By Gillian Leithman, PhD
The North American workforce is undergoing a metamorphosis. We’re aging and retiring in record numbers.
Did you know that 1,000 Canadian employees retire every day?
At this rate, there is not enough talent in the market to replace those who are exiting.
This mass exodus will affect business operations in the areas of talent management, compensation and benefit structures, innovative product development, office ergonomics, organizational safety, and yes – you guessed it – profits and losses.
Unfortunately, many organizations don’t recognize what they are losing when their experienced workforce retires, as they are too focussed on how much the firm will save by replacing older and more “expensive” workers, with cheaper and younger labour.
But such a narrow view can be quite costly.
Consider the example of Nat, head of a technology department at a large insurance company. Nat trained his successors before he retired, and everyone agreed that they had the technical knowledge to assume his role.
What they failed to consider was that, over the span of his career, he cultivated key relationships in and outside the organization, allowing him to pick up the phone and gain quick access to integral information not readily available outside his network. Once he retired, projects were delayed because his successors didn’t have access to his connections, causing them to miss deadlines and submit incomplete reports.
The Development of Expertise
The greatest challenges to organizational survival are both the retention and dissemination of tacit knowledge from older workers to their younger counterparts. According to Dorothy Leonard, professor emerita of Harvard Business School, “Tacit knowledge is stuff in your head that’s never been written down, never been documented. Maybe you’ve never even articulated it.”
It is a personalized knowledge that is born of experience, relies on intuition, and inhabits our subconscious. It is developed by discovering patterns within different situations. When experts need to make important decisions or develop strategic plans, the knowledge contained within these patterns is extracted from memory and applied to new contexts.
Do you remember the story of Captain “Sully” Sullenberger- the US pilot who made an emergency landing in the Hudson River after a flock of Canada geese struck the aircraft and caused the plane’s engines to fail?
Well on January 15, 2009, Sullenberger had less than five minutes to determine that a water landing was his only safe option – a feat he had only ever examined in theory.
Sullenberger credits his training, experience, and lifetime commitment to aviation safety as reasons he was able to land the plane safely and save all 155 passengers on board. His brain sorted through similar situations he either encountered as a pilot or had knowledge of from readings, simulations, or theoretical discussions. Sullenberger’s vast experience enabled him to use a systems perspective, which encompasses a deep understanding that if I do “A,” then “B,” “C,” “D,” and “E” will follow.
A systems perspective is born of experience. Its knowledge a novice just doesn’t have.
Of course, not all situations are as dramatic as Captain Sully’s Hudson River rescue, but that doesn’t diminish the importance that tacit knowledge plays in our everyday lives. As an example, imagine that you or someone you love had to undergo cardiac surgery. Chances are, you’d prefer a surgeon whose experience included successfully operating on cases in which rare or atypical abnormalities were discovered on the operating table. As knowledge management experts Leonard and Swap explain in their Harvard Business Review article, Deep Smarts, “We don’t want to hear the surgeon exclaim, ‘wow–never seen this before!”
Tacit Knowledge is Your Company’s Key Competitive Advantage
In a knowledge economy, tacit knowledge is a company’s greatest source of competitive advantage because it can’t be imitated by the competition. However, because it isn’t codifiable and can’t be written down in a document, slide deck, or spreadsheet, it can be challenging to transfer and teach. Furthermore, the more complex a worker’s expertise, the longer it will take to transfer.
But failing to capture and transfer tacit knowledge is a far costlier endeavor. As key people retire, costs are estimated to be upwards of $50,000 to $1 million per employee, depending upon one’s years of service, expertise, and business relationships. And these expenditures do not include the costs of recruiting, hiring, and training new workers.
While it is impossible to capture and transfer all of a person’s tacit knowledge, it is imperative that you transfer the knowledge, networks and know-how that are central to the day to day operations of your organization.
Outdated negative views of mature workers as “old” overshadow the value of experience. Moreover, they disregard the diverse set of skills needed to successfully navigate today’s complex business environment as the stories of both Nat and Captain Sully illustrate.
The mature workforce has skills that complement that of younger generations. Their institutional know-how and know-who mean they can provide guidance to younger colleagues and introduce them to key people in the organization, thereby shortening their successors’ learning curve and heightening collaboration. Moreover, this process also ensures knowledge continuity from one generation to the next. And that’s good business!
About The Author: Gillian Leithman, PhD
Gillian is best known for her pre-retirement programs which help people focus on the socio-emotional aspects of the retirement transition. When she is not facilitating workshops, Gillian teaches in the Goodman Institute of Investment Management and the Executive MBA at Concordia University in Montreal, Canada. She is the forthcoming author of The Corporate G-spot. She can be reached at email@example.com or visit her website at www.rewiretoretire.com