posted 16 Aug 2007 in Volume 10 Issue 10
Cover story: Knowledge transfer
Loud and clear
The ‘cult of youth’ is being replaced with a realisation that older staff can boast much more experience and corporate knowledge. How can organisations pass that knowledge on when such experienced staff leave or retire?
By Graeme Burton
The ‘cult of youth’ seemingly infects every element of modern life. Television is aimed at the young, newspapers strive to capture the supposedly all-important 18-24 demographic and job advertisements are overwhelmingly aimed at the young, too. Well, not too young – preferably young, but with some experience.
Time was, too, when major organisations couldn’t wait to show their older staff the door to make way for younger and supposedly more energetic recruits (outside the boardroom, that is). While direct discrimination on the grounds of age is unlawful in most places today, a generous retirement package is often enough to tempt the pragmatic to take their 25-year long-service carriage clocks and leave.
But such corporate attitudes are increasingly being regarded as short-sighted. With a lifetime of experience and a knowledge of how the organisation got to be where it is today (for better or for worse), companies are increasingly recognising the wealth of talent, understanding and expertise that their older staff offer – attributes that cannot easily be written down or quantified and which their younger staff will never have until they reach such an age as well.
Increasingly, instead of wondering how older members of staff can legally be forced out of the door in the latest business-management fad, such organisations are having to consider how they can persuade such staff to stay on or how they can facilitate the transfer of all the salient tacit knowledge their older staff embody to the younger generation.
It is a challenge that is most acute at ‘baby-boomer’ companies – organisations that grew fast from the 1960s and 1970s. It is not limited to companies based in Japan, Europe and North America either, where the population is ageing, nor to technical industry sectors, such as oil and gas, and engineering – even restaurant chain McDonalds is facing a major knowledge-transfer challenge.
“We have got the same huge problem that everyone else has – there’s a lot of retiring knowledge,” says Dianne Wiggins, Knowledge-sharing manager at McDonalds. On the surface, McDonalds would appear to be a young company – there are few grey hairs on the heads of staff serving behind the counter at the average McDonalds restaurant.
“Actually, that’s not true. We have got a lot of people in their late 50s, and early and mid 60s – the baby-boomers.”
It would be a mistake to think that McDonalds is little more than the sum of its restaurants.
Behind them is a sophisticated supply chain and support operation that made McDonalds the world’s biggest restaurant chain in the 1970s and 1980s, and which has helped the company to maintain that position today, despite many stiff competitive challenges.
Indeed, many of the key architects behind McDonalds’ system are approaching retirement and if they leave, their ‘winning’ knowledge will leave with them. That fact is stimulating many senior-executive minds at the company. “We are talking about it all the time… We are trying to figure out things we can do to try and transfer that staff knowledge,” says Wiggins.
Fortunately, it is a challenge that has already been broached by many other companies, in many different parts of the world, with lessons that could be applied almost anywhere.
Brazilian oil major Petrobras is one such company. “We have started a new programme here to try to preserve our more important knowledge, but blended with cultural aspects,” says Alexandre Korowajczuk, manager of corporate knowledge management at Petrobras.
“We have had a lot of projects developed at Petrobras in which a lot of decisions have been taken along the way,” he says. These decisions can then be applied as best practice elsewhere – but they have to be captured first, especially as they may have been taken ‘on the fly’ in the field.
“The decision-making and learning process, we try to capture through stories that the workers [who were involved] tell and then organise them in a subject alliance and present the stories in a workshop for new employees. They then discuss them and try to understand why they took that decision and how it could have been done differently,” explains Korowajczuk.
Part of the rationale for this approach is not simply to hand down tacit knowledge from one generation to the next, but to provoke more active learning among new staff – about decisions, the context in which they will be making decisions in the future and to equip them with the knowledge of how such decisions have been reached in the past and why.
Korowajczuk and his team have developed an overall methodology and trained facilitators so that it can be taken to every unit in Petrobras, both within Brazil and internationally, too. That provides a measure of how seriously such knowledge transfer is taken at the company.
At global engineering-services company Fluor Corporation, the issue is not just about capturing the knowledge of workers before they leave for the final time – the company is actually enticing former staff to come back out of retirement: “We are in a very rapid growth mode so we are actually bringing retirees back,” says John McQuary, vice president of technology strategies and knowledge management (KM) at Fluor.
While new hires are very much a ‘pig in a poke’, regardless of how good they are, they will still need training; but when Fluor re-hires a former member of staff, it knows exactly what it’s getting. However, “If they have been out of the workforce for five or more years it’s almost like bringing in a new hire because there’s a lot of new tools, new work processes that they have to get up to speed with,” says McQuary. “But they still maintain that deep wisdom when they are faced with problems or challenges. They have that ability to tap into that wisdom and perhaps come up with a solution.”
The company has had an active knowledge-transfer process in place for some time, but has recently refined it to more closely align the programme with corporate needs. “While we have programmes in place to capture retiring knowledge and develop new talent, a lot of our emphasis has really shifted into getting new hires up to speed quicker,” says McQuary.
This is because although persuading retirees to stay on or to return has given the company a three-to-five year breathing space, when they finally do leave, the company may be hit harder than many of its contemporaries.
Yet it is only just now developing a process for identifying soon-to-be-departing employees. McQuary is currently examining a knowledge-loss risk-assessment programme developed at the power-utility Tennessee Valley Authority (TVA) as part of its succession-planning policy.
