Knowledge loss when older experts leave knowledge-intensive organisations

Knowledge loss when older experts leaveknowledge-intensive organisations

Carmel Joe, Pak Yoong and Kapila Patel

Abstract

Purpose – The purpose of this paper is to describe different concepts of valuable knowledge that are

perceived to be lost when an older expert departs from a knowledge-intensive organisation.

Design/methodology/approach – A multiple case research methodology and semi-structured

interviews involving 17 participants from five small-to-medium enterprises (SME).

Findings – Five concepts of valuable knowledge have emerged from the interviews: subject matter

expertise; knowledge about business relationships and social networks; organisational knowledge and

institutional memory; knowledge of business systems, processes and value chains; and knowledge of

governance.

Research limitations/implications – The scope of the research project is restricted to SMEs in New

Zealand and this restriction limits the generalisation of the results to other contexts. This study may serve

as a starting point for future investigations including larger organisations that may have a greater

number of older experts.

Practical implications – By identifying the different types of older experts’ knowledge, organisations

are able to realise the potential of retaining that knowledge within the organisation.

Originality/value – This is one of the first investigations of the knowledge that older experts in the

professional services industry possess within a small-to-medium enterprise context.

Keywords Small to medium sized enterprises, Knowledge intensive organisations, Older experts

Paper type Research paper

1. Introduction

In the next ten to 15 years, a large proportion of the older workforce will be leaving their

organisations due to retirement. The proportion of older workers leaving the workforce is

greater than the proportion of younger workers available to fill these positions (Hewitt,

2008). The issue with these workers leaving the workforce is the knowledge and expertise

they are taking with them. Organisations need to acknowledge this knowledge that the

older workers possess and identify what specific knowledge is being lost or is in danger

of being lost in the upcoming years. As employees head for retirement, many

knowledge-intensive organisations will be faced with a continuous loss of unrecoverable

valuable knowledge if a process to capture that knowledge is not implemented (Calo,

2008).

Small-to-medium enterprises (SME) make up a large percentage of businesses in New

Zealand (NZ) (Massey, 2004). These businesses cover a vast range of business domains,

some of which are knowledge-intensive. Examples of these knowledge-intensive

organisations include engineering, architecture, surveying, legal, scientific research and

management consulting firms. As the expertise of these employees is of importance to the

organisation, the vulnerability of these smaller organisations is made evident when these

employees leave (Annansingh et al., 2006). Managers must realise the importance of older

experts’ knowledge for a business and identify specific knowledge which is lost when an

DOI 10.1108/JKM-04-2013-0137 VOL. 17 NO. 6 2013, pp. 913-927, Q Emerald Group Publishing Limited, ISSN 1367-3270 j JOURNAL OF KNOWLEDGE MANAGEMENT j PAGE 913

Carmel Joe, Pak Yoong and

Kapila Patel are all based at

the School of Information

Management, Victoria

University of Wellington,

Wellington, New Zealand.

Received 8 April 2013Revised 3 September 2013Accepted 4 September 2013

older expert leaves a business. In this way, managers will be able to find ways to retain this

knowledge within their businesses.

While older experts leave organisations, taking their expertise, the effects of knowledge loss

can be countered by new employees entering organisations, representing an influx of

knowledgeable personnel (Connell et al., 2003), bringing their own expertise, experience

and new ideas. Their knowledge can be shared, and new knowledge evolved within the

organisation, when certain factors that enable knowledge sharing are present. Some

knowledge enablers include: an organisational culture that promotes knowledge sharing,

appropriate technology and tools, a knowledge management infrastructure, and the ability

to measure knowledge sharing (O’Dell and Grayson, 1999).

The aim of this paper is to present the results from a study that examined the knowledge that

could potentially be lost when older experts depart from five of New Zealand’s

knowledge-intensive SMEs who are operating in the professional services or building

industry. We make a contribution in this field by introducing the different concepts of

valuable knowledge that these SMEs believe will be lost when older experts leave the

organisation, mainly for retirement purposes.

This rest of this paper is structured into four main sections: summary of the literature review;

the research methodology, the presentation of the results, and the conclusions including

implications for research and practice.

2. Literature review

2.1 Knowledge management in knowledge-intensive SMEs

Small-to-medium enterprises (SME) are characterised by size; however this depends on the

country. An SME in North America is characterised as having fewer than 500 employees

(Office of Advocacy, 1997). However, in New Zealand, a small firm employs between six and

49 employees while the medium-sized firm has between 50 and 99 employees (Massey,

2004). Also, 97.3 per cent of all NZ enterprises employ fewer than 19 full-time equivalents

and produce 35 per cent of the national economic output (Massey, 2004). Annansingh et al.

