Losing Knowledge: The Trouble with Turnover

‘Organisational forgetting’ is a new concept in academic HRD research. The authors have tested this emerging idea that the knowledge base of an organisation ‘depreciates’ when people leave.

Turnover-induced forgetting is the idea that the knowledge base of an organisation “depreciates” when people leave. Most of the research in this fascinating area has related to professional service firms, and food service. And some iconic studies have been carried out on wartime shipbuilding and 1990s aircraft manufacturing, for example. But the evidence has been inconclusive. This concept has now been tested by two researchers, Luiz Lopez and Albert Sune, using a smoked salmon processing plant.

The plant was characterised by several issues:

  • It had very high seasonal turnover meaning that it employed lots of new temporary workers. These “peripheral” workers could outnumber the regular workforce or “core” by four to one.
  • These temporary recruits received no training. This was based on the assumption that they would be on a “learning curve” after which they would stop making mistakes and reach target times for filleting the product.
  • Depending on how many seasonal workers joined and left, productivity in terms of the kilos of smoked salmon produced, could vary widely from 680 kg a shift to over four and a half tonnes per shift.

The authors did some very precise data modelling and managed to isolate turnover as the most likely event affecting productivity. However, they also asked managers questions around the data to get real context. The authors were testing the assumptions of a big component of the organisational learning literature. So what are the lessons for management and HR?

  • First, that every job has a level of skill. To develop that skill, people need the opportunity to learn. There is always a productivity and profitability penalty to be paid for poor skill. Even when the inexperienced and poorly trained work with more productive colleagues, their effect is to reduce overall productivity.
  • Even in low skilled and process jobs, throwing in extra bodies means the poor productivity of too many untrained people will impair productivity overall, because with high turnover knowledge is lost as cumulative production increases.
  • Linked to this, the impact on productivity of knowledge loss isn’t just about workers leaving but workers joining who are much less productive. This tends to put something of a hole in the ‘learning curve’ argument.
  • Even if we try to tackle this problem it has effects on productivity. For example, skill mentoring (where an experienced fish gutter helps a newbie) will make the experienced worker less productive, but if it improves the learning of the newbie its overall negative effect might be reduced.

The idea of organisational forgetting is a new and emerging concept in academic HRD research. In general we need to rethink how we envisage learning and productivity. It is part of the knowledge management debate. Knowledge management is a growing area of research, especially as firms become more global and change their operations, format and structure. The questions are well rehearsed. (See McGurk and Baron HR Review 2012 for a discussion). Specifically:

  • The need for systematic knowledge management to be practised everywhere (not just knowledge businesses)
  • Rethink the idea of a regular and temporary workforce when your temporary workforce can have such large potential impacts.
  • Challenge the practice in some process jobs of adding more “low or no-skilled” employees without training, as it has hidden impacts on performance.

By providing detailed analysis, these authors have filleted some of our enduring concepts of learning, knowledge management and productivity. Though fairly demanding, as rigorous research often is, it’s full of insight. It would certainly make a good discussion point for an HR team in food and drink processing, or indeed anywhere else.

Source: Lopez, L. & Sune, A. (2013) Turnover-induced Forgetting and its Impact on Productivity. British Journal of Management. 24(1), pp.38-53.

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