Memory gives us the information and context we need to evaluate situations and make informed decisions. It allows us to reflect on our successes and failures so we can improve our abilities. This is just as true for the collective memory of an organization as it is for our own memories.
A company can lose its competitive edge if its collective memory degrades. Organizational memory loss can impact productivity levels, lower employee engagement, and stifle innovation.
Organizational memory loss poses a significant risk to the success of any business. Every enterprise should take steps to safeguard organizational knowledge and prevent memory loss.
What is organizational memory?
Organizational memory refers to an enterprise’s ability to retain its collective knowledge, such as market research reports, over time.
Companies that retain organizational memory and make it easily accessible can be more agile, resilient, efficient, and innovative. But without effective knowledge management systems in place, crucial insights can be forgotten and lost.
How does organizational memory loss hurt a business?
The problem of organizational memory loss is common. According to research conducted by Gartner, 47% of knowledge workers have trouble finding information that is relevant to their roles. Several studies show that organizational memory loss can impact job satisfaction, efficiency levels, and drive up the cost of doing business.
If employees don’t have a reliable knowledge hub, they won’t be able to access the insights they need to make the right choices. 32% of respondents to Gartner’s survey reported that they were making incorrect decisions because of a lack of insight awareness.
When employees can’t perform roles properly, morale suffers. Failing to safeguard organizational memory and effectively manage knowledge significantly results in lower employee engagement levels. Disengaged, dissatisfied, and frustrated employees are less productive and less likely to stay in their roles.
The loss of organizational memory also causes operational costs to rise. Research by International Data Corp. (IDC) revealed that Fortune 500 companies lost approximately $31.5 billion per year due to forgotten organizational knowledge. And it’s not just the big companies that are accruing costs. Smaller enterprises are also impacted. A study by the human resources company Panopto showed that a business with 1000 employees could lose up to $2.4 million per year due to knowledge loss.
When there isn’t a reliable repository of organizational knowledge, business leaders can’t effectively evaluate current strategies. The lack of historical knowledge also leads to duplicate efforts and throws up barriers to creativity and innovation.
With no way to refer back to past best practices, existing teams waste time and resources duplicating research. Figures from one study revealed that employees spend an average of six hours every week duplicating work and that 14% spend a minimum of 14 hours each week on duplicative work.
Organizational memory loss makes onboarding new employees more difficult and time-consuming. 42% of the skills required to perform a role disappear when an employee leaves a company. It can take up to 200 hours to train new hires who don’t have access to this past expertise.
What are the causes of organizational memory loss?
As an organization grows, it will gain and lose employees, adopt technologies and practices, incorporate new departments, develop products or services, and move into new territories. As it does so, its memory increases. But so too do the risks of losing organizational insights.
There are a range of reasons why organizations fail to retain crucial knowledge:
Organizational change
Any type of change can impact an organization’s ability to retain information. Valuable knowledge can be lost due to restructuring, or during mergers and acquisitions. Even adopting new technologies can cause knowledge to be lost.
Organizational change often results in departments being consolidated, roles being redefined roles and responsibilities reassigned. During the transformational stage, information can become siloed or lost. Informal networks are disrupted as employees take up new roles.
Companies often have differing knowledge-sharing practices and cultures. This can make staff reluctant to share knowledge with new colleagues during mergers and acquisitions. System upgrades can lead to the loss of legacy data. Rolling out new technologies can disrupt well-established workflows making it more difficult for employees to locate and share information.
Staff turnover
High employee turnover rates and inefficient offboarding processes are major causes of organizational memory loss. Key employees may leave without properly documenting or passing on their expertise. Their highly valuable experience is simply forgotten, leaving existing and new employees to find solutions without the benefit of past insights.
Ineffective knowledge management systems
In many cases, an organization will be overly reliant on informal knowledge sharing. A lack of structured knowledge management procedures increases the risk of essential information being forgotten.
Fragmented, overloaded, overly complicated, and confusing knowledge management systems are a major cause of corporate memory loss.
If the knowledge management system is too complex or doesn’t contain key research, employees won’t be able to access the insights they need. Employees are also less likely to contribute to a knowledge management system that is difficult to use.
Information overload
Not being able to find information is a problem, but so is information overload. When employees are bombarded with irrelevant information it becomes increasingly difficult to separate what is important from what is not.
Having too much data to sift through makes it harder for staff to retain essential knowledge. This can actively create stress and lead to employee burnout. Research shows a clear link between information overload and stress. In one study, 76% of employees said informational overload increased daily stress, 35% said it negatively impacted performance, and 30% stated it decreased job satisfaction.
It’s imperative to not only share knowledge but to share it effectively. If not, then the information won't be encoded to memory and the overall organizational memory will erode.
How can you prevent organizational memory loss?
Preserving the collective knowledge of a company is essential for its continued success. However, the larger a company grows, the more complicated managing organizational memory loss becomes.
Proactive knowledge management strategies can help new and well-established businesses to preserve corporate memory.
Create a culture of knowledge sharing
A strong corporate culture that encourages knowledge sharing is a highly effective way of building a robust organizational memory.
A healthy corporate culture should place a high value on knowledge and encourage dialogue between teams. Employees should feel able to freely share their unique expertise with their colleagues. For example, an Insights team can share its data interpretation skills so that the marketing team can then effectively apply that knowledge in real-world scenarios.
Focus on employee development
Employee development can play a critical role in avoiding organizational memory loss. Mentoring, coaching, and cross-training programs make it easy for experienced employees to pass on their expertise. These programs enable an organization to systematically capture, retain, and build on its collective knowledge.
Continuously document essential knowledge
Organizational memory must be kept up to date. Maintaining a competitive edge requires that a company continuously review and refresh its knowledge base. Irrelevant information must be identified and replaced, and any topic areas that require new content should be updated.
Leverage effective knowledge management systems
A user-friendly, intuitive, and well-organized knowledge management platform is a vital tool in preventing organizational memory loss. A knowledge management platform provides an organization with a single source of truth and a centralized repository of essential information.
A dedicated knowledge base protects critical insights during periods of change or when key figures leave the company.
The importance of safeguarding organizational memory
Aside from its people, an organization’s collective knowledge is by far its greatest asset. Building a strong organizational memory safeguards essential insights and ensures critical information remains accessible.
The outcome? Faster, more informed decision-making. A reduction in duplicated work. Stronger cross-department collaboration. Teams can build on existing knowledge to drive innovation. Productivity and morale improve across the entire organization.
Taking a proactive approach to knowledge management will help your organization prepare for the future – whatever it may bring.