(2006) characterise knowledge-intensive SMEs by a range of factors including: a workplace

which requires a significant amount of problem solving; an intense amount of reliance on

individuals rather than on capital; higher educational levels and a higher degree of

professionalisation in most employees; critical assets are in the minds of employees,

networks and customer relationships; and a heavy dependence on the loyalty of key

employees who create a vulnerability when they leave the company.

Research into knowledge management began in large organisations before interest in this

topic started developing within SMEs (McAdam and Reid, 2001), so there is therefore less

literature on knowledge management in SMEs. Durst and Wilhelm’s (2012) study indicates

that this research is fragmented, with some focus on topics such as knowledgemanagement

implementation and knowledge transfer, but less in the areas of knowledge identification,

retention and utilisation. SMEs are difficult to compare due to their heterogeneity (Curran and

Blackburn, 2001) and the literature indicates no distinction between different types of SMEs.

Thus SMEs cannot be described as having a single approach to knowledge management.

Knowledge is the most important strategic aspect in large organisations (Spender, 1996).

However, when it comes to knowledge management in SMEs, there is less emphasis on

‘‘ Organisations need to acknowledge this knowledge that theolder workers possess and identify what specific knowledgeis being lost or is in danger of being lost in the upcomingyears.‘‘

PAGE 914 j JOURNAL OF KNOWLEDGE MANAGEMENTj VOL. 17 NO. 6 2013

formal structures, policies or physical storage (Wong and Aspinwall, 2004). SMEs exhibit

weaker strategies for knowledge management and knowledge embodiment (McAdam and

Reid, 2001), and a heavier reliance on knowledge that is personally held by business owners

and key employees. Knowledge generation or acquisition comes from external sources, due

to the small size of SMEs, but the generation process needs to be seen holistically with

knowledge transfer and utilisation.

SMEs have a more mechanical approach to knowledge construction, and have less socially

oriented practices for knowledge sharing. With fewer resources for a strategic focus on

business improvement, SMEs tend to focus more on their external markets than internally

(McAdam and Reid, 2001). They value all sources of knowledge, and agility and

responsiveness at all levels are important to competitiveness. However, they need to view

knowledge management more as a business driver than another initiative that takes up

resources. SMEs are less advanced and less formal in knowledge sharing facilitation,

especially in people-centred processes such as mentoring and coaching. Their knowledge

resides with key employees, so they face unique challenges, especially in light of an ageing

workforce.

The architecture, engineering and construction (AEC) industry is a knowledge-intensive

sector and is defined as a ‘‘project-based industry, which utilizes a variety of separate firms

in a temporary multidisciplinary organisation, to produce investment goods (buildings,

roads, bridges, factories), which are custom built to unique specifications’’ (Kamara et al.,

2002, p. 56). Knowledge management is relevant to the AEC industry as it is used as a

competitive advantage within the industry based on tacit and explicit knowledge, as well as

skill. A successful knowledge management practice requires a strong project, risk, and a

change management foundation and can be defined as a methodology that shares

principles with other disciplines that are present in any AEC organisation. As Pulisifer (2008,

p. 2) states, knowledge management is relevant and applicable to all departments,

disciplines, and groups in the AEC industry as knowledge management is ‘‘an enabler, an

augmenter that supports the unique values and assets of all architecture and engineering

practices’’.

2.2 Knowledge of older workers/experts

There are several definitions of the age group categories within which an older worker can

belong. Several articles defined an older worker that is due to retire within the next decade

as belonging to the baby boomer generation. This generation can be divided into two waves.

The first wave of baby boomers is the fastest growing segment of the population and is aged

50 to 54. The second wave of baby boomers comprises people aged between 45 and 49

and is the second fastest growing segment (Calo, 2008). For the purpose of this study, older

workers are the generation of workers aged 50 years of age or older who are due for

retirement within the next ten to 15 years.

Expertise can be described as the ability to perform with excellence in a specific area,

involving intellectual and cognitive effort over a sustained period of time (Huber, 1999). The

author also suggests that experts are a powerful source of value creation within

organisations and are people who have deep specialised knowledge of a subject, who are

tested and trained, especially by experience. An expert demonstrates higher levels of

efficiency, performs tasks with greater accuracy and cost effectiveness and holds subject

specific knowledge, such as on methods and procedures, including knowledge of how to

deal with problems and new situations. Another important factor is the scarcity of the

knowledge resource. For example if co-workers recognise an individual as being either the

only expert, or one of a small number, on an important subject area, their expertise needs to

be captured and made available to others. People who hold expert knowledge, as well as

the knowledge itself, are valuable organisational resources (Hammer, 2002). These experts

often do not realise that they possess unique valuable knowledge and, for cognitive reasons,

are not able to express this knowledge (Hinds and Pfeffer, 2003).

