Management: Plugging the Knowledge Gap

John Davidson, Partner, Facilitators U.K.

There once was an engineer who had an exceptional gift for understanding and fixing any kind of machine. After a long career with the same company, he happily retired. Several years later, the company contacted him regarding a problem with a piece of production equipment that seemed to be impossible to fix. They had tried everything, but nobody could return the equipment to full capacity. After much persuasion, the engineer flew out to the platform and spent a day studying the equipment. At the end of the day, he marked a small “x” on a component and stated that replacing this component would solve the problem. The component was replaced and full production was restored.

Shortly after, a bill for U.K. £50,000 was received. Very unhappy with this, the company asked for an itemization of the bill. The engineer responded briefly:

One chalk mark: £1.

Knowing where to put it: £49,999.¹

While this story is fiction, the problems described are real. Organizations that do not make a concerted effort to plug the knowledge gap will find themselves relearning, or renting, old knowledge at a high cost. It is no secret that the demographic profile of the oil industry is heavily weighted toward the baby-boom generation. What is not clear is the impact that this will have on the industry in years to come. Will the demographic time bomb go off and leave the industry in crisis or is this an overly pessimistic viewpoint? There is a real issue here that needs to be tackled, and the tools and techniques for doing so are well established and easily implemented. The key to avoiding critical knowledge loss, however, is a strategic framework that weaves together the ability to learn with the ability to retain key staff and to make a knowledge-sharing culture a reality.

Framework for Knowledge Retention

For a business to avoid knowledge loss, a strategy needs to be in place with the following key objectives for the organization:

The organization must be able and willing to learn, in addition to the individual.
Knowledge must be recoverable from staff and contractors.
It must be easy to transfer knowledge when required.
Human resources (HR) processes and practices must help knowledge retention.
Information technology (IT) applications must support retention practices.

Organizational Learning

Kim² defines individual learning as “increasing one’s capacity to take effective action.” If we assume that this definition can also apply to organizations, then organizational learning is about increasing the organization’s capacity to take effective action—including maintaining aging platforms. The question then is, When we look at organizational learning, who is doing the learning?

Margaret Crossan³ and her colleagues suggest that organizational learning takes place through four processes at three levels—the individual, the group, and the organization. The first process is intuiting, which is a subconscious process of learning and acquiring expertise. There are many theories of learning, but there is general agreement that in experts, different cognitive processes are at work. The net result is that it can be hard for experts to share their knowledge with novices. At a simple level, those with children will recall how hard it can be to describe how to tie a shoelace.

At a more complex level, people spend years learning how to teach, yet we expect this process of intuiting to just “happen” in a corporate context. Imagery, metaphor, and narrative are all techniques that help this process, but in the context of the aging workforce, it can be difficult for baby boomers to relate their expertise in language suited to the new-millennium generation, so they often resort to marking the spot with an “x” instead of teaching others. To counter this, one company, which manufactures tanks for the offshore industry, recently employed an application developer. His first task was to assemble and test a tank. The company knew that his deep understanding of the process would help develop applications to support those processes, and it worked.

The second process is interpreting, or explaining ideas and processes to others. This process provides a cognitive map for individuals to use when learning about the business. There is a well-known example of Inuit, which has 12 different words for snow because different domains require different languages, which affects both how people interact with the domain and how they learn through it. Why is this important? Common language is a prerequisite for common understanding. One systems integrator in the U.K. sends support staff in key positions on a 5-day oil and gas introduction course so that they learn the common language to relate to clients effectively.

The difficulty arises when looking at a longer timescale—those who learned how to interpret seismic data 20 years ago did not have the technology available today. Many of the newer IT applications now encapsulate much of the more basic building-block processes, so those learning their trade in the next few years are in danger of missing out on the fundamental principles, without backup experts at hand.

In another domain, application development, similar problems are already emerging. With programming tools becoming more sophisticated, yet easier to use, many of the low-level skills required to do unusual programming tasks are being lost. In addition, finding the right level of skill in new recruits is harder, with a gulf beginning to emerge in the richness of understanding in development.

