Departing employees leave with more than what they know; they also take with them critical knowledge about who they know. That information needs to be a part of any knowledge-retention strategy.
When many experienced mechanics left Delta Air Lines Inc. in the mid-1990s, the company was able to reduce compensation costs in the short term, but the remaining, less-experienced employees took much longer to diagnose and repair airplanes. The result: flight delays and cancellations, unhappy customers and an overall increase in Delta’s cost-per-seat mile. After the 9/11 terrorist attacks, Delta had to substantially reduce its workforce to remain competitive. This time, though, management was keen to ensure that critical knowledge wasn’t departing with the 11,000 employees who were leaving.1 In addition to retaining those who were high performers or were in positions with few backups, Delta also focused on employees identified as “go to” people during crises as well as workers who had substantial relationships both inside and outside the organization.2 In doing so, management recognized that critical knowledge loss is not simply what the departing employees know about their job tasks, but also who they know and collaborate with to get work done on time.
As Delta has learned, knowledge loss resulting from employee turnover is becoming a critical issue that cannot be ignored. In terms of broad demographics, aging baby boomers present a major challenge, with nearly 20% of the American workforce holding executive, administrative and managerial positions set to retire by 2008.3 In certain sectors, these departures are nearing crisis proportions. In the oil and gas industry, for example, the average employee age has risen dramatically — current estimates suggest that roughly 60% of experienced managers will retire by 2010.4
In addition, critical knowledge loss also occurs more subtly via job mobility and alternative work arrangements. Specifically, substantial but often unrecognized knowledge loss takes place when established employees quit or contract employees (representing one in six American workers5) move to another organization. In a recent survey of 5,000 executives, 46% indicated that they expected to remain in their positions for only two to five years.6
These dynamics represent a large and growing concern that most companies have failed to address. In a recent study, only half of the organizations surveyed had identified a list of critical skills needed for future growth. Moreover, more than one-quarter viewed defining critical skills as “unimportant.”7 But the cost of losing important expertise can be enormous. General Mills Inc.,