Canadian Plastics Sector Council (CPSC)

Employee turnover is a normal and expected part of business, no matter how good the incentives to stay may be. It can result from retirements or for other reasons that have little to do with the employer. For a company, the loss of employees � whatever the causes � is a loss of their valuable skills, knowledge, and potentially vast years of experience working with plant equipment, manufacturing processes, and business strategies � not to mention potentially large, accumulated financial investments in training. The workers who replace them may eventually reach the level of experience of those who preceded them, but in the interim a company can experience skills and knowledge deficits that may have a significantly negative impact on business performance. If the market for skilled workers is tight or employee turnover is high, the problem can be seriously prolonged and compounded.

At the same time, the increasing technological sophistication of production processes often requires greater amounts of skill on the part of workers, ever greater investments in training on the part of employers, and in some cases, ever greater efforts to keep track of �who knows what� within a given organization. And more and more, many manufacturers are finding that remaining competitive in the market depends on their ability to employ the knowledge, experience and unique abilities of their workers in order to remain innovative, solve problems creatively, respond to customers� needs, save on costs, and add high value to end products. As these priorities become more important, many firms find that they have no choice but to pay very close attention to what their people know, to take stock of this knowledge, and to effectively manage it.

The concept of knowledge management � the process of gathering value from the intellectual and knowledge-based assets available to a firm � attempts to address the two main concerns described above. Knowledge transfer, as a part of knowledge management, refers more specifically to processes that achieve the effective sharing of knowledge among individuals, business units, departments, or even different branch plants of the same company. Thus, while employee retention practices strive to retain individuals, knowledge transfer policies serve as a retention policy for knowledge and experience (although that is not its only purpose as we shall see). These are reviewed briefly in the following section of this report.

�Knowledge is tacit�it is held so deeply by the individual that it is hard to express or document. If ways can be found to transfer that knowledge to others in the firm, either through personal interaction or by recording it, then that knowledge becomes . . . a key source of advantage.� (Birkinshaw, 2001)

To understand what the literature means by knowledge management and transfer, one must first understand the distinction between tacit and explicit knowledge. These concepts were first introduced to the business literature by Ikujiro Nonaka (1998), who explains the two concepts in the following manner.

Tacit knowledge, according to Nonaka consists of technical skills that are of an informal nature or at least �difficult to formalize.� It also consists of individual �mental models, beliefs, and perspectives� that tend not to be explicitly articulated. In other words, tacit knowledge is made up of skills and experiences that are not always easy to point out or identify, but may be important components of job performance. Even the individuals who possess such skills may not be able to identify them or communicate them easily to others. Because tacit knowledge is so hard to identify, companies often do not realize what knowledge is held by which people, and to what extent it contributes to business performance. Unfortunately, many companies only come to these realizations after particular people leave and production problems begin to emerge.

Explicit knowledge, on the other hand, is objective and quantifiable, and covers all forms of knowledge, relevant to business operations, that a firm has already made efforts to collect and document (Ednie and Mottola, 2002). On the one hand, then, explicit knowledge may be contained in performance evaluations, competency examination results, training reports, psychometric testing, or formally documented certifications (to name but a few examples). Explicit knowledge can also be, following Nonaka, tacit knowledge that has been successfully identified, recorded and made understandable to other people. At the heart of knowledge management is the question of how explicit and tacit knowledge can be brought together as a single resource that can contribute to organizational performance. Knowledge transfer is simply the process by which different types of knowledge are transformed into useable knowledge.

But most importantly, to return to the heart of our discussion, knowledge transfer is about how the sharing of knowledge among individuals can be augmented and improved. Thus, the focus of this section of the report is on the tools that can facilitate the sharing of information among people, whether they are inside an organization, outside of it, or making transitions between the inside and the outside.[1]

Practicing effective knowledge management and transfer requires, first and foremost, that a company have a good sense for what strategic role knowledge has to play in its operations. Some authors in fact caution that there is often a temptation for companies to get caught up in the lure of new knowledge management technologies without having spent enough time considering corporate values, knowledge management objectives, and communications with employees to reinforce the value of knowledge sharing (Stantosus and Surmacz, 2001).

Many if not most of the knowledge management authors consulted in this study emphasize the importance of recognizing the knowledge assets vested in workers as valuable, and understanding what business targets or objectives could be supported by making better use of them. Referring to these literature sources one can clearly note the importance of:

It is important to emphasize that achieving such goals does not require that companies formally lay out their strategy for managing knowledge. But it does seem to require, above all, that companies communicate effectively with their employees about what is expected of them, and why the company is placing so much emphasis on their knowledge. One of the case studies examined for this project demonstrates that good communications in the area of knowledge management may be something as simple as letting one�s employees know that their employer expects them to share whatever external training they may have been sent on with their colleagues.