“It looks at people and how far away they are from retirement and how critical their skills and knowledge are to the organisation,” says McQuary. At power utilities around the world, succession-planning is absolutely critical. At the TVA, it is estimated that four-fifths of staff are over the age of 40.
But selecting the right staff is key. “If you have 100 people that have pretty much the same skillset, it’s not as critical to go after the one person that’s retiring. But if you have only one person with particular knowledge or skills, then it’s very critical.”
Fluor has also instituted a mentoring programme intended to help knowledge flow down the generations on a more systematic basis from ‘subject-matter experts’. Called SME Protégé, it teams “up-and-coming young subject-matter experts with the existing subject-matter experts”.
Furthermore, Fluor enables subject-matter experts who were active in the company’s communities of practice (CoPs) when in employment (see Case report, Inside Knowledge, June 2007) to maintain access to the corporate knowledge-management system in retirement. “It’s not for every retiree. It’s got to be for subject-matter experts who were already active in the communities before they retired,” says McQuary.
This mirrors similar practice elsewhere to maintain an alumnus of knowledgeable former staff who are happy to provide advice and guidance in retirement on an ad hoc basis.
In some cases, this is freely given. Sam Marshall, formerly at fast-moving consumer-goods supplier Unilever and now an independent consultant specialising in knowledge management, collaboration and intranets with Clearbox Consulting, devised a number of imaginative exercises while at Unilever.
As documented in last month’s Inside Knowledge, Unilever used a gameshow format to match expertise with the people who needed to know it. A ‘Mastermind’ format was also used to enable existing staff to question a departing subject-matter expert in a fun and engaging manner.
Not only did it provide a means of sharing knowledge in a less formal setting, but it provided recognition for retiring staff of the skills and expertise that they had brought to the company and they were happy, as a result, to provide contact numbers and e-mail addresses should their expertise need to be tapped in the future.
At Fluor, McQuary utilised a more formal lunchtime question and answer/story-sharing session to engage imminent retirees in a direct knowledge-sharing process. This format required a good deal of preparation, however, in order to make the most of the opportunity.
“We set up a sort of fireside chat and did it over about an hour-and-a-half over lunchtime. There was a lot of upfront work to do. We had to do a lot of pre-work on interview questions to make sure that we would draw out the stories. But the younger people in the audience in this guy’s discipline were very happy with the process,” says McQuary.
Institutional knowledge loss can come in various ways, warns Marshall, and sometimes it cannot simply be transferred or resuscitated from older or retiring staff. “Unilever was once probably the world’s biggest producer of washing powder. Then, powder went out of fashion and it moved on to liquids and tablets. So the company divested itself of all its capabilities in producing washing powder.
“But about ten years after it did this, the company realised that a lot of growth in the future was going to come from developing countries, such as India, where powder, because it’s cheaper, was exactly what they wanted. So, Unilever had to buy in the knowledge again for how to make it,” says Marshall.
That is not likely to happen at Fluor, where the company’s SME Protégé programme to maintain links with particularly highly-skilled experts has partly stalled due to circumstances – the company discovered that it needed to retain such staff full-time. “We put the programme in place and had two or three names come up and we have turned around and hired those same people straight back,” says McQuary. Quite simply, their knowledge was too valuable to lose.
While all companies suffer from institutional knowledge-loss as a result of staff leaving and retiring – and maybe not being adequately replaced – nowhere is this more serious than in the power industry, believes Marshall, and nuclear in particular.
This is because the nuclear industry’s growth has been particularly ‘lumpy’, growing fast in the 1960s and 1970s, but coming to an almost complete halt worldwide in the 1980s and 1990s when oil and gas prices stabilised and then fell. Today, with gas and oil prices rising (and not expected to fall) many countries are looking once again at nuclear power to provide a stable supply of electricity at a predicable price.
Yet skilled staff are nearing retirement and, furthermore, the hiatus in new building during the 1980s and 1990s was also reflected in a hiatus in the recruitment of skilled engineers that, no doubt, rippled all the way back to the universities that supply the raw material – skilled staff, not uranium, that is.
In highly technical industries, knowledge transfer helps provide extra stability in an era when more people are prone to flit from job to job. At energy company RWE, for example, which generates one-third of its power in Germany from nuclear power, a new graduate is not considered experienced and fully operative until they have been at the company for more than five years. “There’s such a rich level of knowledge that they need to build up, losing anyone can be quite severe,” says Marshall. This is recognised the world over.
The TVA, for example, has recently conducted an in-depth inspection of its succession planning specifically with the unique knowledge-retention challenges of the power industry in mind. “Challenges facing power utilities as a result of the ageing workforce include the loss of critical knowledge, the inability to find replacements with utility-specific skills and the lack of bench strength within the organisation,” concluded the report.
The average age of a TVA employee was approximately 46 in 2006 and one-third of its staff will qualify for retirement in the next five years. And, while the TVA has been widely lauded for its succession-planning initiatives, it still needs to improve reporting of upcoming retirement, according to the report.
It is little wonder, therefore, that so many organisations have instituted knowledge retention and knowledge-transfer initiatives. And, of course, companies such as Fluor have gone further than this and are actively re-recruiting many of their most knowledgeable retire staff: because so many organisations now recognise that a lifetime of knowledge and experience is unique and simply too good to lose – and cannot be replicated in any number of training sessions.
Graeme Burton can be contacted by e-mailing firstname.lastname@example.org.
References: Review of TVA’s Succession Planning, September 2006, http://oig.tva.gov/ PDF/06rpts/2006_513I.pdf