Older workers have tended to take significant knowledge and experience essential to the

smooth management of organisations with them when leaving for retirement (Schetagne,

VOL. 17 NO. 6 2013 j JOURNAL OF KNOWLEDGE MANAGEMENTj PAGE 915

2001). Older workers may also hold valuable knowledge of key industry players and

resources, and tacit knowledge about company culture, politics and norms. The range of

experiences that this workforce builds up over time is another important component of

organisational knowledge that older workers possess. This includes why the organisation

functions the way it does, the past successes and failures, and why certain tactics or

approaches are more effective than others.

Calo (2008) describes the older workers that will be leaving organisations as being

knowledgeable and argues that organisations need to take steps to transfer this knowledge

from older workers or face an unprecedented loss of human capital between now and 2020

(Calo, 2008; Ennals and Hilsen, 2005).

2.3 A knowledge taxonomy

Knowledge is an organisational asset that needs to be shared (Alavi and Leidner, 2001;

Leonard and Swap, 2005). Characteristics of knowledge tend to influence its transfer, for

example explicit knowledge is more easily transferred than elements of tacit knowledge, and

it is more efficient to strengthen weak ties to provide access to tacit knowledge, than to try to

convert tacit knowledge to explicit knowledge. The following knowledge taxonomy (Alavi

and Leidner, 2001 citing Nolan Norton, 1998; Zack, 1999) provides a useful context for

considering the types of knowledge that are represented in older experts’ knowledge, and

that may be important to organisations:

B Declarative or explicit knowledge ¼ Know about.

B Procedural to tacit knowledge ¼ Know how.

B Causal knowledge ¼ Know why.

B Conditional knowledge ¼ Know when.

B Relational knowledge ¼ Know with.

SMEs rely heavily on particular individuals in an organisation, such as those that possess a

vast amount of organisational knowledge (Annansingh et al., 2006). As mentioned

previously, organisations rely on the knowledge of their employees as a tool used for

competitive advantages. Losing those key personnel could lead to the fear of the

organisation losing their competitive advantage which is dependent on the knowledge

acquired and developed by these employees (Annansingh et al., 2006).

2.4 Summary and research question

The current literature covers aspects of knowledge management in knowledge-intensive

SMEs, issues of older workers leaving the workplace and the knowledge that departs with

them. However, before knowledge management strategies are implemented, it is important

to identify the knowledge of an older expert which presents the gap in the current literature. It

is important to examine whether older experts do in fact possess an extensive amount of

valuable knowledge, and in particular, within the context of knowledge-intensive SMEs.

Therefore, the research question that guided this study was: what types of knowledge does

a knowledge-intensive SME risk losing when older experts leave?

3. Research method

A multiple case research approach was taken in this study. According to Yin (1989), case

research is an empirical enquiry that investigates a contemporary phenomenon within its

real-life context, especially where the boundaries between phenomenon and context are not

clearly defined. As few previous studies have been carried out in this area, a case research

approach was considered appropriate for this study (Trauth, 2001; Benbasat et al., 1987).

Five knowledge-intensive SMEs in the building industry and based in Wellington (New

Zealand) were invited to participate in this study. Each of these organisations acknowledged

that at least one of their older experts (aged over 50 years) were about to retire in the near

future and that they would be interested to explore the types of knowledge that may be lost


when these experts depart. Semi-structured interviews of about one hour’s duration were

conducted with the older experts and their respective colleagues (see Appendix 1 for a list

of the questions). Over a period of three months, a total of 17 participants from the five SMEs

were interviewed and Table I provides a summary of the background of these participants.

The interviews were then transcribed and the transcripts were sent back to the participants

to check for accuracy and further comments were provided where appropriate.

The first step in the analysis of the data involved coding each of the 17 interview transcripts

by highlighting each line or a set of lines thus capturing the conceptual substance. We then

labelled these slices of the data as conceptual units and assigned a conceptual code,

consisting of a name and a number, to each unit. We then examined all the remaining lines in

the transcript and for those lines which represented a conceptual unit, either gave the same

conceptual code or another code, depending on the conceptual similarities or differences

with previous assigned codes. This process was repeated for all the other transcripts.

The conceptual units were again examined for similarities or differences and grouped into

clusters of conceptual units, which we called conceptual categories, and which represent a

higher level of abstraction. New and higher levels of abstractions among these theoretical

categories were also formed. These resulting theoretical categories eventually became the

list of different types of valuable knowledge as described in the next section.

