I have happily hosted many a lunch with senior executives from many industries and, not surprisingly, the conversation at some stage moves to people. And one of the concerns often expressed is about the potentially catastrophic effects of highly talented people having too much responsibility too soon.
I have also read opinion that suggests that the cost of lost knowledge is hidden. Well, it really shouldn’t be, and if only we read the reports and stopped thinking that it always happens to someone else, maybe it would be less hidden.
The fact of the matter is that the rate at which baby-boomer retirements are going to pick up is going to put a severe strain on the depth of expertise that companies have to draw upon. Too much comfort is being taken from the expectation that people will stay on or re-engage very easily.
Leaders often won’t invest resources to reduce the impacts of lost knowledge because they don’t understand the true costs of failing to act. Making the costs of lost knowledge visible is the best way to create a sense of urgency that will lead to executive action.
We are continually building our database of examples to help organisations understand this serious threat to future performance.
Here are some examples (and we would like to hear yours):
After a maintenance technician retired from a plant producing soybean oil, large batches of oil suddenly started to go bad during production. It took the company two years to rediscover the simple trick that this retired technician knew made the difference. Unexpectedly losing this veteran employee’s knowledge cost the company millions of dollars in lost product and sales revenues.
A large pharmaceutical company recently acquired a small biotech firm for its new drugs. But after the acquisition, chemists left the biotech company with critical knowledge needed to begin manufacturing. It took three months to recover this knowledge, delaying the drug’s introduction and costing the company millions of dollars in potential revenues.
When Boeing offered early retirement to 9,000 senior employees during a business downturn, an unexpected rush of new commercial airplane orders left the company critically short of skilled production workers. The knowledge lost from veteran employees, combined with the inexperience of their replacements, threw the firm’s 737 and 747 assembly lines into chaos. Overtime skyrocketed and workers were chasing planes along the line to finish assembly. Management finally had to shut down production for more than three weeks to straighten out the assembly process, which forced Boeing to take a $1.6billion charge against earnings and contributed to an eventual management shake-up.
One of Nasa’s multimillion-dollar space probes was lost on Mars in 1999. In evaluating the accident, a flight safety director concluded that the loss was caused by an obviously flawed design that would have been readily detected and corrected if more experienced engineers had been overseeing the project.
The merits of putting a man on the moon again, or even Mars, are debatable. According to the bumper sticker, of course, many women feel that if we can get one there, there is a strong case for getting all of us there.
Can Nasa put a man on the moon? No longer, according to Geoffray Petch.
Astonishingly, the blueprints for the Saturn rocket have been lost and much of the knowledge of the 400,000 engineers that made the first moon landing possible lies in documents that are devoid of meaning without the contextual and personal knowledge of those who generated them.
Nasa now has a programme of “knowledge archeology” to excavate and add meaning to the repositories of information in order to prepare for a future manned landing.
The importance of retaining the knowledge must not be overlooked. Some companies are seriously dealing with it, but the vast majority are saying a lot more than they are doing, perhaps hoping that it will be OK. Can we learn from recent history and hard-earned experience? That remains to be seen.
Jon Glesinger is CEO of Expert Alumni