There are several causes of knowledge loss in an organization. Number one cause of knowledge loss in an organization is the departure of experienced employees from an organization. It is a common knowledge that every time experienced employees leave an organization, they take with them vast knowledge on the key operations that they have acquired over the period of their service to the organization. Improper induction of new employees by the departing ones, due to lack of adequate time and resources necessary to facilitate smooth transition between the outgoing and the incoming employees, in a company leads to loss of knowledge. Considering that some of the informal know-how existed only in the minds of individuals are orally passed along to newer appointees, the short and selective memory recall of departees makes it so difficult to characterize and document knowledge in conventional ways. As a result, time pressure hampers oral transmission of knowledge to new appointees at the time of joining the company. In the event of inadequate time to ensure smooth transition and oral debriefing between incoming and outgoing employees, the company is liable to experience a serious knowledge loss.
The subsequent loss of knowledge has proven very critical to the business in a number of ways. Given that knowledge loss results into degradation of the much needed intellectual capital (IC), low levels of efficiency in the coordination of physical factors of production such as land, labor and raw materials to meet the goals of a company will be experienced by the top management. This is attributed to the fact that experience, operational expertise, and technical “know how” are the real forces behind the operations of a company other than the physical work. The company should guard against knowledge loss by retaining its experienced employee so as to derive competitive advantage from the firm’s environment.
The impacts of knowledge loss are detrimental in the wider sense to an organization. It is reported in the Harvard article that knowledge loss, as manifested in the loss of experienced employees, inhibits the growth of organizations tremendously owing to the ongoing inefficiencies of the new employees. The departure of highly experienced employees whose operational expertise is enhanced due to years of experience is the leading obstacle to the innovation and development of new products. In short, retention of employees is the only key to innovation as observed by the captain of the U.S. Navy Ship (USS Benfold) Michael Abrashoff in command of three hundred crew members.
Although organizations put more emphasis on the retention of tacit (embodied) knowledge compared to the formalized and codified explicit knowledge, the two forms of knowledge are equally important therefore both should be retained. The embedded knowledge which takes the forms of structures, artifacts, routines, culture, products and processes should be retained in an organization on the basis that they sustain the organizational knowledge. As explained in the Harvard Article, the life span of these types of knowledge is as old as an organization because they have been developed from the past experiences of the organization. The lifespan of these types of knowledge is determined by the duration of their relevance and usefulness in the operations of the corresponding companies.
I would recommend that all organizations determine which knowledge is critical to the business based on the weight of their (types of knowledge) contribution to the organization memory and intellectual capital. The categories of knowledge that contribute directly to the body of intellectual capital should be treated with utmost regard. Furthermore, data, information, knowledge, experiences and intellectual property that are fundamental in the company’s attempt to derive competitive advantage from the firm’s environment at different levels should be considered critical to the business.
In devising a knowledge retention strategy, I expect the new employees to use the retained knowledge more than any other though existing employees can also find the knowledge useful in the business operations. In circumstances where an employee is transferred from one department to another within the same company, the retained knowledge will be put into practice. In general, the retained knowledge ensures smooth transition between the new and old employees in an organization. Nevertheless, the likelihood of the holder or owner of the knowledge sharing it with other depends on a number of factors just the same way the individual who needs it will use it. Upon proper education and motivation, the owner of the information will see the need to disseminate the knowledge for subsequent use by the individual who needs to use it. In order to motivate both the knowledge owner and the knowledge consumer to engage in an exchange, the company should give incentives to both parties. Similarly, the company should make the exchange a policy for its employees otherwise this kind of an exchange cannot be realized.
Knowledge retention is concomitant to McElroy’s idea of knowledge markets in the sense that it champions for the recollection, capture, codification, dissemination and use of information over a period of time within an organization. In this regard, knowledge is considered an important resource (intellectual capital) in the operations of a business. Ideally, Tacit to tacit (socialization) aspect of the SECI model is the best suited to these organizations due to its operation on the existing social relationships. It has been observed that employee (staff) retention and empowerment is the most ideal type of knowledge retention tool that has proven most effective for the Navy.