Measure Knowledge To Manage It
Knowledge-based management and evolution of landscapes [Source: https://www.youtube.com/watch?v=axFg13K8qOY]
According to a report in the Harvard Business Review, one company faced with the concurrent retirement of 700 personnel estimated the combined loss of experience at over 27,000 years. Using that correlation as a reference point, what will happen when the 75 million strong baby boomer generation exits the US workforce over the next 14 years? And what will happen in other developed economies like Canada, Europe, Japan and South Korea where a similar story is unfolding?
It's being called the Knowledge Drain. But knowledge may be relatively easier to replace. What we are at risk of losing here, permanently, is much more than that. This is knowledge that individuals have processed through their personal filters of insight, instinct, intuition, judgment, wisdom and experience to create a valuable intellectual asset that is unique to themselves.
This the kind of knowledge that is impossible to define or quantify. It does not show up on the balance sheet, but (probably) has the most impact on it. And since it cannot be measured most companies don't have the structures or processes to capture and recirculate it.
True, strategic workforce planning can help organizations assess the impact of retirements, identify the subsequent skill gaps that emerge and devise appropriate rectification strategies. But that's still mostly an exercise in damage assessment and rebuilding rather than a proactive initiative to retain knowledge.
Consider the practice of Human Resources Accounting (HRA) for a moment. Conventional accounting norms did not mandate it. But without the context of Human Resources, there would be little to distinguish between two competing firms with similar physical and financial resources. Today, there are a growing number of enterprises that are accounting for the value of their human capital on their balance sheets. And it is not just a symbolic nod to the workforce. In the time honored tradition of what-gets-measured-gets-done, computing the value of human assets enables companies to take a more focused approach to monitoring, nurturing and enhancing the value of that asset.
Knowledge needs a similar approach today. Enterprises need to measure it before they can hope to have a meaningful approach to managing it. In a knowledge economy, that is possibly the only approach that can truly ensure sustainable enterprise value.