Analysis: Do you know where your knowledge is?

Surveys of eight companies show senior managers in Europe have a long way to go before they discover the location and value of their intellectual capital.

By Donna Murphy

Judging from the results of the Adecco Institute’s Demographic Fitness Survey, most firms don’t know where their knowledge is.
Over the past two years, the Adecco Institute has surveyed companies in eight major European economies (the UK, France, Germany, Italy, Spain, the Netherlands, Belgium and Switzerland) to assess how firms are preparing for a workforce that will increasingly be comprised of older workers. See www.adeccoinstitute.com/demographicfitness.htm for country-specific reports.
One of the dimensions surveyed is knowledge management – how well firms track company-specific and other business-critical knowledge. The survey analysed several aspects of knowledge management: the extent to which companies were aware of their own business-critical knowledge; the types of tools that companies use to track and maintain that knowledge; and the extent to which employees are engaged in utilising knowledge management tools.
The demographic trends are clear. Populations – particularly in Europe – are aging. Over the next 50 years, every country will experience a drop in the share of people of prime working age and an increase in the number of people aged 65 plus. In just 10 years, people over 40 will be in the majority across Europe for the first time. The total number of 50- to 65-year-olds in the five biggest EU economies, representing two thirds of regional GDP, will rise by 16 per cent and those in their 20s to 40s will decline by nearly 10 per cent.
Retiring workers are being replaced by a smaller, increasingly mobile, and far less ‘loyal’ generation. The newest employees entering the workplace are members of Generation Y, also called the millennials, the Internet Generation, and Echo Boomers, because they are, relatively, the largest generation since the Baby Boomers.
Accustomed to immediacy and multi-tasking, they value flexibility, options, and the ability to work part-time or to leave the workforce temporarily. Generation Y workers are likely to flit from employer to employer – or to flit in and out of the same workplace – as they pursue an agenda that blends professional with personal aspirations.
These converging forces will put a focus on knowledge management as companies will be increasingly challenged to systematise, store, retain and reproduce their knowledge assets. Knowledge management is poised to become the ‘re-engineering’ phenomenon of the coming decade – companies will be fundamentally re-thinking how they capture and leverage their knowledge assets to improve business performance.
Yet survey results indicate the issue is not yet on the corporate agenda. Fully 31 per cent of companies surveyed have done no analysis at all to determine who the holders of business-critical knowledge are in their companies. One in five has done no work on identifying the holders of either workplace-specific or company-specific technical knowledge – the lifeblood of their companies. Only 36 per cent have done the work to determine the risk of loss when an employee leaves.
Can companies really afford to neglect the key knowledge they rely on to run the business? The management of business-critical knowledge is an area of expertise sorely lacking in most firms. One of the underlying reasons is that knowledge management as a discipline hasn’t truly mobilised in the business world, leaving companies with few effective tools to assist the process.
Any firm that has lost a key employee understands the imperative of knowledge management. Companies need to track where key knowledge resides, establish formal knowledge-sharing processes, raise awareness of who ‘knowledge holders’ are, and understand how knowledge is developed, transmitted, and propagated in their organisations.
When staff members leave, vital expertise leaves with them – explicit knowledge, such as how a product or process works, as well as implicit knowledge embedded in customer relationships, internal networks and firm culture and values. All of these can affect a company’s ability to produce, innovate and compete.
Companies can retain and renew these critical ‘intangibles’ by implementing a systematic approach to knowledge management and by improving awareness of people’s know-how and experience. Only 30 per cent of European companies have conducted an analysis to identify the holders of business critical knowledge, whilst 42 per cent have done the work to determine the holders of company-specific knowledge. More than half of all European firms are at risk when key knowledge holders depart, and most are unaware of the consequences.
The Adecco Institute Demographic Fitness Survey analysed the use of 12 different knowledge management techniques – from the utilisation of tools such as Customer Relationship Management Systems to the use of external consultants. The average European firm uses six of the 12 tools analysed.
The two most common knowledge management techniques are the use of external consultants and training programmes that focus on the renewal of knowledge.
Maintaining standardised records of business-critical knowledge comes in third, with 58 per cent of all firms engaged in this practice. Far lower down the list are simple techniques like building mixed aged teams (42 per cent), internal online forums (34 per cent), and publication of an internal ‘yellow pages’-style directory of knowledge holders (28 per cent). Management Information Systems and Customer Relationship Management Systems are used by only about half of all companies – 56 per cent and 47 per cent respectively.
The fact that most firms use six of these techniques tells us that none of the tools are truly meeting needs – or that tools only meet part of the firm’s knowledge-management needs. Moreover, survey results tell us that less than one third of employees actively use the tools that are available to them.
