Continuity Management: Preserving Corporate Knowledge and Productivity When Employees Leave / Edition 1

by Hamilton Beazley, Jeremiah Boenisch, David Harden

Overview

"How can I keep knowledge from walking out the door when employees leave?"

This pressing question is insightfully answered in this landmark book. Operational knowledge has never been more critical to organizational success. Knowledge loss from downsizing, imminent baby-boomer retirements, and high job turnover have created a knowledge continuity crisis that poses an unprecedented threat to organizational productivity and profits. Based on extensive research, Continuity Management solves this crucial problem of knowledge loss for managers at any organizational level by describing an effective strategy for preserving knowledge continuity between employee generations. Revolutionary in its effect, but evolutionary in its practice, continuity management is fueling a new knowledge revolution. This book is about that revolution-and how to lead it.

Product Details

ISBN-13:	9780471219064
Publisher:	Wiley
Publication date:	08/19/2002
Pages:	288
Product dimensions:	6.22(w) x 9.21(h) x 0.98(d)

About the Author

HAMILTON BEAZLEY, PhD, is chairman of the Strategic Leadership Group and former associate professor of organizational sciences at The George Washington University. Prior to his academic career, he served in various financial and strategic planning positions in the American oil industry and as president of two nonprofit organizations.

JEREMIAH BOENISCH is a communications officer in the U.S. Air Force who has served on the staff of the Office of the Secretary of Defense at The Pentagon. He holds a master's degree in organizational management from The George Washington University.

DAVID HARDEN is a pilot in the U.S. Air Force who has served on the Joint Chiefs of Staff at The Pentagon. He holds a master's degree in organizational management from The George Washington University.

Read an Excerpt

Continuity Management

Preserving Corporate Knowledge and Productivity When Employees Leave

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By Hamilton Beazley Jeremiah Boenisch David Harden

John Wiley & Sons

ISBN: 0-471-21906-1

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Chapter One

Knowledge Loss in the Information Age

Each generation of business leaders has had to deal with a characteristic threat to profitability and, sometimes, survival that came to define their era. War, inflation, depression, stock market collapse, foreign imports, and labor shortages were all serious threats to business enterprises in the past century that had to be countered if those organizations were to survive. The first decade of the new century offers no exception to the litany of threats; it merely adds a new one: knowledge loss. The loss of knowledge from departing employees poses a threat to the productivity and prosperity of contemporary organizations that is equal to the great business threats of the past century. Those organizations that can surmount this challenge by preserving their organizational knowledge base while job transfers, retirements, terminations, and resignations deplete the knowledge base of their competitors will be the business success stories of the century.

Knowledge Workers

Peter Drucker, perhaps the foremost management thinker of our time, coined the term "knowledge worker" in his 1959 book, Landmarks of Tomorrow. In 1994, he predicted that a third or more of the American workforce would be knowledge workersby the end of the century (Drucker, 1994, p. 53), a prediction that he confirmed in 2001 (Drucker, 2001, p. 2). Knowledge workers are the members of the labor force whose skills are primarily intellectual rather than manual. They create and apply knowledge rather than make things. As the defining characteristic of work shifts from repetitive actions governed by strict instructions or simple techniques to unique actions that require complex decision making grounded in understanding, knowledge becomes increasingly important. And more and more people become knowledge workers.

This shift to knowledge work has significantly enhanced the value of knowledge to an organization. As Chapter 2 explains, knowledge is now the primary economic factor in production, a capital asset to be carefully preserved and wisely invested. But knowledge resides largely in the heads of people-people who leave and take their knowledge with them. When knowledge walks out the door with departing employees who have left no "copy" for the organization, the results can be devastating. Mounting knowledge losses can create a knowledge crisis for the organization. In fact, contemporary organizations are facing just such a crisis: an acute threat of knowledge loss from impending baby-boomer retirements and a chronic threat from terminations, transfers, layoffs, resignations, and job hopping.

Acute Threat: The Impending Knowledge Collapse

The generation born in the post-World War II baby boom has had a profound effect on public policy, the workplace, and society at large throughout its life. Between 1946 and 1964, about 75 million children were born in the United States. Today, the baby-boom generation totals approximately 83 million, including those born in other countries but now residing in America. At each stage in its life cycle, this generation has shifted the demand for public services, changed the market for a wide range of products, and altered the nature of the workforce. For nearly 20 years, policymakers, analysts, and social scientists have been concerned about the effect the baby boomers would have on the economy and the nation as they retired.

Technically, the year 2005 marks the beginning of the baby-boom exodus from the workforce. Beginning that year, every seven seconds, another baby boomer will turn 60-and reach retirement age-a process that will continue for the next 18 years. What will these retirements mean? They presage a hemorrhaging of workplace knowledge and knowledge-based experience at a time when such knowledge and experience is increasingly important to the American economy and to the organizations that comprise it.

