Establishing a knowledge management programme can lessen the blow of staff churn. Never has this been more important as now, as baby-boom employees near retirement and years' worth of experience looks set to walk out the door, says Dorothy Leonard.
In today's knowledge economy, where innovation can be instantly replicated and reproduced by competitors on the other side of the world, people are an organisation's chief source of competitive advantage.
Over the past decade human capital management, a discipline dedicated to managing people for performance, has grown out of the recognition that people make the difference.
The war for talent has intensified a drive to improve people management. Business is beginning to focus on the strategies it needs to defend, and grow, this critical resource.
Retention and succession planning are key elements of any people management strategy. But how many companies are acting to capture and retain the knowledge in their employees' heads, and their employees' informal work networks?
With the baby boomer generation nearing retirement, these are becoming critical issues for businesses, their employees and shareholders.
For some sectors the day of reckoning is uncomfortably close. Oil and gas is one example. According to the Society for Petroleum Engineers, 44% of the industry's experienced staff are due to retire by 2010.
Each individual who walks out the door represents the loss of decades of accumulated experience and expertise. And when you are looking at almost half of your employees leaving within the next seven years, you have a crisis on your hands.
Enterprises do not think twice about securing, and insuring, the value of easily replaceable physical assets such as vehicles and computers. Yet they adopt an entirely different attitude when it comes to the real source of value in the business: knowledge.
Businesses need to act now if they are to avert the coming crisis. The first step is to understand there is nothing inevitable about future knowledge deficits. A comprehensive knowledge management programme will enable businesses to identify their vulnerabilities and ensure they focus on capturing key knowledge.
To succeed, knowledge management must be integrated with the enterprise's wider strategy for managing, retaining and replacing talent. Knowledge management cannot be effective if it isolated.
And, although knowledge management is presented here as a succession strategy, it should be remembered that it is also about securing competitive advantage, right across the business, today and not just tomorrow.
What do you think?
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Dorothy Leonard is professor of business administration at Harvard Business School. She is the keynote speaker at Knowledge Management Europe, which takes place 10-12 November in Amsterdam. www.kmeurope.com