As people work together, interpretive processes become integrative and embedded in the culture of teams. Theorists such as Seely-Brown, Duguid, Wenger, and others espouse the concept of workplace practices, where groups can come together and share experiences and expertise. With new Web-based technologies, these groups can be colocated or remote and still be effective. In terms of organizational “memory,” the richness of expertise can still be maintained, but only for as long as the experts remain. What happens when they retire? Unless there is a process that embeds what is learned through these communities, then the knowledge gained is only temporary.

Online communities have another problem: roughly 7% of a message is in the words, 38% in the tone of voice, and 55% in the body language.⁴ If this is the case, then the idea of online communities may be a nonstarter. Clearly, there should be a strategy balance between online and face-to-face communications.

The final process is institutionalization. Organizational learning is at the core of this concept and is different from teaching individuals in the organization. Although individuals come and go, not all of the knowledge will leave with them. Some of their knowledge is embedded in the systems, processes, structures, strategies, and working practices of the organization. When establishing a policy for retaining the retired workforces’ knowledge and skills, a key component of that policy should be how knowledge is institutionalized.

Smaller, younger companies are often seen as more agile and able to use spontaneous interactions more easily and more effectively bring about change. In larger, more stable organizations, relationships are more formal, and change often is enacted in a more controlled way, through strategies, plans, and routines.

It takes time for learning to filter through routines, which can then be incorporated into organizational memory. Once there, it then takes time to be lost. This has its advantages as well as its disadvantages. For example, the U.S. Army, often cited as a best-practices organization in terms of lessons learned, found that despite having made 29 recommendations in an After Action Review on Hurricane Hugo in 1991, no action was taken. This led to the same mistakes after Hurricane Andrew in 1992, the second-most-expensive hurricane on record after Katrina.

So, if the problem of the retiring workforce is to be tackled effectively, organizations need to be more agile at managing their organizational memories. This is because the knowledge of retirees needs to be captured and embedded, and because old processes and routines need to be changed, which takes time to achieve.

Recovering Knowledge

If you need to recover knowledge, it is not too late. Like our fictional company, you can always pay for your retirees to come back and, if expectations are set beforehand, it need not cost too much. Part-time consultants give the impression that the organization is in control, but unless the time is used effectively to transfer knowledge, it eventually will be lost again.

The outsourcing market is growing rapidly and can provide a solution to knowledge loss in many areas. However, in key specialties, this is not always possible—an analysis of roles and uniqueness of knowledge will help to determine which skills can be outsourced.

Finally, the least attractive method is regeneration of the knowledge. Techniques may have to be rediscovered or relearned, and this sometimes will be unavoidable. However, several techniques exist for avoiding this knowledge loss.

Transferring Knowledge

Techniques for transferring knowledge are varied. Storytelling is becoming more popular because it allows the complexity of knowledge to be retained without requiring large volumes of data. However, as with any story, it is told from a particular perspective and so must be used with caution and certainly not as a main transfer mechanism.

Training is a common method, but it suffers from the intuiting problems discussed earlier. If the retired employee cannot articulate the subtlety of his experience, training becomes a less useful technique. Mentoring is a powerful method, although expensive. If restricted to the roles that are at greatest risk from knowledge loss, it is an effective way to transfer tacit knowledge from expert to novice and also from expert to expert. However, in the case of the retiree, this will require careful planning and possibly changing HR policies.

Communities of practice, already discussed, are a good way to link experts, but unless managed well, they will result in the same problems being discussed over and over, with little embedding of learning taking place. Lessons-learned reviews are powerful, but effective only if the lessons learned are embedded in the organization. Consider a lessons-learned database to be a failure.

Finally, tactical games can be used in which a lot of tacit knowledge needs to be transferred quickly. The most effective use of this method the author has seen is in prisons, where new hostage negotiators are put into situations, with the expert playing the role of facilitator, guiding the interactions and passing on the tacit knowledge in the process. This is very powerful if used sparingly. Whatever techniques are used, ensure they are balanced, because no one technique is perfect.

