Retaining employee expertise


 

It’s an organizational fact of life that talented and experienced people will move on — whether through headcount reductions, promotions or leaving for a better job. The knowledge that departs is often vital to a firm’s capabilities and a key source of best practices. This flight often ends up weakening the company, increasing costs and boosting risks.  To preempt this outcome, leaders should develop talent plans for key employees that capture organizational history, best practices and customer insights.

Many kinds of knowledge are at risk of disappearing with key employee turnover.  This expertise could be around key business relationships, customer insights, or having an implicit understanding of how the organization really operates or how a product has been designed.  Information risk is especially acute under times of business distress or when circumstances (e.g., a merger) overwhelm deliberate thinking.  Outside of risk mitigation, documenting and sharing expertise in a timely fashion is a great way of driving continuous improvement and minimizing costs.

Two of our previous client engagements illustrate the hazards of not retaining wisdom:

Product firm outsources key activities

This company decided to outsource an important business process, making the operational team redundant.  Despite a long implementation period, little attention was paid to retaining the team’s institutional knowledge. This was a fateful omission.  The firm no longer had the expertise to effectively manage the outsourcer, resulting in higher costs and reduced operational performance.  Furthermore, the lack of know-how prevented the company from exploiting new innovations that could have improved consumer satisfaction.

IT company is acquired

A rapidly growing software firm was purchased by a large IT services company.  As buyers are apt to do, they quickly brought in their own teams and processes, and rationalized many of the functions including sales and product development.  This process was handled clumsily.  Incoming managers spent too little time understanding the informal works practices used to get their jobs done.  Moreover, they did little to preempt expertise gaps through knowledge transfer or retaining key people as consultants.  These omissions created significant problems around client retention, customer service and software upgrades.

In both cases, outcomes would have been better if these companies codified and managed their expertise, had timely knowledge transfer and archived important historical information in accessible places. The reality for many organizations, unfortunately, is the opposite.  The proficiency of a small team or even a single person can be a challenge to re-accumulate when needed.  Vital know-how (especially implicit knowledge that is never written down) is often spread over many people or buried in IT silos. In fact, losing implicit data may represent the biggest danger because managers may not even know it existed in the first place.

How can firms avoid these pitfalls?

First, recognize this issue is not about better severance packages or employee engagement.  Key people will leave; you just have to manage the risk, and work on better documenting and sharing their expertise.  Catherine McIntyre, SVP Strategy and Development at LoyaltyOne, believes capturing institutional knowledge is crucial.   “My experience at LoyaltyOne and P&G shows it’s essential to do and it definitely pays out in many ways. Like most leadership tasks, it takes planning and showing we truly supported the work by participating in some meaningful way.”

This can be achieved by exploring three key questions:

Which employees have risks, opportunities?

Who are your experts in the key roles?  Usually, they will be long serving employees who manage customer relationships or design products.  These people may not always be high in the organization or be the ones with the most seniority.

What do we need to learn from them?

What are best practices, indispensable skills or work habits needed for important tasks?  You will often need to go deep to understand the “art” of the job.  In key accounts, for example, who are the decision makers, barriers and influencers?  Or, what “pitch” seems to work best?

How will we get this knowledge, in a sensible way?

High performance companies bake information sharing into every employee’s job description and performance plans. We also recommend regular team and department debriefs, as well as 1:1 mentoring with those workers most likely to graduate to key roles.  McIntyre takes a comprehensive approach to talent management. “I’ve used a variety of approaches, appropriate for the type of knowledge to be captured and the existing culture. This included special functional training as groups of people were promoted into new levels, job shadowing for those being groomed for next roles, and case study competitions to encourage documenting the most current knowledge.” Companies looking to be more strategic in their approach may want to develop apprentice programs, encourage more inter-department job mobility and look to create internships with key suppliers, especially outsourcers.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

 

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