The Private Sector

The Bureau of Labor Statistics has attempted to estimate the number of baby-boomer retirements that will strike the private sector annually and to identify the most affected industries. The bureau's study indicates, for example, that 19 percent of the baby boomers holding executive, administrative, and managerial occupations are expected to leave by 2008. That's almost 1 in 5 management positions. But some industries will be even harder hit. By 2010, "as many as 60% of today's experienced management personnel will retire from the [oil and gas] industry even if various 'golden handcuff ' incentives are initiated to retain perhaps 20% of them" (Clark and Poruban, 2001, p. 74). The Society of Petroleum Engineers estimates that the industry will lose 44 percent of its petroleum engineers between 2000 and 2010, a loss of 231,000 years of cumulative experience (Kornberg and Beattie, 2002, p. 19). Development Dimensions International, a Pittsburgh-based human resources consulting firm, projects that between 2000 and 2005, some companies (especially large, older companies) will see 40 to 50 percent of their executives retire, a decimation of management that will leave a knowledge void of unprecedented proportions (Geber, 2000, p. 50).

But many baby boomers-particularly in the management and executive ranks-are thinking about retiring before they reach 60, which foreshortens the retirement timeframe and amplifies the retirement threat from the baby-boom generation. According to the John J. Heidrich Center for Workforce Development at Rutgers University, 76 percent of the baby boomers would like to retire before they are 50 (working for fun, 2000, p. A1). Deloitte Consulting has discovered that by 2003, nearly one-third of its 800-partner firm will be over the age of 50-and some of the fiftyish partners are talking retirement (Geber, 2000, p. 48). The obvious prediction about the baby boomers is that they will not behave as a group; some will retire early and some will retire late. The sheer number of baby boomers, however, will generate millions of early retirees. Moreover, the general trend toward early retirement means that some of those in the generation following the baby boomers may themselves elect to retire early, exacerbating the effect of baby boomer retirements.

It is possible that estimates of early or "on-time" retirements are exaggerated because of future financial pressures that might force many baby boomers to change their minds about when they will retire. Their longer life spans, for example, might require more funding than retirement income alone can provide if baby boomers are to maintain the high standard of living to which many of them have become accustomed. Or baby boomers may incur extraordinary expenses associated with aging parents that will force them to continue working. Perhaps one of these circumstances will mitigate the threat. Certainly, a broad array of federal policies and programs have been developed or modified over the past several years to encourage baby boomers to remain in the labor force. Changes to the Social Security system, for example, have raised the official age of retirement, laws prohibiting age discrimination in the workplace have been enacted, and changes to pension and benefit regulations have removed many disincentives to continue working beyond age 65.

Even if baby boomers do work later than preceding generations, however, they are not likely to remain in the same job. They are more likely to choose a different full-time career or a part-time career that will utilize their experience while affording them the opportunity to do more of what they want to do. Either way, they will have retired from their primary organizations, taking their knowledge with them. And when they do, the results can be disastrous. Bill Gates, cofounder of Microsoft, recounts the potential loss to Microsoft that might have occurred from the retirement of just one employee whose operational knowledge had not been captured:

A few years ago we discovered we were missing some blueprints for the existing buildings on our Redmond campus. We needed the blueprints as background for our next stage of construction. Our longtime head of real estate and facilities had just retired, so we had to call him up at home to see if he knew where the plans were. He directed us to an electrician who fortunately still worked with one of our outside vendors. Sure enough, the electrician had the blueprints. In fact, that electrician was the only person in the world who had all of the plans for all of our buildings.

Traditional societies often rely on one or two people to remember the group's history and traditions, but modern organizations need a better way to record and pass on their folklore. Yet at Microsoft we were relying pretty much on oral tradition, too. Here we were, the largest developer of office space in the Seattle area, embarking on a period of construction in which we would put up between half a million and a million square feet of new office space a year, and our entire "knowledge base" of crucial information was being carried round in the heads of just a few people and in a few stacks of blueprints we didn't even have on file.(Gates, 1999, pp. 236-237)

In a similar vein, an account executive for a multi-billion-dollar company told us the following story. "We lost a high-performing client manager to retirement," this executive said. "When I took over the account, I discovered that we had also lost critical information relating to that account that we could not easily retrieve. With no continuity, I had to put off the customer for two weeks while I scrambled to recover the lost information. That didn't bode well for the client-or for me-because it stalled their important project. What were we missing? Just the thing we needed most-knowledge."