4. Results

4.1 What is valuable knowledge?

The participating organisations share some themes with regard to the concepts of valuable

knowledge that emerged from the interviews. First, subject matter expertise and experience

are at the core of the organisations – the significance of applied scientific and professional

knowledge is reflected in each company’s strategy. Second, knowledge about relationships,

social networks, social processes and co-ordination were held to be important – rich,

productive and highly valued social networks exist to varying degrees of visibility. Third,

organisational knowledge was described as being about the institution, its memory and the

continuity of the entity – with the implication that loss of individual knowledge can potentially

degrade an organisational asset in a way that is not immediately clear. Fourth, knowledge of

business systems, processes and value chains is pivotal to these organisations – efficiency

and effectiveness of processes underpin the quality of their respective services and financial

models. The last concept, knowledge of governance and the big picture, enables the

organisations to maintain focus on their respective strategic directions – while

understanding the reasons for their current success.

Table I Summary of the SMEs

Name Type of business Size of SME Older expert about to retire Other participants interviewed

SME 1 Management consulting Small Founding Director and had workedover 19 years in organisation

One director and senior consultant

SME 2 Structural engineering Small Senior draftsman, and had over 30years experience

Two other draftsmen

SME 3 Building Industry (Research andDevelopment)

Medium Help desk support advisor and abuilder with over 30 years ofexperience

Four other building industryresearchers, including a seniormanager

SME 4 Construction engineering Medium Managing Director and had over 40years experience

Three other senior engineers

SME 5 Quantity surveying Medium Quantity surveying manager and hadover 30 years experience

One senior quantity surveyor


4.2 Subject matter expertise and experience

A wide range of expertise was found in the five organisations – including strategic,

business, operational, economic, scientific, policy and regulatory. Subject matter expertise

(topic-specific knowledge) did not consist solely of technical or scientific knowledge, and

could be lost from any area of an organisation. Such expertise was characterised by a high

reliance being placed on a single individual in some cases, for example where there was

only a single expert in a specialist knowledge area in the organisation. Subject matter

expertise is tied to the skills, knowledge and experience of individuals, and may be

developed through formal qualifications, on-the-job or experiential training, and can be an

attribute of workers of all ages. Some organisations had experts who had joined them with

expertise which was then honed and adapted to their role. The expertise could be in

specific, well-defined areas such as seismic structural engineering or help desk support,

where a specific person was targeted especially for the role.

Another type of expert knowledge was in the area of rare knowledge, which one interviewee

described as being knowledge that was not used in an everyday context, but essential for a

business group to function effectively. An example of this is the processes that need to be

completed on an annual basis, such as business planning – reviewing past performance,

reviewing the current year, and developing plans for the future. Where a manager has sole

responsibility for completing such processes (applying this knowledge) then it may become

personal knowledge and be lost if the manager leaves. On the other hand, such knowledge

may be well-documented, due to the need for these processes to be disseminated and for

them to be completed in a consistent manner throughout the organisation. One manager

commented that the underlying information or data that were collected for business planning

and review processes may appear to be important, but were of lesser meaning until they

were analysed.

The concept of craftsmanship emerged in a number of organisations; a knowledge worker

described it as being related to rare knowledge and skills. Some roles, by their specialist

nature, are not seen to be easily supported by a process or a system. Tasks may involve

dealing with complexity, handling exceptions, or dealing with cases that in some way deviate

from a norm. Thus, an older expert would transfer such knowledge and skills via an

apprenticeship model to a less experienced colleague over a longer period of time. A senior

scientist describes this as:

. . . a science that actually takes years to get right, understand properly andmake it work. If you do

a fast track on ‘‘how to be a scientist in two days or two years’’ exercise, it doesn’t happen. [. . .] So

the process of building these layers (of knowledge) can be concertinaed somewhat, but you can’t

do it in a year, and you can’t do without having that (senior) person as a mentor, but rather than

taking up to ten years, you can take 4 or 5 to layer someone up to be adequate, and that means

we actually have a nurturing model of knowledge within the organisation – we’re prepared to

invest in and support the nurturing of that knowledge.

Some of the experts also possess stocks of professional knowledge that complement their

specialist knowledge, for example knowledge of procedures that work and specific methods

of carrying out these procedures. These organisations suggested that a defining

characteristic of experts is that they are highly efficient and cost-effective in the way they

work – and this experience and knowledge needs to be recreated if it is not captured before

experts leave.

These organisations also make a distinction between base knowledge, which is established

through education such as an academic qualification, and the experience that needs to be

built on this foundation. It is this subsequent practical experience that enables experts to

accrue applied knowledge, for example, an added layer of learning from designing and

implementing projects, and knowledge consisting of understanding the implications of

projects.


