become immediately productive. You need a smarter, more experienced skill base.

This reminds me of a comment between the VP of Research & Development and the CEO at a company I worked for. The CEO was pushing the VP hard to complete development of a new product. He asked the VP, “Can’t you put more engineers on the project?” The VP’s comment to the CEO was, “You can’t make nine women pregnant and have a baby in one month!” Hmmmm … I think he was saying that some things just take time!

2 examples of lost knowledge

Is there a cost to a company for lost knowledge? Absolutely. Here are two examples:

  1. An employee at Texas Instruments who worked on a production line retired, and she was the only one who knew that the best way to work the machines was not what was written in the operating manual. Rectifying the resulting mistake cost $200,000.
  2. A petrochemical executive says that his company thought it could fix the problem of lost knowledge just by hiring more people. Having less experienced people working in sophisticated computer-controlled manufacturing operations increased the risk of serious and costly mistakes. An investigation into an explosion at this executive’s chemical plant found that the engineer in charge had only been out of college a year, and the operators in the control room at the time of the accident all had less than a year of experience in the unit.

Executives have known about “lost knowledge” and retiring Boomers for years, and yet very few companies have taken steps to insure that there is some sort of effective knowledge transfer from Boomers to younger employees.

Do executives know what they are losing?

In many cases, executives have no idea what knowledge they are losing —- from whom and from where. The first step is to think about how the loss of an individual employee’s specific knowledge would impact the company’s strategic plans.

For example, will the departure of an R&D scientist threaten the speed of new product development? Will the loss of a senior salesperson reduce revenues? Exactly which divisions, business units and departments have critical people approaching retirement? What evidence do you have that there is critical knowledge at risk? What will be the impact on the company’s strategic objectives, revenues or costs?

The more clearly you can articulate where retirements are going to cause real damage to the company, the more likely you are to be able to take meaningful action.

In Part 2 of this article, we will look at how companies are taking action, how it is working for them and what they are learning. Don’t miss it — there are some really creative ways that companies are using to transfer knowledge!

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