Knowledge Transfer 101: How a Sound Strategy Can Save Companies $31.5 Billion a Year

Andy Cook
April 9, 2018

A knowledge transfer is a proverbial passing of the torch — it’s the process of imparting important information from one part of your business (or person) to another. And it’s critical to your business’s success because, when done effectively, it increases the efficiency and productivity of your organization.

Simply put, the more your employees are up to speed on critical working knowledge, the more they’ll be able to make the right choices on their own. Having the right info at their fingertips empowers your employees to work faster and with fewer errors.

It’s like the former British Prime Minister, Benjamin Disraeli, famously said:

“The more extensive a man’s knowledge of what has been done, the greater will be his power of knowing what to do.”

And since it’s estimated that poor knowledge-sharing practices cost Fortune 500 companies $31.5 billion annually, it’s safe to say that effective information flow is essential to your success.

However, knowledge transfer encompasses much more than communication or training. Yes, it includes all of the aspects of internal communications, like documentation or operating procedures. But effective knowledge transfers are really about creating a culture where people freely share their experience and expertise (and having the processes in place to document that expertise; more on that later).

Below, we’ll delve into why that’s the case and explain how you can create a company culture that embraces knowledge transfer.

Why Effective Knowledge Transfer Is a Company Culture Issue

Formal training and documentation processes (which are certainly crucial components of knowledge transfer) will always hold an important place in the success of any organization. It’s why pilots log almost two years of training before they’re allowed to fly commercially, and it’s why they have extensive manuals for any problems that might come up in flight. In their case, that kind of knowledge transfer can literally save lives.

But consider this: What if the only two employees on the product development team were to leave in close succession? Where would the knowledge they had about the programming, coding, and software go?

Now, what about the employees that you hire to replace them? How will they learn the subtle nuances and skills to hit the ground running in these roles?

It’s important that your organization find a way to counter these potential issues (and others like them) before they occur. That’s where more informal knowledge transfer is key. If you create a company culture where everyone documents and exchanges their expertise proactively, your teams will be more interconnected and tuned in to each other. This free flow of knowledge can mitigate issues without you ever having to intervene directly.

Generational Shifts Increase the Need for Effective Knowledge Transfer

Research from CIPD suggests that the workforce will soon encompass five generations: veterans (born between 1939 and 1947), baby boomers (1948 and 1963), Generation X (1964 and 1978), millennials (1979 and 1999), and Generation Z (post-2000).

This is important because there are stark contrasts between the beliefs and expectations of different generations.

For example, the lure of a high salary and a steady career trajectory is no longer of the utmost importance for millennials — some estimate that they’ll change jobs at least four times by the age of 32 — and all of that change will affect the transfer of knowledge.

Furthermore, nearly half of all baby boomers have already retired, with the entire other half eligible to retire within the next 10 years. That means a lot of tacit knowledge will leave organizations all over the world.

And it means that no matter what the generational makeup of your company is, building the processes and culture that encourage effective knowledge transfer have never been more important.

4 Ways to Encourage Effective Knowledge Transfer

While your company culture drives effective knowledge transfer, it’s up to the leaders to spearhead the cultural changes that create that environment. To help you foster a workplace culture that promotes the free flow of knowledge, here are a few simple tactics to get you started.

1. Foster trust and openness.

If your team doesn’t trust who they work with, they won’t share their knowledge with them. It’s how organizational silos form and why they’re so harmful for a business of any size.

And it’s why this might be the most important point on this list.

When silos form, it slows or stops the flow of important information and knowledge between departments and employees. Most importantly, it kills the desire to share that knowledge.

That’s why it’s critical that leaders break down any silos and encourage a culture of openness and collaboration.

The key to doing that, according to a two-year study by Google, is to create what’s known as “psychological safety.” The safer your employees feel to speak their minds without fear of repercussions (embarrassment, shaming, etc.), the more likely they are to share their knowledge, work together more effectively, and even stick with the company longer.

