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Institutional Knowledge Hides the Blind Spots in an Organization

Updated: Jun 9, 2019

By Rod Walker, CEO & President of Rod Walker & Associates Consultancy

One reoccurring issue has been identified from our Company’s working with C-suite level leaders as they address succession planning and the impact of an aging workforce heading to retirement in large numbers in their organizations. Knowledge of the job is not the only thing that walks out the door when an employee retires. They may leave with great technical and industry knowledge, which in itself is sometimes hard to back-fill, but their knowledge of the organization (institutional knowledge) and how it operates is leaving gaping holes – blind spots – most organizations are not prepared for.

As baby boomers retire, they are leaving gaps in organizations that are not only hard to replace, but demand a deeper look at potential changes in organizational structure, job descriptions, company procedures or employee development. The deeper look is vital to ensure the gaps left in the organization when a person retires does not create a significant drop-off in the individual job and overall company performance or, even worse, safety, financial and reputation issues. We recommend that this type review be a part of every company succession planning effort, not just to identify the candidate that will replace the retiree, but to determine if other changes are needed to avoid a significant performance drop-off when the retiree leaves.

The difference is significant institutional knowledge. Most baby boomers came up in the era where employees typically had only one job in their entire career as it was frowned upon to change jobs as often as younger workers do today. Therefore, most have been with their current organization for many years (>25-30 years) and have developed an intuitive understanding of nuances and blind spots with their job and the organization as a result of their extensive experience. Less experienced employees, while well-qualified, are not likely to recognize, nor be able to handle these blind spots.

Look at the issue this way. A seasoned driver can understand and see the blind spots (gaps) better between them and other cars on the road than a new driver. Similarly, seasoned long-term employees can identify and navigate the blind spots or gaps between their jobs and others (i.e. peers, supervisors and direct reports) to ensure the organization functions well and blind spots are addressed, regardless of their job description.

In business today, there still exists the “Way” of doing business for an organization that is largely outside of written procedures but is known by baby boomer employees with institutional knowledge from many years of service. Less-experienced replacement employees may be technically sound and have deep experience in whatever industry the company operates, but are sorely deficient on how the company actually runs its business and the nuances of how jobs overlap.

Organizations are struggling more and more from this phenomenon and, due to the large numbers of retirees continuing for the foreseeable future, the phenomena will not only continue but worsen. Therefore, a sense of urgency is developing amongst leadership in organizations to place more attention toward ensuring succession plans are robust enough to handle this issue. No longer can organizations “hope for the best” when their key employees with institutional knowledge decide to retire.

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