Who Knows?

Employees come and go, but how do you get their knowledge to stick around?

A competent employee has left your company, and amid the confusion, you realize you've lost something irreplaceable: that person's knowledge and experience. You're facing a knowledge gap that could have been avoided by asking yourself a few questions: How am I encouraging our employees to share their knowledge of products and procedures? How am I documenting it for future reference?

Heather Hesketh, 29, saw this knowledge gap from the employee perspective when she was a technical writer for a manufacturer of scientific devices. "It took me six months to get up to speed when I started," she says. "They showed me the room that had all the documents I would need, and that was it. I'm sure the person before me had a system, but I didn't know what it was."

Today, Hesketh is president of Raleigh, North Carolina-based hesketh.com, the Web consulting firm she founded in 1994. She's been lucky and hasn't lost any of her seven full-time employees . . . yet. "Losing people-ugh," she laments. "I hate to see that happen, but that day will come."

Hesketh, who is an avid notetaker, is anticipating turnover by having her employees document everything they do, information that's stored on the company's intranet as a sort of history lesson. It's her way of preserving the past and preparing for the future. "In our business," Hesketh says, "we can't afford to have some people who are so pivotal that if we lose them, we get stuck."

Getting "stuck" isn't that far-fetched these days. According to statistics compiled by the Bureau of National Affairs, roughly 13.2 percent of permanent full-time U.S. workers changed jobs in 1998. The turnover this creates is costly. Says Frances Summers, president of Insights for Business, a human resources consulting firm in Medford, Oregon, "It costs an average of $9,100 to find and train a new permanent employee," Summers says. "And this is in direct costs that don't include the cost of recruiting, management time, and signing bonuses, which can make the figure even higher."

In The Know

Passing on knowledge and information to employees is the oil that keeps the entrepreneurial gears turning, no matter what type of business you have. "Part of the reason many small businesses fail is that they don't focus on those areas where they have world-class knowledge," says Vijay Govindarajan, a professor of international business at the Tuck School of Business at Dartmouth College. Integral to this knowledge is your staff. If you own a software business and one of your talented programmers moves on, can her replacement pick up where she left off?

"If your employees aren't encouraged to share knowledge and information, it's not getting passed on. So when good performers leave, they take their knowledge with them," says Morten Hansen, assistant professor of business administration at Harvard Business School.

A field called knowledge management (KM) focuses on the ways companies use knowledge and information. Experts have found that companies, just like people, have their own ways of communicating. Some people prefer to communicate on paper, while others like to speak face-to-face. Some companies place the majority of their information on intranets, where employees can access it and apply it to a broad customer base, while others emphasize verbal interaction between co-workers, and projects are tailored to each client.

Entrepreneurs need to understand there's a difference between knowledge and information, Govindarajan says. Information, he says, is the "know what" of a company, the readily accessible data at employees' fingertips. But knowledge is a company's "know how," its history, mission and creativity. "About 80 percent of the interesting things about a company aren't on a computer," Govindarajan says. "Employees can't get the 'know how' and 'know why' there. That's tacit knowledge, the things that cannot be written."

As you add new employees, what are you giving them that will help them understand your company's big picture? Many companies depend on mission statements-those manifestoes infused with purpose and lofty ideals-to relay a sense of purpose, printing them in the employee manual or posting them online. But do they do their job? "Spending a lot of time on mission statements without the strategy to back them up is a waste of time in the age of information overload," says Amy Newman, principal and co-owner of Organization Blueprint Inc., a training and consulting firm based in Floral Park, New York. She says companies don't realize that communicating their mission takes more than just whipping up a document and expecting employees to read it. "Some databases are ghost houses," she says. "Employees often miss the most important pieces of information. Who wants to read a mission statement online? Make the information come to life."

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Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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This article was originally published in the April 2000 print edition of Entrepreneur with the headline: Who Knows?.

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