Year 2008 - A Staff Oddity

Drew Troyer

“The most valuable assets of a 21st-century company will be its knowledgeable workers and their productivity.”
- Peter Drucker

Ah, it is 2008 and the baby boomers, who presently operate and maintain our plants, mills and factories, are going fishing – permanently, and in droves as they enter their golden years. That’s OK, right? For maintenance at least, we’ll replace our retiring mechanics and lube techs with younger, less costly employees. We can manage this situation. Right?

Oops, someone forgot to have enough babies in the 1960s, 70s and 80s. Moreover, most of the kids born during those decades grew up playing video games, not working on hot rods and farm equipment, and their technological skills are in high demand. Surely someone in our organization remembered to capture the knowledge and experience of our retiring workers in the form of standard operating procedures and troubleshooting guides, cross-referencing among our many employees and plants to ensure we captured the best practices and are implementing them consistently across all locations, right? No, that didn’t happen either, and now we’re in a pickle. Does this sound like science fiction? Well, it’s not. It is science fact …

Fact: our nation’s baby boomers start retiring in droves starting in 2008.

Fact: the ratio of workers to retired employees will change from approximately 3:1 to approximately 2:1 during that period.

Fact: according to the Gartner Group, up to 85 percent of Fortune 500 companies’ market capitalization is attributable to intellectual rather than tangible assets. Presently, due to poor management, a chunk of this value walks out the door every time one of our employees retires or resigns.

Fact: Most managers believe their organizations do a poor job of reusing and managing knowledge about the business.

We’ve often heard companies say “employees are our greatest asset,” or something along that line. In a knowledge-based economy, people (it is more precise to say that the collective experience and knowledge represented by our employees) are the firm’s greatest asset - assuming, of course, that it is managed effectively. If, however, the knowledge and skills are mismanaged or are allowed to retire or resign, these same people represent our greatest potential liability, not directly, but in terms of value erosion associated with lost knowledge – a phenomenon referred to as corporate amnesia.

When experienced people solve problems, they apply heuristics, or rules of thumb. If an individual encounters a problem or situation, he or she will size it up to see if it fits the pattern of a previously experienced event. If so, the individual applies the corrective plan used before, assuming, of course, it was effective. Matching of the present scenario to a past scenario is often called pattern recognition. If an inexperienced person encounters the same problem, he will do his best to figure out the problem and to develop a corrective action – often on a trial-and-error basis. Sometimes the plan is effective and sometimes it isn’t, as is the case with any trial-and-error-based approach to problem solving. Unfortunately, organizations find themselves solving the same problems again and again, which is costly in many ways.

Corporate amnesia is a fitting name used to describe when a company forgets how to run its business. Some companies have already experienced corporate amnesia. In the past decade, many companies have offered their more experienced workers lucrative early retirement packages to reduce headcounts and operating costs, only to selectively rehire some of these same workers – attracting them with lucrative consulting contracts once they discover they need the skills these individuals represent.

So what is the answer? We can’t stop the retirement of the baby boomers, but we can reduce the resulting level of corporate amnesia. It will require a diligent effort to capture and organize the knowledge possessed by experienced workers into documented standard operating procedures for routine tasks, and in problem-solving scenarios for nonroutine tasks. Fortunately, software packages designed to support the collection and problem-solving scenarios are entering the marketplace and can be employed to capture and simulate the heuristics experienced people employ. Because we must go to the effort to capture this knowledge, we may as well take the opportunity to evaluate to review and, where appropriate, reengineer tasks to incorporate new technology and methods.

The large-scale loss of experienced manufacturing employees during the next 15 or 20 years is an unavoidable fact. Some organizations will initiate efforts to protect and improve upon the valuable knowledge represented by our retiring workers, then use the collected knowledge in knowledge-sharing schemes to increase the effectiveness of all workers. Others, unfortunately, will regain the knowledge lost as a result of corporate amnesia through costly trial and error – an exercise that some organizations will not survive. This is my viewpoint. As always, I’m interested in yours.

Did You Know…
Webster’s Dictionary defines heuristic as:
1. serving to indicate or point out; stimulating interest as a means of furthering investigation
2. encouraging one to learn, discover, understand or solve problems on his own by experimenting, evaluating possible answers or solutions, or by trial and error
3. pertaining to or based on experimentation, evaluation or trial-and-error methods

Webster’s College Dictionary, Random House, 1991.

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