Business Acumen and Systems Knowledge Loss, Part 1

Companies today are faced with a challenge of preserving their internal systems knowledge and functional business acumen – essentially the inner-workings that are distinctive to a company’s operational and support structure. There are key areas of concern where this manifests itself and becomes a potential risk to future business agility, growth and speed to market.  To varying degrees, most companies face this challenge in the areas of functional departments where proprietary knowledge or information is used to enable business processes or to maintain and support systems.

The risks become very evident when an employee with that knowledge leaves or transitions from a company, taking critical human capital with them and leaving holes in skillsets and overall functions of the business. Oftentimes only a percentage of the knowledge associated with a role is passed along to the successor; this particular issue is exasperated by the outsourcing of business and IT functions without maintaining the internal knowledge of how things work. This pattern of knowledge loss, coupled with a lack of current process and system documentation, continues each time a staff replacement or transition is made.

So, Why Now?

This issue has become so significant today that many companies end up having to hire back former employees as consultants, simply because they do not have the institutional knowledge to run some business functions or operations. With this usually coming at a very high cost for the employer, it’s an issue that needs to be addressed in today’s business environment. Many c-level execs are not recognizing the full business impact, only the financial consequences. For instance, business resourcing is top of mind today as brands seek strategies and technologies that will provide lower overhead costs. It’s when businesses look to reorganize parts of their business that they also need to consider the consequences of being tied to outsourced vendors: knowledge loss.

In my next post, i’ll provide recommendations on how to reduce the risk of knowledge loss in roles/organizations.

One comment

  1. Laura Hardenbrook

    Institutional knowledge loss is a HUGE issue in knowledge management. Unfortunately it’s also a “stealth” issue because no one person or group of people at an organization knows what he/she/they don’t know. The upcocming mass exit of experienced, knowledge-rich boomers poses a real threat to businesses, but few people are paying enough attention. The threat is compounded by the tendency of younger workers to fail to connect with their employers in a way that inspires long-term loyalty. Thanks for addressing the issue here.

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