Dan Mallin is CEO & Founder of Lucy, a one-stop AI-powered knowledge platform for all the data an organization owns and licenses.
As the economy remains uncertain, many companies are needing to restructure their businesses, and alter their labor forces. Even large and profitable companies are needing to reengineer their businesses to battle inflation. In the first half of 2022, major companies such as Peloton, Carvana and Netflix laid off thousands of workers. Even companies that turned a profit—45 of the top 50 companies were in the black—held layoffs this year with at least 27 of the 50 largest firms collectively cutting more than 100,000 workers, according to analysis done by The Washington Post.
Many companies minimize the immediate and long-term effects of cutting people. As Wharton’s Business Journal says, “Employers also often underestimate the cost of layoffs in immediate financial terms, as well as in the lingering burden it places on remaining resources—both financially and emotionally…. The toll of layoffs is high. In many industries, layoffs beget lower productivity and profits.”
That said, not all companies are ignoring the effects of such actions. There has been an increase in companies trying to minimize the impact of succession planning around reorganizations as well as layoffs. The main thing they’re trying to do? Preserving institutional knowledge, a significant problem right after reorgs and layoffs. A new focus on technology, such as knowledgement management, helps minimize the impact of losing people.
The True Impact Of Restructuring
One of the biggest reasons restructuring hit companies so hard—and why productivity takes such a hit—is the immediate loss of knowledge from employees who move or leave the organization. When a company loses people, it also loses the knowledge each one of those employees had, both explicit and tacit. This means companies face costs in educating and retraining the remaining employees as well as future new hires.
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Think about it: When someone leaves a company for any reason, they leave a slew of documents in Sharepoint, Onedrive or other servers. And once the person leaves, the remaining team members can’t find anything, and the information is untouched and unused. Not only are organizations unwittingly paying to store and keep the unused documents (and slide decks, PDFs. etc.), there are entire teams that could be referencing or leveraging the content. It’s critical that everyone at a company has access to the information and knowledge that has already been created.
Companies still need to meet the needs of “business as usual” as they realign the staffing for different needs in the new economy. Increased efficiency will be key to the success of the employees that remain.
How To Capture And Manage Your Knowledge
Companies need to be armed to face this type of circumstance, and for many, engaging with a knowledge management system is a solid foundation. A recent report from the McKinsey Global Institute found that “Improved communication and collaboration through social technologies could raise the productivity of interaction workers by 20 to 25 percent.”
Using a knowledge platform to search, gather information, communicate and collaborate internally drastically reduces redundancy, which saves money, people’s time and most importantly, allows the company to make better decisions faster. McKinsey explains how: “The average interaction worker spends an estimated 28 percent of the workweek managing email and nearly 20 percent looking for internal information or tracking down colleagues who can help with specific tasks.”
Interestingly, after employment transitions happen, remaining employees tend to lean on department subject matter experts (SMEs) to help capture lost knowledge. This puts a tremendous amount of stress on SMEs—usually some of the highest-paid employees on a team—and pulls them away from profit-generating projects. Even worse, when SMEs leave, all their valuable information goes with them. Having a knowledge management tool in place—that is actually used by the team—will help capture and surface the information your team needs.
As we continue to navigate the post-pandemic business world, companies need to have a plan in place. For growing or established companies, it’s never too late to introduce or integrate a knowledge management strategy to preserve institutional knowledge and proprietary data and help facilitate internal communication and collaboration.