institutional knowledge

How to capture institutional knowledge

When your employees stay in the same role for extended periods, they accrue institutional knowledge – or information and understanding about the systems, relationships and tactics that make your company run optimally.

This valuable combination of loyalty and insider expertise is one of the major long-term benefits behind the push to increase employee engagement and reduce turnover.

However, when a well-tenured person does retire or resign, a substantial reserve of company-specific insights may be lost.

That is, unless you have a system for regularly capturing institutional knowledge.

What is institutional knowledge?

Institutional knowledge refers to the information that only one or a few employees have about your company’s operations or important relationships.

You could view it as company culture brought down to the department level combined with the undocumented processes and behaviors that ensure even the smallest areas of responsibility are covered.

For example, think about your own job tasks:

  • What do you know that only a few coworkers or subordinates might grasp?
  • Are you the main point of contact with a vendor?
  • Do you stick to a special, unwritten workflow because experience has demonstrated that it helps you avoid issues with clients or stakeholders?

Scenarios like these may point to the institutional knowledge that you hold.

Now, think through how many other people in your organization may hold similar information.

Isn’t it worth capturing that information sooner rather than later?

How institutional knowledge builds up

Institutional knowledge isn’t inherently bad, if managed properly. In fact, companies relying heavily upon it likely have a faithful band of employees.

Here are three things, however, that can lead to an unhealthy buildup of institutional knowledge.

1. Everyone is busy.

In fast-paced industries or workplaces, employees are typically immersed in doing what they should be doing – their jobs. Training happens, expectations are set, and procedures are introduced – but none of these things are written down.

Meanwhile, with so much information that must be documented for compliance reasons, it’s easy to skip formalizing procedures that don’t legally require documentation. But failure to document and update procedures may create significant business problems in the long run.

2. Employment often ends when we least expect it.

“So-and-so will never leave” – have you ever thought this about a colleague or employee?

Yet haven’t we all seen someone’s life change in a dramatic way, without warning? Marriage, divorce, death or an unforeseen new opportunity can bring change not only for your employee but also your company.

3. We see institutional knowledge as a good thing (until it’s not).

Dedicated employees managing heavy workloads with great independence – if you don’t see much of a problem, you’re not alone.

That’s the trouble with institutional knowledge. Management frequently fails to recognize it as a bad thing until a trusted employee leaves, and then it’s too late to capture the lost information.

Consequences of failing to capture institutional knowledge

Yes, when you don’t document institutional knowledge, sudden employee departures disrupt operations and growth much more severely.

But did you know that institutional knowledge can lead to inefficiency during regular times, too?

Here are a few of these possible consequences:

  • Having to start from scratch when training lost employees’ replacements
  • Lost growth opportunities (e.g., investors walking away due to uncertainty)
  • Employees who no longer see your written procedures or training materials as relevant
  • Employees who start implementing processes about which others are unaware
  • New hires receiving old procedural information that confuses or frustrates them

How to preserve institutional knowledge

With commitment and smart planning, you can capture institutional knowledge in a way that improves your operations and buffers you from some of the consequences of seasoned employee exits.

The crucial combination strategy that prevents institutional knowledge loss includes:

  1. Succession planning
  2. Maintaining updated standard operating procedures

Succession planning

Many organizations have an organizational chart, but fail to set aside time for succession planning.

Succession plans not only acknowledge who may be retiring soon, but they also create a plan for retaining the knowledge that’s needed to keep an organization running smoothly through leadership and staffing changes.

Succession planning should include identifying backups for any critical areas of responsibility. The goal should be to never have just one primary person who holds all the knowledge related to any key operations, which is a threat to any organization.

Standard operating procedures

Where succession planning pinpoints the location of valuable institutional knowledge within your organization, maintaining current standard operating procedures should be your means of capturing and formalizing it.

Standard operating procedures are evolving electronic documents that describe the systems and workflows your employees use to do their jobs.

Ideally you would maintain these processes for every role at your company to put you in the best position no matter who might leave your company.

Yet, as you can imagine, it takes great collaboration to capture standard operating procedures, so start with the areas most critical to your success.

Here’s what a great procedure development team looks like:

  • Subject matter expert (SME) – the employee whose institutional knowledge you want to capture
  • Project manager – someone who asks great questions and documents procedures clearly, succinctly
  • Project champion – someone with internal influence and authority who can communicate the importance of capturing the institutional knowledge
  • Ongoing overseer – someone who can maintain the standard operating procedures by coordinating quarterly or semi-annual updates

At the outset, the project champion should speak to the whole team about the benefits of preserving institutional knowledge. This helps to set a reassuring, positive tone. By focusing on the value inherent to solidifying workflows and creating stability for current and future employees, the project champion and manager can help allay possible fears about potential job loss or looming organizational changes.

Following a well-executed kickoff, the project manager can get things rolling.

By speaking with an SME and shadowing them on-the-job, the project manager should seek to discover his or her:

  • External and internal clients
  • Daily, weekly, monthly, quarterly and annual tasks
  • Reports submitted to internal clients and how they’re reviewed and approved
  • Challenges faced in the role
  • Workflows
  • Advice for potential successors

When this information gets documented, any important institutional knowledge becomes official procedure and a helpful resource for both current and new employees.

Planning ahead

Does your organization depend on institutional knowledge? By thinking ahead and relying on smart solutions, you can enjoy the benefits of it while minimizing risks down the road.

Learn more about how succession planning can help you identify roles where it’s crucial to capture this valuable information when you download our free magazine: The Insperity guide to succession planning through HR.

The Insperity guide to succession planning through HR, Issue 13
The Insperity guide to succession planning through HR, Issue 13
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