The recognition of good practices is also an effective way for a company to communicate what practices it considers to be important. Whether a company wants to strategically use organizational knowledge for the purposes of innovation, responding to customers� needs more effectively, or preventing knowledge loss through turnover, it can also take useful steps to reinforce the importance of knowledge sharing practices by rewarding and recognizing workers who do this well (Cameron, 2003). Thus, many companies offer financial or non-financial rewards to employees who devise particular solutions to business or operational problems, distinguish themselves as trainers or sharers of information, etc. Some companies integrate financial rewards for good knowledge sharing practices into overall performance-based pay systems.

Communications must also strive to address workplace cultural factors that might impede effective knowledge management. For knowledge management and transfer to be successful, firms must encourage individuals to work together, interact and share ideas (Birkinshaw, 2001). Business environments in which individual teams or departments compete intensively amongst themselves may lead to the hoarding of information and knowledge to gain a competitive edge of other business units. To ensure good knowledge sharing, a company must be attentive to how people are accustomed to working within that company, and to take measures to address the factors that drive the hoarding of information. Otherwise, different units or departments may develop isolated and protected information �silos.�

Mentoring and coaching are already familiar to most firms as a training tool, but they also are valuable in transferring intangible and tacit knowledge (Frank, 2002). They achieve this by pairing experienced workers with less experienced workers over a period of time, allowing the less experienced partner to observe and absorb the actions of the mentor or coach. Mentoring and coaching are also effective inter-generational knowledge transfer tools, and may be particularly important to companies facing the retirement of key staff (Frank, 2002). Frank also mentions that mentoring and coaching are useful ways for workers to share �lessons learned,� as the mentoree will often have the chance to benefit from the mentor�s trial and error experience.

Already a familiar training and development practice, rotating employees through different positions, and often different departments, permits experience and knowledge to be shared among areas of a firm that might not normally collaborate closely with one another. For example, a job rotation in which technicians or engineers in the manufacturing area of a company are temporarily posted to positions in sales would allow for a greater dissemination of knowledge between these two departments and allow them to benefit from each other�s knowledge. In our example, the sales department would acquire a better understanding about the product manufactured and the process involved (thereby improving its ability to communicate with customers), and the manufacturing side would have an opportunity to learn more about customer�s expectations and requirements. In addition, the individual employee acquires a broader perspective of the company�s operations which can then be shared with colleagues.

Similarly, cross training (where, for example, manufacturing operators are rotated through positions that allow them to acquire competency using different machines and equipment) allows for a more limited form of knowledge sharing, usually within a particular area of a company (particularly manufacturing, for the purposes of this study). It should be noted that cross-training also has the added benefit of developing an increasingly flexible skilled workforce.

Phased-in retirement is �any arrangement the enables employees approaching normal retirement age to reduce their work hours and job responsibilities for the purpose of gradually easing into full retirement� (Smolkin, 2001). In addition to being a useful retention tool, phased-in retirements can be effective knowledge transfer tools, particularly for companies concerned about waves of workers retiring in a short period of time. Phased-in retirements can allow for increased lead time in bringing in new recruits, while temporarily retaining the knowledge of a company�s most experienced workers. The worker going through phased-in retirement will see a reduction in work hours and responsibilities, and some companies choose to use a part of that person�s remaining time on the job on activities related to coaching, mentoring and providing other forms of training. This in turn allows for a longer period of time to achieve inter-generational transfers of knowledge and experience.

Communities of practice are a form of online teamwork that, particularly in larger organizations, can be effective at sharing experience and allowing individuals to build up one another�s knowledge base. Usually developed through a computer-based system that allows discussion and the sharing of documents, communities of practice bring together people with different skills and from different areas of a company or different project teams (or even different plants in different regions), to converge on particular issues or problems to be solved (Ednie and Mottola, 2002). Discussion and the exchange of ideas are usually tightly focused on an issue or problem, and individual roles and accountabilities within the community may be defined strictly (Hasanali et al, 2000), but even in doing so, communities of practice also allow each member to contribute his or her individual experience in the process of collective problem-solving. Numerous companies currently offer software applications for hosting and administering communities of practice.

A very large part of the knowledge management literature is devoted to discussions of particular types of technology that support knowledge transfer. This may be driven in part by the fact that many of the major and well-known studies of knowledge management are about relatively large, and often high tech, companies, companies with considerable technological expertise and large budgets for technological infrastructure.