4.3 Knowledge of relationships and social networks

For the larger organisations, much of the knowledge about relationships is held by

individuals and there are common stakeholders across different business groups. This

means that although a lot of the knowledge about relationships is tacit and deep, an

employee seldom has a sole relationship with a particular stakeholder. Thus the existence of

multiple relationships with stakeholders mitigates the loss of knowledge when an individual

employee leaves. Some employees possess referential knowledge of relationships, and this

ability to locate the right contact or refer someone to the right knowledge source is

characteristic of valuable job-related networks. The term ‘‘deep smarts’’ was described in

recent research on preserving business wisdom within organisations, as being: ‘‘. . . a potent

form of expertise based on first hand life experiences, providing insights drawn from tacit

knowledge and shaped by beliefs and forces. Deep smarts are as close as we get to

wisdom’’ (Leonard and Swap, 2005, p. 2).

Knowledge about relationships has some important attributes, including knowledge of the

key players and how to facilitate productive relationships with them. SME 1 noted that this

was particularly valuable while working with public sector organisations, which is expected

to involve intensive relationship-building and result in a wide range of professional contacts.

Anyone can sit down and read the [. . .] Act and go into our archives and get out all the information

and all the work that’s been done around the industry [. . .] but the thing that’s most difficult to track

is basically the things to do with human beings being in touch with each other [. . .] It’s about

people and individuals, their particular views, of the chief executive, chairman, director, or

someone in a particular area. Understanding who those people are, what makes them tick, what

their issues are, what their networks are, how they interact with others, what views they’ve got on

particular issues, how they are best approached, how to deal with difficult questions. [. . .] and the

facts of the matter, the analysis and the advice (that’s) given to Ministers, all that stuff – it’s the

social part of what policy is.

There is a reputational dimension to knowledge, in that an older and more knowledgeable

person may often be the front person for co-ordinating work, for example liaising with

government ministers to facilitate agreement on a particular public policy.

A closely related type of knowledge is knowledge of a contextual and social nature, as

opposed to factual knowledge. Contextual knowledge may consist of knowledge that is

relevant to performing a particular role in the organisation. It can be described as

‘‘knowledge about the knowledge’’ and resides in the minds of people. For example, if a

manager recalls that SME 3 was involved in researching a specific topic in the 1970 s, he

would know that he needed to locate the relevant information, or find someone who was able

to suggest where to look. Several interviewees referred specifically to social processes and

the importance of knowing how people in groups interact. Thus, social processes can be

viewed as all the interactions between people that are required to achieve a successful

business outcome or solve a problem. Knowledge about ‘‘how things happen’’ in terms of

people and their perspectives is valuable. Social processes may be complex and are

evident in SME 1’s business activities, for example policy development, that require

consultation and co-ordination across different sectors.

Knowledge of networks is important for identifying who is interested in a particular business

area, and gathering related and peripheral knowledge, to include the appropriate people to

contribute to a sound piece of advice. Knowledge gained from networks complements

‘‘ SMEs have a more mechanical approach to knowledgeconstruction and have less socially oriented practices forknowledge sharing. ’’


documented knowledge, enabling these experts to produce thorough reports. A senior

employee in SME 5 reported:

I think one of the things [. . .] in terms of valuable knowledge is also the networking we have. The

people who typically have all this (scientific) knowledge also have the very good networks and

that’s essential for that sort of stage, so you can pull in people, and the right people, to give the

right information at that level to then make sure you have formed a good sound piece of research.

The ability to network and collaborate with other people is an important factor in conducting

professional services and also in building a professional reputation – starting within New

Zealand then being internationally recognised as an expert.

4.4 Organisational knowledge

Under the category of organisational knowledge, four related concepts emerged:

institutional knowledge, organisational memory, organisational continuity, and knowledge

for mentoring.

First, institutional knowledge was noted as being valuable: it is knowledge of the

organisation as a whole, its identity, how it operates, and why it functions the way it does

today. Its role and its place in New Zealand history have evolved through major

organisational entity changes, and knowledge of its social contacts and processes, and its

communications promote a common understanding within the organisation. Experts’

institutional knowledge was described as being tacit in nature, which means the knowledge

holder is unaware of what they know, and it is not documented or easily expressed; it may

have been built up over many years and through a web of relationships (Lahaie, 2005;

Lesser, 2006).

Another type of institutional knowledge that was valuable was the expert knowledge of

relationships. This includes relationships within the organisation, and how the organisation

relates to other parties. An organisation’s public face and reputation are at the forefront of

these relationships as part of its participation in bidding for research funds or contracts.

These experts know the funding organisations well, in terms of their specialties and interests,

and the individuals and groups to who they can pitch proposals to gain funding.