This loss of an experienced account manager to retirement exemplifies a mini-knowledge collapse. The phrase is not hyperbolic because the knowledge disappeared suddenly and with serious impact. It damaged the relationship with the client and delayed a major project. When these minicollapses are multiplied by the number of baby boomers eligible for retirement and the number of situations affected by the loss of their knowledge, they rapidly build into a knowledge collapse of major proportions. The depth and breadth of the baby-boomer knowledge base makes it a formidable corporate asset, one that cannot be easily replaced if lost and one that is currently at risk.

It can be argued that the knowledge base of the baby-boom generation is the single most valuable-and the most critical-organizational asset in America today, whether part of the public or private sector. Those organizations that fail to preserve baby-boomer knowledge are destined for rough sailing. They risk declining customer satisfaction, lost market share, lower revenue, and even potential bankruptcy. Such a scenario of companies faltering on lost knowledge was highly implausible in the Industrial Age. In the knowledge-driven Information Age, it is highly probable.

The Public Sector

The public sector is no more insulated from catastrophic knowledge loss than the private sector. By 2005, more than half the federal employees will be eligible for retirement, including an astounding 71 percent of the senior executive service, which is composed of the government's highest-ranking and most experienced career professionals (Walker, 2001c). According to the U.S. General Accounting Office, another 58 percent of federal employees at the GS-15 level (the highest-ranking managers beneath the senior executive service) and another 41 percent at the GS-14 level will also be eligible for retirement in the same year (Walker, 2001a). Debra Tomchek, director of human resources management at the Department of Commerce, warns that "we're going to have a crisis at the top" unless some strategy is devised to replace the knowledge lost from the retiring managers (Figura, 1999, p. 20). The Treasury Department's chief information officer reports that the department is "approaching a crisis in information technology skills" because of its "highly experienced workforce, which is moving in great numbers toward retirement eligibility" (Figura, 1999, p. 20). A U.S. Senate Governmental Affairs subcommittee issued a December, 2000, report entitled "Report to the President: The Crisis in Human Capital" that carried similar warnings about the high risk of baby-boomer retirements (Walker, 2001a). Since the federal government represents 20 percent of the U.S. economy, provides essential infrastructure functions, and ensures the national defense, major disruptions in its ability to carry out these responsibilities would have a highly adverse effect on the United States and its economy.

State and local governments throughout the United States face the same problem as the federal government. Described by a State of Wisconsin Workforce Planning Committee as "the most significant talent and brain drain ever experienced by government," 40 percent of all state and local government employees will become eligible to retire in the next 15 years (Wisconsin State Government Workforce Planning Team, 2001). The committee's report described the impending baby-boomer retirements as a "big locomotive," concluding that, "for the most part, states and municipalities are acting like they don't even see the train coming."

The Department of Defense faces a similar problem. The secretary of defense reported in May 2000 that "the Department of Defense is on the verge of a crisis that the rest of the public and private sectors will also encounter-a retirement-driven talent drain (Acquisition 2005 Task Force, 2000)." Furthermore, according to the report, it is "a crisis that can dramatically affect our Nation's ability to provide warfighters with modern weapon systems needed to defend our national interests" (Acquisition 2005 Task Force, 2000). In 2005, 50 percent of the civilians who work in defense acquisitions and 39 percent of the total civilian workforce of the Department of Defense will be eligible for retirement. "In some occupations," according to the Department of Defense, "half of the current employees will be gone by 2006" (Acquisition 2005 Task Force, 2000). Former Secretary of the Air Force F. Whitten Peters called the situation "a time bomb waiting to go off" (Grier, 2001).

Senator George Voinovich (R-Ohio), Chairman of the Senate Subcommittee on Oversight of Government Management, wrote in an op-ed piece for the Washington Post entitled "Dangers of an Aging Federal Work Force" (Voinovich, 2001), "The federal work force is in crisis. And nowhere is this erosion more evident, or potentially more dangerous, than in our national security establishment....

Continues...

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Table of Contents

Introduction.

PART 1: KNOWLEDGE CONTINUITY IN THE INFORMATION AGE.

1. Knowledge Loss in the Information Age.

2. Knowledge as a Capital Asset.

3. Knowledge Continuity: The New Management Function.

4. The Knowledge Learning Curve.

PART II: CONFESSIONS OF A CONTINUITY MANAGER.

5. Getting Started.

6. Six Steps to Continuity Management.

7. The Knowledge Continuity Assessment.

8. Designing the Knowledge Profile.

9. Developing K-PAQ: The Knowledge Profile Analysis Questions.

10. Developing K-Quest: The Knowledge Questionnaire.

11. Creating the Knowledge Profile.

PART III: KNOWLEDGE ASSET MANAGEMENT.

12. Operational Knowledge Transfer and Acquisition.

13. Realignment of the Organizational Culture and Reward System.

14. Continuity Management in Practice.

References.

Acknowledgments.

Index.

About the Authors.