In her TEDx talk, Harvard behavioral scientist Amy Edmondson (who first coined the phrase “psychological safety”) offers three things you can do to foster that safety within your business:

  1. Frame work as a learning opportunity. Treating work as an opportunity to learn takes the pressure off of your team and gives them the space to figure out how to best execute.
  2. Acknowledge your own failures. No one is perfect, and if you take this approach as a leader, those who work under you will be more likely to follow suit.
  3. Ask lots of questions and be curious. If you’re modeling the desire to learn and acknowledging that you don’t have all the answers, your team will be more likely to do the same.

Keep in mind that creating psychological safety is also in the little things, like giving and receiving feedback, communicating, or simply becoming a better listener. These small acts can send an important signal to employees about the value you place on their contributions and experience, which helps them open up to you and each other.

2. Encourage experienced employees to “show their work.”

Much of the information your employees need to do their jobs effectively is hard to pass on because it’s embedded (sometimes subconsciously) in the minds of your more experienced employees.

That’s where a strategy that Jane Bozarth, a PhD in training and development and the Director of Research at The eLearning Guild, outlines in her book Show Your Work provides a more intentional solution to effective knowledge transfer.

By having your more experienced employees document their work as they would on a high school math test, the practice brings to light a lot of that subtle, tacit knowledge embedded in how their work gets done.

For example, if one of your senior salespeople was really adept at closing deals, having them record their calls would help newer sales hires understand the process they use for success.

Alternatively, you could also have employees show their work by writing it down after they’ve completed it. But by sharing the exact process you use to complete tasks, other employees can recognize and acquire the subtle expertise that otherwise might not be communicated.

Then, once it’s documented, keep in mind that it’s equally important to store and organize those work examples (and any others like them) in an accessible knowledge base for later. If future employees can’t find it when they need it, it limits how useful that document/video/etc. really is.

3. Use the rules of three.

Determining when and where something should be documented can sometimes be a challenge. Should it go in Slack? An email? A Google Doc?

In our experience, there are two simple rules that can help you determine when something should be documented. One focuses on the number of steps in a process, and the other focuses on how often you need certain information.

The Three-Step Rule: Think about all the processes you use on your team. It may prove helpful to go department by department as you’re coming up with your list of processes. Now, pinpoint all the processes that have three or more steps. Those are the ones to document (we do this by creating a suggestion in Tettra and assigning an owner to it).

The Three-Repetitions Rule: Simply put, whether it’s your product road map, the way you process a refund, or your company values, write down anything that you’ve had to explain three times or more. If you’ve already repeated it (when onboarding a new person or planning feature launches with your marketing team, for example), you’re likely to need that info again in the future.

4. Document new projects and processes.

One of the most important ways you can nurture a culture of sharing is to ensure that teams know how to transfer knowledge and when it’s appropriate. And one of the simplest ways you can do this is by helping your employees understand their role within any given process or project.

For example, imagine the stages of a construction project, such as building a house. There will be various specialists involved at different stages of the project, starting with architects and including scaffolders, bricklayers, plumbers, electricians, plasterers, carpenters, and more.

If a plasterer isn’t sure of their place in the process, they might start plastering walls and boarding up the house before the electrician has put in the wiring. At some point, the knowledge that the plasterer needs has not been transferred from the project lead.

If the plasterer discusses the current state of the building with the electrician before starting work, they can avoid errors.

Your team is similar. Whenever you embark on a new project or initiative, encourage people to document the process and dependencies. Dependencies refer to steps that need to occur for others to move ahead with subsequent steps. Documenting new projects will increase your team’s familiarity with documentation, helping to create a culture of knowledge transfer.

Effective Knowledge Transfer is Essential for Growing Businesses

The tacit expertise your teams have is critical for the success of your business’s future and competitive advantage. Not only will it save you money, but it will also help you increase productivity, employee retention, and improve culture.

A huge part of effective knowledge transfer is building a process that makes both the capture and the access to important collective expertise easy.

Tettra was designed to simplify this process. If you’re looking for a better way to do that, learn more here.