To what extent the technologies discussed below can be implemented by smaller firms is a serious question that each company would need to assess according to its own capacities. It should be noted, however, that the implementation of knowledge management technologies should never be seen as a substitute for the social interactions that are the foundation of knowledge transfer and sharing (Birkinshaw, 2001). Thus, for example, practices such as mentoring and coaching are equally effective ways of sharing knowledge, depending on a company�s particular characteristics and requirements.

Technology does play an important role in knowledge management, but its role is essentially limited to two functions. Firstly, technology plays the role of documenting, archiving and making available records that �contain� knowledge that has been made explicit. It provides a tangible, explicit record of knowledge that can be permanently held and used by others. Its second function is to serve as a written or graphic medium for exchanging and building knowledge in the first place. This can be particularly useful when it is not possible to bring people together to share knowledge face-to-face (consider the example of a company that wants to promote knowledge sharing among employees in plants spread out across a region). It can also be useful for permanently recording the actual exchanges that make up knowledge transfer (e.g., discussions, debates, visual explanations).

Currently, there are a great number of providers that specialize in the design and implementation of knowledge-based technologies, and the products they sell are diverse and numerous. We therefore provide here a brief listing of the most common types of tools used.

(1) Databases, customized to the purpose, provide the means of storing recorded knowledge. They are used to contain whatever types of knowledge that are considered worth retaining. The greater the extent of knowledge to be gathered, the more important it becomes to catalogue it in a central repository where it can be easily retrieved.

(2) Intranet systems function much like the internet, allowing people to communicate with one another (e-mail) and to make documents available through a computer network (an internal web). Intranets are common to many firms, and can contain a wide range of materials, including training documents, materials management information, scheduling, client information, job orders, etc. (usually stored on a linked database). Companies such as Interquisa Canada (interviewed for this study) use their Intranet for many of these purposes, but also to catalogue retained knowledge. In the case of Interquisa, such records also contain information about who entered created the record, thus allowing other people to identify repositories of knowledge in particular individuals.

(3) Groupware is web-based software for online collaboration that �integrates work by several concurrent users at separate workstations.�[3] Groupware is often the environment used for hosting �communities of practice� (see above), but more generally provides computer-based tools that allow people to collaborate on projects, share knowledge, and create a permanent record in the process.

B. Knowledge Transfer: A Retention Strategy

The sources consulted in this study suggest that most of the literature on knowledge management tends not to provide the reader with immediate steps or solutions that can be quickly and easily implemented. Most commentators tend to emphasize the highly conceptual and abstract nature of the issue and the fact that knowledge management requires, in their view, a considerable amount of strategic thought about a company�s needs, capabilities, and its available financial and intellectual resources. As such, the bulk of the literature on knowledge management tends to deal at the level of concepts and general planning guidelines rather than immediate, practical solutions. We have therefore tried, as much as possible, to isolate examples of practical applications.

Although knowledge management and knowledge transfer are rarely undertaken with the singular goal of coping with the negative effects of turnover, this does not mean that they do not have potentially positive effects on retention. As Bontis (2003) points out, knowledge management practices can have a strong, positive effect on retention. They are usually premised on good communications, the development of skills in the workplace, and the valuing of employees� inputs and contributions. Our previous discussion of retention showed that such practices are not only important but often crucial to building strong employee commitment, and this was in evidence in a few of the case studies conducted.

As was the case with retention, many of the companies profiled in this report do not have explicit knowledge management strategies; indeed, some of them are only familiar with the notion in a general sense. In practice, however, many of their practices, particularly in the area of training, effectively achieve knowledge transfer objectives. This is not surprising, as knowledge management and training share a common root in the broader concept of �skills�: when firms engage in training, they change the level of skills in individual workers (providing new knowledge through training), and when they engage in knowledge transfer (for example, by effecting inter-generational transfers of skill through mentoring), they change the distribution of skills.

The overall issue of retention is just as much about retaining the skills people possess as it is about retaining people themselves. Having considered these conclusions, it became increasingly apparent to us that our efforts throughout this project were really directed to a single overall concept, which we understood to be one of skills management, in other words: the practices put in place by organizations to help them to effectively use the skills available to them. This has helped us to understand the many practices undertaken by the Canadian plastics companies we studied as being part of a single overall goal.

[1] Nonaka�s discussion of knowledge transfer has been greatly simplified here for the sake of brevity. The reader is referred to his work in this area, cited in the bibliography.

[2] This list is a composite of ideas appearing in multiple sources. See, for example, Stantosus and Surmacz (2001); Bontis (2003); Cameron (2002); Ednie and Mottola (2002); Birkinshaw (2001); Manasco (1996).

[3] This definition appears at www.wikipedia.org, an online collaborative environment of sorts in its own right.