What's Wrong With Relying on Institutional Knowledge?

No matter how you look at the concept of institutional knowledge or tribal knowledge (or whatever you prefer to call it), it can be an issue. The risks are too severe when your team's success is dependent on unwritten knowledge. What happens if the leader steps down? What if the person in charge of that tech program gets sick and needs to take a month off? 

The remainder of this article will look at how you can lessen your team's dependency on institutional knowledge by creating a workflow that everyone can manage.


What is Institutional Knowledge? 

The definition of institutional knowledge is a lot simpler than it sounds. It is, essentially, information known to a group — usually within a company — that is often unknown externally outside of it. This is also commonly known as "tribal knowledge.” 

Institutional knowledge includes all job-related facts and data that each person keeps in their heads. Through the process of transforming each person's individual knowledge into a collective company memory bank, your company and its employees can counteract the ongoing erosion of this essential information. 

Institutional Knowledge IllustrationCreating a process to preserve and distribute this knowledge helps to democratize information and foster a learning culture inside your organization.

Institutional knowledge is especially present for businesses that are rapidly expanding. It's natural for your team to learn from each other if it started as a small group, but as that group expands, spreading that knowledge becomes increasingly difficult. 


The Issue With Institutional Knowledge

Let's say there is an aspect of your company, such as a machine or vital tool, and only one person in your organization knows how to operate it properly. Then that person leaves. What happens next?
 
No one wants to consider losing a knowledgeable member of their team, but it's necessary to be realistic. The most significant reason to prevent institutional knowledge is to avoid the possibility of a person departing and taking that critical information with them. 

Institutional knowledge can sometimes create a challenging working environment. One individual may end up carrying the brunt of the workload and thus becoming overwhelmed. When employees without the knowledge seek to learn more, they may even feel untrustworthy and unchallenged.


How Institutional Knowledge Impacts Your Business

Employees stay at a firm for an average of about 4.5 years before moving on. And they take all they know with them, including the preferences of clients and the company's historical view on corporate strategy. They may even be the only employee who knows how to operate that one problematic machine in the company.

While each of these data bites may appear insignificant, the financial cost of losing all of this data over time is considerable. Here are some examples:

  • It frustrates other employees, lowers production, and causes misunderstanding and miscommunication, all of which could have serious consequences for the organization.
  • It also makes it harder for learning and development teams to provide employees with the knowledge they need to do their jobs. 

It's all on the line. Failure to establish a strategy for preserving institutional knowledge can have a significant financial impact on your firm. Here are a few further ways that squandering this important knowledge could cost your company hundreds, if not millions, of dollars.

  • It requires your company to build each new course and training resources from scratch, making training less practical. They must rely on costly third-party resources rather than tapping into the wisdom of experienced personnel. 
  • More generic training results as a result of this. A mass-produced training course or an actual employee who has worked for five years in your organization would better handle the company or department-specific subtleties of a topic. 

Consider a seasoned designer who is intimately familiar with the company's style guide and is well-versed in the most effective banner ad formats. Their customized training program for new team members is far more helpful than a generic one.

When it comes to onboarding, when workers must quickly learn the skills and information they need to accomplish their jobs effectively, the challenge is particularly pronounced. New recruits typically receive two and a half weeks of training, based on information from Panopto, but it can take up to six months for an individual to properly ramp up to a new role. 

They will waste that time rushing for information, ineffectively teaching themselves new methods, or just doing their work improperly if they do not have dedicated knowledge resources.

Shortening the time it takes and getting people functioning more effectively is possible with an education system based on institutional knowledge transfer. Based on information from the Aberdeen Group research, organizations that enhance their onboarding process can increase revenue per employee by 17%. 


How Institutional Knowledge Impacts Your Employees

Long-term staff leave with thousands of dollars worth of hard-won knowledge and skills. This is a significant financial setback with far-reaching consequences. 

What Harvard Business Review refers to as "deep smarts" is the crucial, experience-based knowledge that employees collect over time. It's impossible to replace deep intelligence. A new employee may be capable of doing the fundamental functions of the person they are replacing, but without personal mentoring, they will be unable to recreate their predecessor's relationships, ideas, or work methods.

Deep intelligence is more important to your job than you may realize. The Panopto Workplace Knowledge and Productivity Report says that each employee holds 42% of the company's useful knowledge. They are the only ones with that information. It's an expensive mistake to allow that information to essentially vanish. If a person departs the organization, colleagues will be unable to cover 42% of their work successfully, and a new worker will have to learn forty-two percent from the ground up. 