Second, organisational memory is the part of institutional knowledge that deals with why the

organisation functions as it currently does, since an organisation’s existence is rarely

isolated in the present. Older experts had much more experience and knowledge than

younger staff had in this area. While knowledge of an organisation’s processes is important

to its business, knowledge of how processes have evolved and the rationale for current

processes provides a more sound understanding and reconfirms the validity of the current

organisational state. The rationale for taking a particular path includes understanding why

things were done in a specific way. It should be noted that organisational memory includes

an understanding of the legislation and instruments involved at various times, and how they

link to systems and processes in the organisation, that is, how such instruments have been

implemented.

Third, knowledge about organisational continuity was regarded as being valuable and

increasingly rare. Continuity may be described as ‘‘the connectedness over time among

organisational efforts and a sense or experience of continuity that links the past to the

present and the present to the future hopes and ideals’’ (Fry and Srivastva, 1992, p. 2).

Experts with this type of knowledge are able to tell the story of the organisation and its history

and development, from the point-of-view of someone who has lived through change. These

experts recall both the rationale for change and what the operating environment was like at

the time that changes happened. The survival of this knowledge relies on the continuity of

personnel or good quality recording and documentation. According to Kolb (2003), the

concept of organisational continuity is useful in dealing with organisational change in terms

of relating the latest change to a series of changes in the past, to demonstrate connectivity

and continuity, rather than focusing on change as disconnecting from the past. At a lower

andmore practical level, the knowledge that enables effective handover processes from one

knowledge worker to another is valuable. When such knowledge transfers fail, there is


potential for error, rework and a failure to maintain the continuity of normal business while a

new worker becomes familiar with their role.

The last type of organisational knowledge, mentoring, is important, and there was concern

that the knowledge and skills required for effective mentoring will be lost as older experts

leave. Mentoring involves providing support to younger, less experienced staff in dealing

with new activities and learning from difficult situations. Examples of mentoring are dealing

with government ministers as part of the policy development process, and familiarising

employees with difficult business processes by pairing up a newer person and a more

experienced one. While newer employees have a certain amount of base or technical

knowledge, mentoring covers areas such as how the workplace processes and conventions

work, which means how to get things done and how the world operates for the purposes of

conducting its business.

4.5 Knowledge of business systems and processes

Knowledge about business processes and value chains was valuable as such sequential

patterns form a foundation for handling the majority of an organisation’s business

consistently and effectively. Steps in one business process are likely to have

interdependencies on another business group’s functions or processes. Thus, cohesion

and integration across these processes is important. Expert knowledge is a major

requirement in managing areas of risk such as inter-process linkages and exceptions, as

with compliance-related events.

There is a threat of losing explicit or documented knowledge, since this is not often as

up-to-date or as complete as was desirable to complete a task. It was common for most

people, especially knowledge workers, to focus on completing the job as a top priority,

rather than keeping documentation, records or systems up to date. Thus, with incomplete

documentation, there would always be a certain amount of knowledge that cannot be

retained or replicated. Some of the knowledge that could be the subject of transfer between

teams or organisations appeared to be embedded in individuals and did not lend itself to

being shared readily.

Three elements of process-related knowledge were at risk of being lost. First, there were

business rules that needed to be applied, but were not always understood or consistent, due

to aspects such as political considerations. Second, the logic or rationale pertaining to

processes and their modification over time were often not captured, and were more difficult

to transfer than explicit and documented knowledge. Third, processes may evolve to meet a

new or changing need, and the details of this may be embedded, so that transferring the

explicit knowledge alone was insufficient for understanding.

4.6 Governance knowledge

The concept of governance knowledge encompasses many references to high level

processes, management structures and aspects of the broader, formal context within which

these organisations are required to operate. Some managers identified governance

knowledge as a distinct type of knowledge – recognising, however, that it overlaps some

aspects of organisational knowledge and the knowledge of relationships and social

networks. The managers described governance knowledge as the knowledge of how to

report to government or the board of directors, liaise with external stakeholders and how the

organisation’s executive team discharged its responsibilities.

As well as understanding how the organisation functions internally, executives needed to

see the big picture, and understand how the pieces of the organisation ‘‘hang together’’.

Knowledge that enhances an organisation’s ability to meet its strategic objectives and to

report efficiently on its performance was also noted as being valuable. This type of

knowledge was not widespread in the organisation but is critical in ensuring that the

organisation continues to be managed effectively within a wider political, government and

economic framework. The overview nature of this knowledge includes aspects such as

environmental, economic and political factors and trends nationally and globally.


