Knowledge loss: can you afford it?

Posted by Hélène Russell, a member of Legal Futures Associate Law Consultancy Network

Russell: Consider ‘randomised coffee trials’

Law firms sell solutions to clients’ problems based on the combined knowledge of staff. People will always move on, but can you afford to lose their knowledge when they go? If not, what can you do to minimise the losses to your business?

What is the cost?

Replacing any member of staff necessitates the cost of recruiting, hiring and training a new person, but what’s the cost of losing that person’s knowledge? Their knowledge could be technical legal knowledge, specialist client knowledge, or they could understand the workarounds needed to make your legacy software work.

Dorothea Leonard, academic and consultant, studied this problem in 2015, surveying and interviewing 75 senior leaders in large US firms. Her research found that leaders estimated that the intangible cost associated with losing a knowledgeable person was between $50,000 and $299,000, saying: “If a business is relying upon certain know-how and that is lost, the resulting disruption could affect the entire business – perhaps 20% or 30% of a $2bn operation.”

What can you do to avoid it?

Frankly, by the time someone decides to leave your firm, it is too late to prevent knowledge loss.

If your leaver is going to a competitor, they will naturally want to take their expertise with them. If they are being made redundant or leaving because they are unhappy, they have no reason to help your firm.

If someone is choosing to retire, you have a better prospect of knowledge-transfer, but usually by this point they will simply have too much knowledge to impart. Even an expert in knowledge exit interviews will only recover a fraction of what they know.

Human memories are highly contextual, so people don’t realise what they know until that knowledge is needed to solve a real problem.

Experts also tend to suffer from a cognitive bias known as “the curse of knowledge”, which means that, once they know something, it hard to remember what “not knowing” is like, so they tend to undervalue their knowledge.

If you want to ensure that valuable knowledge isn’t lost when people leave your organisation, you need to have an on-going strategy of knowledge transfer. If you prioritise knowledge sharing all year around, then less knowledge will be lost when someone leaves, and you will create more experts amongst those who remain.

What can you do to improve knowledge sharing?

Some knowledge is easy to set down in writing and put in a database for others to find later. In the legal context, this means asking for your experts’ input on updating or adding notes/signposts to precedents, checklists, practice notes or work processes.

Other complex knowledge is more efficiently transferred through dialogue. To improve this knowledge sharing, focus on building networks and breaking the barriers to sharing, such as lack of leadership support for sharing, a failure to break “knowledge silos” – isolated groups which, usually due to an organisation’s mentality and structure rather than deliberately, do not share or make available their knowledge to those outside its group – and, of course, chargeable hour targets.

A five-step plan to improved knowledge sharing

1. Examine the networks that exist in your organisation. Understand where the network is weak and which individuals have a strong, connected network.

2. Introduce projects which break silos and build network links. To avoid the cost of losing well-networked individuals, build elements which break silos into everyday work.

Try mixing up training events (skills-based, client-based, location-based as well as practice-area based), in-house secondments, coaching/mentoring across practice areas or business development projects in mixed teams. Add a project to build a random element to the network building, such as ‘randomised coffee trials’.

3. Make sure everyone can find the right expert to talk to. Create a directory of internal experts, so experts can be found. Include a mix of people, not just partners, so juniors won’t feel inhibited about discussing tricky problems.

But beware the Dunning-Kruger effect. Base inclusion in the directory on evidence of expertise, such as positive client comments, additional training/education undertaken, published articles, and training events given.

4. Introduce projects which promote person-to-person knowledge sharing. Encourage senior leaders to ‘walk the floor’ or work out loud. Try a ‘no-email Fridays’ policy or an early morning huddle/stand-up meeting. Investigate enterprise social networks for online collaboration by a dispersed workforce. Experiment and see what works with your culture.

5. Have a knowledge strategy. This needn’t require a large investment at first, but in the longer term you will need a strategy written by someone with expertise in knowledge management, using evidence-based methods.

Knowledge loss can be a considerable cost to businesses, but an on-going strategic policy of knowledge sharing can minimise those losses.


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