I’m a Linkedin hound, keeping track of people’s comings and goings, and suddenly I am noticing a lot of goings. People I’ve known for 30 years are saying sayonara to the workplace. This is inconceivable to me.
I understand we are all getting older — but the idea that people whose opinions I value, whose wisdom I covet are suddenly no longer around, is jarring. I know how their void is hitting me personally, but what does it do to the organizations these people left? And is there any way to capture and preserve their knowledge?
Statistics show that an exodus of grey matter is real. The youngest boomers are now 55 — while the oldest are in their early 70s. This demographic still makes up nearly a third of the workforce. And while many boomers are staying in the labor force at rates not seen in 50 years, others are stepping out at a rate the Pew Research Center estimates is 5,900 a day.
- 57% of boomers have shared half or less of the knowledge needed to perform their job responsibilities with those who will assume them after they retire
- 21% have shared none of their knowledge
- Only 18% have shared all of their knowledge
Further, millennials, the largest demographic in the workforce, are also the least loyal. So even if they pick up the know-how of their elders, how long before they leave?
The estimated cost of replacing employees can set you back as much as half or more of their annual salary. And since high performers (read experienced vets) can deliver significantly more in productivity than the average employee, that number can be even higher.
What you can’t easily train
Now let’s look at these “high performing retirees.” People who just “know” the right thing to do in most any situation, and they know this because they have learned the consequences of not doing something correctly. This is called tacit knowledge.
Unlike explicit knowledge, tacit knowledge is subjective and a result of “experiential learning.” They have learned either through hard-knocks they have faced or observed others going through. And they seemingly know what to do when faced with any type of activity that departs from the usual.
This type of knowledge is also referred to as “tribal knowledge” and in scholarly circles, as organizational wisdom. A good deal of knowledge about products, processes and customers is not written down; it is in workers’ heads.
While it is not something that most organizations will want to admit, this tribal knowledge is a “driving force behind innovation,” writes Michael Collins, CEO of MPC Consulting, and “is critical to the company’s competitive advantage; and is the basis of the training [of] a retiree’s replacement.”
Writing in 2016, Collins notes that experts estimate 25% of the 12 million manufacturing employees now working in the United States are 55 or older. Replacing these people when they retire is a big problem for manufacturers because they are the most experienced and skilled people working in a manufacturing plant, and the knowledge base they’ve built over decades will go with them when they retire.
The brain drain costs
He also notes that management is often unaware of the amount of knowledge in these workers heads, and might not understand the severity of the upcoming brain drain.
The Kraft Heinz merger in 2017 resulted in a 30% reduction in force. Since, the stock has taken a tremendous beating, down more than half over the last 12 months, as the Securities Exchange Commission investigated its procurement division. Credit Suisse Market Analyst Robert Moskow wrote, “The dramatic reduction in Kraft Heinz’ headcount after its merger may have played a role in the breakdown of internal controls. When a company loses institutional knowledge in highly complex areas of the business, the consequences can be severe.”
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But just how do you go about capturing this knowledge before it is lost forever? I asked Lutz Kruger, Ph.D. in artificial intelligence at DXC Technologies. DXC is the 2017 amalgam of CSC and Enterprise Services business of Hewlett Packard Enterprise and is a global leader on digital transformation. And that includes knowledge management. Kruger’s role is to determine how to preserve that goldmine of knowledge.
He admits it is a difficult, but important, problem to solve. In his role as guardian of knowledge for 130,000 people at DXC, Lutz has been building a methodology that incorporates machine learning, ontologies, and building knowledge models.
But you need humans to validate behaviors under various conditions. And there is a distinction between team or department goals and organizational ones. Consider most any internal training, which covers broad subjects instead of specific scenarios. Harnessing implicit knowledge is about capturing all the “what ifs.”
“AI is very good at spotting patterns,” says Lutz, “but we must combine AI with supervised learning. We are in the beginning of using AI correctly — but we are still a few years away.”
Of course, the largest predictor of whether harnessing implicit knowledge can be achieved is if the C-suite has the stomach to commit to such an endeavor.
At Lutz’ company the commitment is a mandate. With a mission to be leaders of digital transformation, which includes preserving institutional knowledge, Lutz and his team have the resources to refine their framework. And so far the results are not only promising, but lucrative.
“We took a very conservative approach, and saw that a $1 million investment in building ontologies and investing in technologies, yielded $10m in value in just two years,” he shares.
And of course knowledge preservation is not static, says Lutz. “It must be maintained.”