Throughout 2001, headlines have announced job cuts in a number of major corporations: AOL Time Warner, Lucent Technologies, Verizon, DaimlerChrysler and Sara Lee, to name a few. Although the economic downturn has not yet been on the order of magnitude of the early 1980s, indicators point to a substantial slowdown in a variety of sectors. The growth spurt of the late 1990s has clearly wound down.
During that boom, an important trend had appeared: Companies had begun to manage knowledge as a strategic capability. Time and resources went into enhancing the ability to create, share and use both individual and collective know-how so that businesses could improve productivity, organizational effectiveness and innovative capacity.Many public- and private-sector organizations undertook a wide range of knowledge-management initiatives, including identifying and sharing relevant practices, locating and highlighting expertise, fostering communities of practice and installing collaborative technologies.
The Risks to Knowledge Assets
The era of rapid growth and change was conducive to experimenting with and implementing new techniques for managing knowledge. Expanding budgets for new personnel and systems, coupled with a need to disseminate knowledge quickly to an ever growing and increasingly diverse work force, provided steady nourishment for knowledge-management efforts. However, in an era of uncertainty, shrinking budgets and staff reductions have put knowledge at risk: The most knowledgeable employees often leave first, critical social networks are damaged, trust decays and the time necessary for knowledge transfer is compressed and compromised.
The Most Knowledgeable Workers Leave First
Voluntary reductions in the work force may have a negative effect on preserving knowledge. Many organizations, in an attempt to soften the blow of impending layoffs, institute incentives to encourage individuals to leave the organization voluntarily. Unfortunately, voluntary attrition programs often encourage the most marketable and knowledgeable individuals to leave. In addition, early-retirement programs apply to older individuals, so companies often end up losing those who have accumulated the most knowledge — and rapidly deplete the corporate memory, knowledge base and supply of mentors. Rarely do organizations have any way of systematically identifying individuals’ specific knowledge or tapping their ability to share that knowledge. Even fewer companies attempt to record and share the knowledge held by outgoing employees. Hence, remaining workers faced with new duties may be frustrated and unproductive.
Damage to Social Networks
Downsizings can hurt the social networks that speed the flow of knowledge across an organization.