4.7 Impact of knowledge loss

One of the impacts of knowledge loss for an organisation is the firm’s credibility with the

client. A participant states that by losing an expert’s knowledge it may mean the company

performs less well and is ‘‘at risk of producing low quality products, for example, the product

may arrive late, not be fit for purpose or not delivering what the client wants.’’ In addition, it

may lead to the loss of clients as they often seek people with wisdom and experience to

oversee work.

Another impact is the need to train another worker to replace the older expert. The older

workers believed they could train younger workers to do their jobs, but the time to train them

would vary. One participant claims that he could train a graduate in his area of expertise to a

functional level in six to 18 months:

. . . they would be able to do smaller jobs on their own but I would still have to be involved (and)

after a few several years, they would be able to do what I do.

Thirdly, a possible impact of knowledge loss for an organisation is a decrease in revenue. A

loss of knowledge may have an impact on the number of proposals received and ultimately a

loss in revenue. Therefore this would mean the organisation would hire fewer people.

Finally, the last impact of knowledge loss for an organisation is to acknowledge the need to

establish a knowledge management system as the five SMEs are unaware of ways to formally

transfer or manage these types of valuable knowledge. Several attempts have been made to

transfer knowledge, however, as stated by participants, not all employees are aware of their

functionality and knowledge management is not incorporated into the culture of the

organisation. Therefore, organisations must also be able to provide knowledge management

systems that are effective and usable by both older and younger workers as the purpose is to

transfer this knowledge between these employees. By being able to identify the knowledge of

older experts, managers of organisations will now be assisted to find the best way to capture

and transfer this knowledge to other workers. Consequently, the risk of valuable knowledge

being lost as older experts leave knowledge-intensive small-to-medium enterprises is reduced.

5. Conclusion

5.1 Findings and limitations

The purpose of this paper was to describe different concepts of valuable knowledge that are

perceived to be lost when an older expert departs from a knowledge-intensive organisation.

Using a multiple case research methodology, 17 participants from five small-to-medium

enterprises who are operating in the professional services or research industry were

interviewed. Five concepts of valuable knowledge have emerged from the interviews:

subject matter expertise; knowledge about business relationships and social networks;

organisational knowledge and institutional memory; knowledge of business systems,

processes and value chains; and knowledge of governance.

Schetagne (2001) proposes that older workers hold valuable knowledge of key industry

players and resources, and tacit knowledge about company culture, politics and norms. The

range of experiences that this workforce builds up over time is another important component

of organisational knowledge that older workers possess. This includes why the organisation

functions the way it does, past successes and failures, and why certain tactics or

‘‘ One of the impacts of knowledge loss for an organisation isthe firm’s credibility with the client. ’’


approaches are more effective than others. Experts’ tacit knowledge of why organisations

function as they do and why approaches and processes work are examples of causal

knowledge as defined in Alavi and Leidner’s taxonomy. In terms of the research findings,

many of the comments made by participants supported these claims.

However, the findings also suggest that although it is easy to transfer the knowledge of these

frameworks and tools, it is difficult to transfer how to apply them in different situations. Based

on Alavi and Leidner’s (2001) knowledge taxonomies, the knowledge of frameworks, tools

and approaches can be classified as pragmatic knowledge. This type of knowledge can be

easily transferred to other employees, however, the relational knowledge (Alavi and Leidner,

2001), which is the ability to apply it and understand how the tools interact in different

situations is much harder to transfer.

These claims support previous research that older experts would have a lot more contacts

than younger workers, which suggests the importance of this knowledge to an organisation,

especially an SME in the professional services field. When retiring from an organisation, it

would be beneficial for the organisation to know the business contacts the older experts

have, as with the departure of this knowledge, there may be disadvantages such as the loss

of potential clients or those resources that assist in tasks or projects being completed.

Participants also mentioned the older experts’ knowledge of who to go for information or

advice. Younger workers often approach older experts for advice, suggestions or directions.

Therefore, without this knowledge of who to approach in different situations this may also

cause issues.

This supports Schetagne’s (2001) comments that an older worker has the knowledge of past

successes and failures. This is due to the several years of experience an older expert

possesses. In relation to Alavi and Leidner’s (2001) knowledge taxonomies, this type of

knowledge that an older worker possesses can be classified as individual knowledge, which

is created and inherent in the individual. More specifically, this knowledge is gained from the

completion of past projects, therefore by the experience gained from working in the industry.

An older expert has the knowledge of what is important and more specifically what to focus on

and what not to worry about. As this knowledge is rooted in actions and older experts’

experience, this knowledge is classified in the literature as tacit knowledge (Alavi and

Leidner(2001). However, this type of knowledge can also be described as being ‘‘tidy

minded’’, which is a term used by an older expert. By being tidy minded, an older expert has

the ability to examine different situations in detail and provide insights to clients straight away.