In developing robust knowledge-management practices, firms are faced with three converging forces: limited appreciation of the need for knowledge management, inadequate tools, and lack of employee engagement.
Developing the business case for knowledge management is non-trivial. It is difficult to establish direct cause and effect linkages between loss of knowledge and business results, but business lore is rife with stories of companies that founder when key people depart, of deadlines missed when key people are unavailable, and of ‘non-compete’ agreements designed to keep employees from taking their valuable knowledge to a competitor.
As employees start to retire in record numbers, a natural result of the ‘baby boomers’ reaching retirement age, identifying, codifying and retaining knowledge will take on heightened relevance.
The situation is further complicated by the lack of available tools. As knowledge has been treated as an intrinsic part of the business for so long, there are no established techniques for codifying that knowledge.
The recent emphasis on disaster recovery has helped firms start to gather and document some of this knowledge: who is responsible when systems go down, where backups are stored, how to recover systems and data. But knowledge extends far beyond the realm of most disaster-recovery plans – and is often spread among numerous people, departments, and systems.
Key customers and suppliers, contact lists, and most elusive of all, those bits and pieces of information that employees gather in the course of a project or a career, but have no place in the corporate databank: unique solutions to known problems, direct contact numbers, workarounds, successful bids, document formats, layout plans, and the vast amount of other knowledge that is gathered in the daily course of business.
There are no well-established tools for managing all this knowledge, and companies interested in pursuing knowledge management are left to adopt niche solutions or craft customised techniques and schemes.
Finally, tools must be embraced by employees. With only a third of employees using the knowledge-management tools available to them, even available tools are not being utilised fully. To maximise the investment in these tools, companies must promote and reward their use and demonstrate their value.
The path for the aspiring knowledge manager is not an easy one: both managers and employees need to be convinced of the value of a knowledge-management programme, and tools then have to be cleverly knit together to ensure ease of access, ease of use and value.
Two trends are making knowledge management more important than ever: (1) jobs are increasingly knowledge-based, and (2) the population of new entrants to the workforce pales in comparison to the population leaving – a reversal of traditional trends.
As industrialised nations transition into the ‘knowledge economy’, knowledge is becoming the new currency. Knowledge assets are likely to become as valued, and as valuable, as human and financial resources.
What should managers do? A good place to start when developing a knowledge-management agenda is to assess what you know. Develop an inventory of key information that makes the organisation run – and then identify where this information is stored. When choosing tools, managers have to recognise that simply adopting tools is not enough – employees must be encouraged to use the tools.
One simple way to start is to build an internal directory of key knowledge holders and identify what knowledge they have. To engage employees in the process, encourage them to contribute – invite employees to publish information about their areas of expertise, areas of knowledge and areas of interest. Recognise your key knowledge holders, either formally or informally. Take it a step further by establishing online forums where employees can exchange information, inculcating into the firm the value of sharing knowledge and raising the profile of key knowledge holders.
This knowledge-management technique is used by more than half of German firms (52 per cent), but the European average is just 33 per cent. These are two relatively low-cost ways to get information out into the open. Building mixed-age teams is another low-cost, high-value technique that not only promotes knowledge management, but enables knowledge transfer.
In workplaces increasingly characterised by workforces spanning up to four generations, mixed-age teams can promote mutual understanding, enable mentoring, and foster the adoption of tools to codify latent knowledge – the hardest knowledge to capture.
When knowledge is shared, everyone’s ability to contribute to solutions increases, as well as the firm’s ability to identify innovative solutions. Companies generally recognise the value of innovation, but are often vague on how to foster or promote it.
Part of the answer lies in improved knowledge management: assessing the value of a company’s knowledge, identifying its knowledge holders, and establishing procedures to systematise and categorise that knowledge. All contribute to the knowledge pool in general. Very often employees are eager and willing to contribute to problem-solving, but lack both awareness of problems and a platform to contribute.
Knowledge management is designed to close these gaps. Opening up problem solving to the wealth of knowledge embedded in your employees increases awareness of ‘who knows what’ and improves a firm’s ability to innovate and compete.
Every company needs to embrace knowledge management as a means to protect that asset that really keeps your company going – your own intellectual capital.

Donna Murphy is former managing director, the Adecco Institute, London. Contact her at dmurphy@decern.com