I’ve never been great at documenting my work processes and how I do things. In fact, before I joined 360Learning, I’ve relied entirely on daily to-do lists, a ‘Downloads’ folder that’s never been cleared, the search bar of my GoogleDrive and Slack, and a ton of catch-up meetings.
That, unfortunately, wouldn’t fly at 360Learning. As a remote company, we enforce decentralized, asynchronous, but transparent work. This means information needs to be available to people working at their own time, in their own timezones. Because our CEO believes synchronous communication kills productivity, we also don’t use Slack. This only works if everything - from processes to decisions, down to how we label things on Salesforce or Marketo - is documented properly, and easily accessible for every team member.
It took some adjusting, and I thought I’d hate it, being a “creative, non-type-A” person. But I didn’t know what I was missing. Now I can never go back to working in the dark, not knowing where to find crucial information I need, when I need it.
As it turns out, sharing and documenting institutional knowledge is not only key to your company’s growth, you’ll lose money if you don’t do it properly. Even if your team uses Slack and doesn't work remotely. Here’s why.
Why sharing institutional knowledge affects your bottom line
Employees spend 4.6 years at a job on average before moving on to a new company. When they leave, they take everything they know with them: from the preferences of a particular client to their historical perspective on company strategy to the operation of that one finicky copy machine.
While each of these info bites may seem small, the cumulative financial impact of losing all this information over time is enormous. It’s frustrating for other employees, slows productivity, and creates confusion and miscommunication that could have dramatic repercussions for the company. It also makes it very difficult for learning and development (L&D) teams to equip employees with the knowledge they need to do their jobs.
L&D teams can combat this constant erosion of valuable information by converting that personal knowledge into shared institutional knowledge. Institutional knowledge, sometimes known as tribal knowledge, is your company’s collective memory. Developing a process to preserve and share this knowledge democratizes information and helps create a culture of learning inside your company.
The stakes are high. Failing to create a system for sharing institutional knowledge can have a real effect on your company’s bottom line. Here are some ways that letting this valuable expertise slip away could cost your business thousands or even millions of dollars.
When employees go, their expertise leaves with them
When long-time employees leave your company, they walk out the door with thousands of dollars in hard-won knowledge and expertise. This is a financial hit with far-reaching implications.
The critical, experience-based knowledge that employees accumulate over time is what Harvard Business Review calls “deep smarts.” Deep smarts is very difficult to replace. A new employee may be able to perform the essential duties of the person they are replacing, but without guidance, they have no way to replicate their predecessor’s relationships, ideas, or approaches to work.
More of your job depends on deep smarts than you think. The Panopto Workplace Knowledge and Productivity Report found that 42% of valuable company knowledge is unique to the individual employee. That’s knowledge they alone possess. Letting that information essentially evaporate is a costly mistake. If an employee leaves the company, that’s 42% of their work that colleagues can’t effectively cover and 42% that a new hire will have to try to learn from scratch.
The company will pay dearly in training and productivity to recapture that lost knowledge (some of which may be gone forever). Panopto estimates that the average new hire will spend 200 hours trying to either chase down this lost information or “reinvent the wheel” trying to create lost processes and data.
There are other potential risks: customer relationships can be damaged, essential tasks can be overlooked, and innovation may be lost. Harvard Business Review estimates that the cost of losing an employee can be up to 20 times higher than the average costs related to recruitment and training.
This very real issue is about to become even more significant. The workforce is currently experiencing a silver tsunami as baby boomers retire and leave the workforce. Ten thousand baby boomers are turning 65 (the average age of retirement in the United States is between 61-65) every day, and this trend will continue until the year 2030. As baby boomers leave the workforce, they are taking decades of institutional knowledge with them.
But there is a way to get ahead of the tsunami: ask employees to document their essential duties and their experiential knowledge before leaving the company. (We use Trello, and the training is part of our onboarding process.) Collect important information about their roles, relationships, and experiences in the company so that no critical information lives in only one person’s brain.
Information silos hurt productivity
Information silos crop up when knowledge is concentrated in one person or department and not available company-wide. So, while the sales team might know the latest demographic numbers for new users, the marketing team has no idea. When information doesn’t flow freely through the company, employees can’t do their jobs properly, which leads to huge losses in productivity.
Information silos create inefficiency. Employees have to spend time finding or learning information that already exists elsewhere. Panopto’s study found that employees spend an average of 5.3 hours a week looking for information they need to do their job.