PathCreated with Sketch.

Managing Tacit Knowledge : the 3 I's to Grow Your Company's Knowledge Capital

Work decentralization and increased turnover rates have become an HR nightmare. On top of the resources required to find, train, and manage recruits, businesses are also struggling to retain knowledge capital - especially when it comes to hard to codify tacit knowledge.

Now more than ever, it is crucial for organizations to tackle the question of how to not only maintain, but to increase their intellectual capital in order to sustain a competitive advantage in a highly uncertain market.

Why are companies facing new challenges in knowledge transfer ?

The workplace is evolving fast.

A shift in demographics. While baby boomers are exiting the job market, Gen X and Millennials are gradually reshaping the workplace with their own mindset.

Job-hopping is the norm.The times when a majority of employees could expect to spend a career growing at one company are over. Contingent workers have radically increased over the last decade, and bouncing from job to job has become the norm. This is especially true among Millennials, whose average tenure in a job is only two years. Businesses now face higher turnover rates than ever before, making it more difficult for them to maintain a level of company-specific knowledge within the organization.

Work decentralization is becoming common. As employees are asking for more flexibility at work, telecommuting and hot-desking are becoming increasingly common. Because of this, it is harder for remote workers to get and share knowledge on an informal and regular basis. This is a huge concern, as research indicates that 75% of learning that has a real impact on human performance tends to be informal in nature.

Fast evolutions of technologies. Technologies keep modifying the workplace and the way work is done. Therefore, employees need constant knowledge updates to keep the company up to date and competitive. Now more than ever, being a specialist requires learning on a continuous basis.

Many companies fail to keep up with these changes, or do not know how to initiate innovation in L&D. However, it is crucial for their survival to develop efficient ways to transfer, retain, and optimize company knowledge - especially the kind of knowledge that is hard to codify and share.

The new stakes of tacit knowledge transferability

Tacit knowledge, as opposed to explicit knowledge, is a complex but highly valuable sum of know-how, insights, and experience developed by an individual. It refers to “the things that we know but cannot tell” (Polanyi in "The Tacit Dimension", 1967).

While most of this knowledge is created within a firm and is firm-specific, its transfer is not an easy process. As Robert M. Grant points out: “tacit knowledge is not directly appropriable because it cannot be directly transferred. It can be appropriated only through its application to productive activity”.

Within an organization, tacit knowledge is an essential resource whose transferability is a critical determinant of its capacity to provide a sustainable competitive advantage.

Therefore, it is key for companies to understand its transfer dynamic among employees.

The 3 “I’s”

Three most efficient knowledge transfer mechanisms can be highlighted.

1. Internal learning: Although external expertise can bring new insights to the company, training staff internally has certain advantages, including cost and relevance, by customizing the learning to fit the company’s exact needs. Internal training allows companies to access a resource they already possess, while encouraging experienced employees not to retire without fully (or to as great an extent as possible) transferring their knowledge.

2. Interactive learning: Almost all reviewed literature agree that social interactions are a major prerequisite to tacit knowledge transfer. Based on the work of Daft and Lengel on media richness, we can also say that face-to-face mechanisms are recognized by many authors as the most effective way to transfer any kind of knowledge.

3. Informal learning: Most of the learning happens on an informal basis. As Sally Anne Moore of Digital Equipment Corporation perfectly sums up:

“The majority of companies that provide training are currently involved only with the formal side of the continuum. The net result is that companies spend the most money on the smallest part—25%—of the learning equation. The other 75% of learning happens as the learner creatively « adopts and adapts » to ever changing circumstances. The informal piece of the equation is not only larger, it's crucial to learning how to do anything.”

Examples of informal knowledge sharing include instant messaging, a chance meeting by the coffee machine, a phone call, or a meeting with a manager or mentor.

Unfortunately, most companies tend to disregard this part of the process. Why? Because it is much easier for training and development professionals to create, deliver, and track the formal learning path.

Developing these in-company mechanisms to facilitate learning is now a must-do for organizations. Among the cheapest internal and interactive training strategies are informal techniques such as using mentors and peers for on-the-job training.

The new workforce’s mindset requires companies to adapt

Encouraging these dynamics to facilitate learning is now a must-do for organizations, who need to adapt to a continually evolving workplace and optimze the way they transfer and deliver knowledge. That happens by understanding the dynamics at work in the effective transfer and assimilation of knowledge by the workforce.

Allowing workers to access internal learning on an informal and continuous basis will help increase the knowledge retention - not to mention productivity - of employees by tapping into their natural social learning styles.

In return, having employees who are provided with opportunities to learn and develop within a company will decrease turnover rates.

Would you like to know more about ways to optimize tacit knowledge management within your company?

PathCreated with Sketch.