How to Maintain Institutional Knowledge When Your Company Depends on Freelancers

Every company built to last needs to preserve its institutional memory, That's tougher in the gig economy than it was in the 30-years-and-a-gold-watch economy.

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By Martin Konrad


Opinions expressed by Entrepreneur contributors are their own.

One of the underrated costs of employee turnover -- in addition to the costs of recruiting and training new employees -- is the loss of institutional knowledge represented by departing employees. When employees leave your company, they take with them a lot of valuable knowledge, connections, expertise and social capital that can be difficult to replace.

Institutional knowledge, also known as institutional memory, is part of a company's intellectual property: it's the company's shared set of key concepts, experiences, expertise, processes, internal structure and collective understanding of how to work.

All of these things take time to learn, and this knowledge base is part of the unique culture and shared language of the company; when employees leave, or when new hires get brought on board, the company needs to have a plan in place to preserve the continuity of the company's institutional knowledge. The challenge of preserving and conveying this unique institutional knowledge has been intensifying for several years and is now reaching a critical tipping point as more companies are transitioning to the freelance economy. The labor landscape is changing irreversibly due to several prominent social, cultural and economic trends and many companies are seeking to adapt their hiring, collaboration and retention processes to suit the new opportunities of working with freelancers.

Related: We're Turning Into a Freelance Nation. Here's What That Looks Like

A key aspect of organizational knowledge is how it relates to building and growing company's knowledge around their external workforce.

Before I started Shortlist -- a workforce management technology company -- I spent nearly 15 years at various companies in the role of sourcing and hiring external vendors and freelancers. The most common problem when hiring freelancers is a lack of information within the company about the past relationship with their freelancers; who the company used for the particular type of project, or how the freelancer performed previously -- did the freelancer deliver work on time, did they go over budget etc.

Unfortunately, most of the organizations still lacks systems to convey this kind of institutional knowledge, which as a result make them vulnerable to the risk of making bad hires and having to recruit, rehire and retrain multiple times.

When hiring freelancers, it's not just a matter of finding the right technical skills and expertise -- you need freelancers who are a good cultural fit for the organization. You need to be confident they will perform well on the type of project you want to assign them to, and that they will deliver on time.

So what can be done about it?

Companies should start utilizing systems of record to keep their relationship history with their freelancers and contractors.

Related: What Workers Need in the On-Demand Economy

In fact, organizations have already been effectively collecting and sharing data for years with use of various systems of record, particularly in the area of sales, where CRM systems provide a tremendous value through the shared data allowing the company to recognize sales opportunities that otherwise would have been missed.

Following that trend, we can expect that companies will take advantage of the rapidly developing workforce technologies designed specifically for the freelance economy.

Some companies are already recognizing the need to build internal knowledge about their external workforce. One prominent example is PricewaterhouseCoopers (PwC), which recently launched its private talent marketplace called "Talent Exchange," where U.S.-based freelancers can apply to be selected to join consulting projects for PwC clients.

As the freelance economy continues to grow, more organizations follows the lead of PwC to transition their knowledge to the talent platforms and stay connected with their freelancers as an ongoing resource for the company -- while preserving these connections and data as part of the company's base of institutional knowledge.

A great example are Freelancer Management Systems (FMS) -- not only assisting companies in engaging freelancers but for serving as a repository of company knowledge about the freelance workforce that acts as a company's ongoing source of freelance talent.

Related: The Freelance Economy Is Booming. But Is It Good Business?

Freelancer Management Systems (FMS) if used well, can offer exceptional data insights about each freelancer's work history, professional reputation, and niche areas of expertise. This makes it easier for companies to hire or re-hire exactly the right talent, while being confident that the freelancer have the skills, experience, work ethic and personality to be a good fit within the organization's culture. FMS can remove much of the risk of making a bad hire, and help companies hire and scale up their teams more quickly by drawing upon referrals and recommendations from their trusted network of freelancers.

The institutional knowledge is an essential element of building a successful organization, and it's important to conserve this knowledge and convey it to new hires. With the accelerating transformation of the workforce, we can expect to see more and more enterprises begin to utilizing FMS systems to grow and share their data and knowledge about their external workforce.

Martin Konrad

Co-founder of

Martin Konrad is an entrepreneur of Polish origin and a co-founder at -- a San Francisco-based freelancer and vendor management platform company focused on helping businesses manage independent contractors. Before Shortlist, Konrad founded and operated Design Royale, an award-winning Sydney and New York City-based digital creative agency successfully acquired by Edelman Worldwide in 2012. 

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