Also, by being tidy minded, an older expert will be able to see several problems and focus on

the core problems and not worry about every detail. This often comes from experience which

is gained fromworking in the same industry and dealing with similar projects. Older experts do

not realise they possess this knowledge; in addition, an older expert states, ‘‘things are just

instinctive to us’’. This creates an issue, as with unidentifiable knowledge, there is little

possibility of being able to transfer this knowledge to the younger workers.

This is one of the first investigations of the knowledge that older experts in the professional

services and building industry possess within a SME context and contains the following

limitations. First, this study involved only five small-to-medium enterprises, but it would have

been possible to analyse other organisations to provide more in-depth and rich results.

Secondly, the geographical limitations also restrict the generalisation of the results. Finally,

the scope of the research project is restricted to New Zealand and this restriction limits the

generalisation of the results to other contexts.

5.2 Implication for practitioners

In light of this study, four practical implications have been identified for knowledge-intensive

SMEs in the professional services industry. First, this study allows senior managers to

identify the importance of older experts’ knowledge to their businesses.

Second, without the transferring of knowledge of older experts within an organisation before

their retirement, there may be severe impacts for the organisation, as it is often

underestimated how much knowledge and the types of knowledge older experts possess.


Third, by identifying the different types of older experts’ knowledge, organisations are able to

realise the potential of retaining that knowledge within the organisation. This provides the

opportunity for businesses to consider the implementation of knowledge management

systems and ways of transferring this critical knowledge to other workers.

Finally, an important implication for the retention of expert knowledge from older workers is

that one cannot assume that an individual is wise or has valuable knowledge by virtue of

age alone, or that all knowledge held by older workers is of value (Labouvie-Vief, 1990;

Leonard, 2005). Wisdom may be an ideal only reached by a few. In considering the

knowledge of some older experts as being a valuable organisational asset, organisations

need to recognise that the components that need to be retained extend beyond the more

widely recognised aspects like factual, procedural and organisational knowledge. Recent

work on processes and procedures for retaining knowledge from older experts refer to the

steps of identifying at risk knowledge (Stoutamire, 2006) and those who possess this

knowledge (Gross et al., 2001; Hammer, 2002; Lesser, 2006). Organisations wish to

capture wisdom-related knowledge from identified candidates. In Ardelt’s (2004) study of

individuals regarded as being wise, these individuals were also nominated as such by their

peer group.

5.3 Implications for future research

Being one of the first investigations of the knowledge that older experts in the professional

services industry possess within a small-to-medium enterprise context, this study may serve

as a starting point for future investigations. There are several opportunities for future research

such as comparing more cases, and more specifically analysing other knowledge-intensive

industries such as the medical profession. There is also an opportunity for researchers to

analyse larger organisations that may have a greater number of older workers and identify the

knowledge loss when older experts leave their organisations.

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Appendix. Interview questions

1. In the context of your organisation and its core business, when you think of valuableknowledge what do you mean?

2. What are your unique areas of expertise?

3. What types of knowledge do you have? Technical? Managerial?

4. What do you believe you have learnt over time compared to a younger worker?

5. If you had to leave work suddenly, what critical pieces of knowledge would youremployees be unable to find or know you had?

6. What impact would this have on your business?

7. How critical is your knowledge if it was lost? What would happen to the running ofthe company for a week if you had to leave? How long would it take to trainsomeone up?

8. How much of your knowledge is documented or could be found? Or is a lot of it tacit?

9. Who will be taking over your position when you leave this business?

10. Do you have a plan to transfer that knowledge before you leave?


About the authors

Carmel Joe is a management and ICT consultant, with a PhD from Victoria University ofWellington, New Zealand. Her research interests include knowledge taxonomies,organisations’ perceptions of knowledge and their strategies for retaining the knowledgeof older experts in the context of an aging population.

Professor Pak Yoong was the Foundation Director of PhD programme and former Director ofResearch in the School of Information Management at the Victoria University of Wellington,New Zealand. His research, teaching and consulting experience is in the facilitation of virtualmeetings, knowledge continuity and leadership development in information technologyenvironments. Pak’s publications include a book, Leadership in the Digital Enterprises:Issues and Challenges, and numerous articles in IS journals such as Information Technologyand People, Journal of Information Technology, Information Systems Frontiers andDATABASE for Advances for Information Systems. Pak Yoong is the corresponding authorand can be contacted at: [email protected]

Kapila Patel is a Change Manager with IBM (New Zealand), with a BCA (Honours) degree inInformation Systems from Victoria University of Wellington, New Zealand.


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Knowledge loss when older experts leave knowledge-intensive organisations