To reclaim that lost expertise, the corporation will spend a lot of money on training and productivity (some of which may be gone forever). Panopto says that the average new recruit will spend 200 hours trying to find this missing data by recreating lost processes and procedures.

Other hazards include the potential for customer relationships to be harmed, vital activities to be ignored, and innovation to be lost. According to Harvard Business Review, the cost of losing an employee might be up to 20 times more than the typical recruitment and training costs. 

This very real problem is poised to get even more serious. As baby boomers retire and leave the workforce, the workforce is currently facing a silver tsunami. Every day, 10,000 baby boomers turn 65 (the average retirement age in the US is between 61 and 65), and this trend is expected to continue until 2030. Retirees bring decades of institutional knowledge with them when they leave the company.

However, there is a technique to combat this problem: Before departing the organization, have employees document their vital responsibilities and knowledge. Collect crucial information about their positions, relationships, and experiences in the firm so that no critical information is held in the brain of just one individual.


How Institutional Knowledge Hinders Productivity 

When knowledge is concentrated in a single person or department and not shared across the organization, information silos are created. As a result, while the sales team may be aware of the most recent demographic data for new users, the marketing team is completely unaware. Employees can't do their tasks correctly if information is not flowing smoothly throughout the organization, resulting in significant productivity losses. 

Inefficiency is caused by these data silos. Employees must devote effort to locating or learning knowledge that is already available. Employees spend an average of 5.3 hours each week looking for knowledge to do their jobs. 

Panopto believes that if that number is extrapolated over a year, the average small organization with under one thousand employees will lose $2.4 million in productivity owing to a lack of information sharing. The number rises in proportion to the company's size. Workday inefficiency may cost a corporation with thirty thousand employees $72 million. 

Those are significant figures, but consider that 5.3 hours a week is nearly an entire workday spent looking for information rather than working. That's a lot of wasted time that could be spent doing something more productive.Institutional Knowledge Illustration

As businesses expand, information silos are certain to emerge. Employees aren't hoarding knowledge on purpose; they simply don't know who needs it and how to get it to them. Deloitte found that 72% of employees can't find the information they need in their current systems. 

These silos must be demolished. Provide staff with a better framework for exchanging company-wide institutional knowledge. A company-wide collaborative learning system aids in the democratization of information by making it accessible to anybody who requires it.

 

How to Use Institutional Knowledge the Right Way

Find the Source


The first step is to figure out where the knowledge within your company is stored. Examine each member of your team individually for their knowledge of work practices. Working with recruiters who have spent the most time at the organization will be especially beneficial in this process. 

After you've obtained the data, assess what should be documented and what shouldn't. There's a chance you have some institutional knowledge on your team that you won't need in the future, so get rid of it! Keep it for the next phase if there are processes, skills, or data that everyone in the team should be aware of.

Use Technology 


Now it is your job to create training materials. It is entirely up to you and your team to decide how to document the knowledge of your company. Make sure that every detail is documented, whether you're creating training films with screen sharing and voiceovers or Google documents. If you can, document it in several ways so that your employees can access it regardless of their learning styles.

We completely understand that finding the right solution can be daunting. Contact us to set up a free consultation on how to easily tackle your institutional knowledge issues.

Mentor Each Other


Mentoring is an excellent way of using institutional knowledge the right way. It allows senior employees with more experience to pass their knowledge down to newer or more novice employees. It also creates a cohesive atmosphere within the company, which is great for team building.

Don't Repeat History


It's all-too-easy for institutional knowledge to quietly get out of control, so it's up to you as an organizational leader to keep this from happening. Make sure you are utilizing technology and other tools that have a low barrier to entry and can be used by everyone on your team. Make professional development and consistent training a team-wide standard. Create an environment where team members feel free to contribute the valuable abilities they've gained through their experience. 

You'll build an open, collaborative workplace where all of your team members are welcomed and appreciated if you focus on leveling the educational playing field.


Conclusion 

In this new era of corporate efficiency, it is abundantly clear that institutional knowledge is being looked at in new ways, as it should be. At Structural, we advocate for our clients to use technology to tap into institutional knowledge. We believe that automated and robust profiles — searchable by skills, project, and client data — are vitally important. This is, after all, what we do here at Structural, and we look forward to doing the same for all of our new clients. 

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