Let us look back to February of 2006. Due to corrosion in a pipeline at the Prudhoe Bay oil platform, nearly 900,000 liters of oil escaped into the ocean. The responsible company, BP, did not find the leak until five days later. Due to the necessary repairs, massive quantities of oil could not be delivered for days on end, resulting in fuel shortages at American gas stations. US Congress demanded to know what led to the incident. Once revealed, the reason was met with disbelief. An employee with specialized knowledge had left the company and had not yet been replaced. A gap in knowledge had caused millions of dollars in damages.
The Cost of Turnover
Even without a disastrous incident, the cost of the turnover alone is extremely costly. In fact, a single employee turnover can total between 33-200% of the departing employee’s annual salary. The largest factor being the cost to replace the uncaptured knowledge that the individual gained through tenure and experience.
Other turnover costs include:
· Recruitment costs for a replacement.
· Productivity loss during the time it takes to find a replacement.
· Administrative costs for the new hire.
· Productivity loss during the training period of the new employee.
· Productivity loss pulling coworkers from their important tasks to assist in new employee training.
How Does Knowledge Management Minimize the Cost of Turnover?
Again, the largest cost factor of turnover is the time and resources it takes to replace uncaptured knowledge when an employee departs. The benefit of a Knowledge Management System (KMS) is that it captures and stores information into an organized and easily accessible platform. If a company integrates a KMS into their natural daily process, that information never walks out of the door at the end of the day.
Additionally, the ramp up period for the new employee is shortened and productivity loss is reduced. With a KMS, the new employee has instant access to the tools and resources needed for training. The employee does not have to go on a long search for answers and coworkers take less time away from their tasks to assist with training.
How Does Knowledge Management Aid in Employee Retention?
Two key reasons why employees leave a position are lack of communication and lack of support. A well-adopted Knowledge Management System (KMS) combats both issues.
An effective KMS allows employees to transmit and receive information that may not be able to easily obtain otherwise. This offers individuals the support they need to maximize their work experience.
Employees are also able to easily interact with one another through the platform by asking questions, sharing advice, and working together on content creation. This automatically enhances communication and collaboration.
The more value and support your team members feel, the longer they will stay on board.