HR Processes

HR is a critical function in retaining knowledge. An HR department has the following roles to play in a knowledge-retention strategy. First, HR departments need to create systems for the evaluation of skills and knowledge. This sounds simple, but in fact can be difficult to do. A recent exercise in a local government organization found that of 10,000 employees, only 150 or so had knowledge that was critical to the continued service it provided, and some of the real issues they thought they had turned out not to be problems. For example, the only person who could process royal visits was retiring—a crisis situation until investigations found that every government agency in the area had a person doing the same job. So this was an opportunity for collaboration, not a critical problem. Second, succession plans need to be put in place for these critical roles. If the identification of critical roles has been done well, this is a reasonably simple job.

Third, a culture of retention needs to be created. This can be hard to achieve in most companies because reward systems are based on what people know, not what they share with others. Trust is critical in this process; without it, few people will be willing to lose their power base for the greater good.

Finally, retirement and recruitment policies can help greatly. Typically, a new person is recruited only when a person retires, so where does the knowledge go? It leaves. If the key skills are properly identified, then retirement and recruitment can be phased to provide an opportunity for a proper handover and, ideally, a mentoring process can be established.

IT Applications

IT applications must conform to the following principles:

It must not be difficult either to add knowledge to or to get knowledge from an application, either in terms of usability or accessibility.
It must be possible to use the application from anywhere. In practice, this means Web-based applications designed for the oil industry.The author’s first job in the industry was to retire a U.K. £2 million application that ran too slow to use over VSAT networks.
It must be assumed that a lessons-learned (or similar) database is a last resort. Knowledge should be embedded in the way we do things, not in a database.
Technology is not a substitute for talking to one another. The emphasis should be on connecting people to allow knowledge transfer, not on harvesting knowledge to be forever lost.

What Now?

To implement a knowledge-retention framework, the following steps are required:

Measure—The ability of the organization to learn at individual, group, and company levels needs to be measured and assessed. Problem areas need to be tackled, and those areas supporting learning need to be exploited. Tools such as “learning signature” are ideal for this purpose.
Tactical planning—Having assessed the ability to learn, a tactical plan needs to be created that identifies the key objectives of the knowledge-retention program, maps out the critical success factors for the success of the program, maps out how well current processes support the critical success factors, maps out what needs to be done to improve processes that do not effectively support retention, and identifies an action plan.
Championing—The overall process needs to be championed at the most senior level in the organization, especially when changes to HR policies are required.
Implementation—The action plan needs to be implemented. We have found that action learning sets are an effective way to implement these action plans.
Frequent checking—Do not wait until the action plan is complete before running your diagnostics again. Check about 20% into the action plan to see if the actions are having the desired effect, and do not be afraid to change things if they are not.

Conclusion

The demographic profile of the industry is a fact. The impact is something that can be influenced by action within individual organizations. However, avoiding the time bomb is something that requires a coordinated approach across departments, based on a thorough knowledge of the organization as it is. A proactive approach to knowledge loss allows a strategy to be put in place that does not disrupt companies when activity is at high levels, yet allows knowledge to be retained systematically.

References

De Long, D.: 2004. Lost Knowledge: Confronting the Threat of an Aging Workforce, Oxford, 143.
Kim, D.H.: 1993. “The Link Between Individual and Organizational Learning,” Sloan Management Review, Fall, 37–50.
Crossan, M.M., Lane, H., and White, R.: 1999, “An Organizational Learning Framework: From Intuition to Institution,” Academy of Management Review; July 1999, Vol. 24 Issue 3, 522–537.
Mehrabian, A.: 1972, Silent Messages: Implicit Communication of Emotions and Attitudes, London: Wadsworth.

John Davidson is a Partner in Facilitators U.K., a management consultancy based in Aberdeen. He is responsible for developing the company’s information and knowledge management business as well as strategic product development. He has extensive expertise in organizational learning, technology strategy, and knowledge management in the public sector and in the oil and gas industry.