Knowledge is a critical strategic factor in a competitive environment because it cannot easily be bought or contracted. The cost of knowledge is usually thought of as the cost associated with obtaining and retaining employee skills. The true cost of knowledge is much broader, and encompasses process efficiency, worker productivity, human error reduction, and building the institutional knowledge.
The cost of knowledge should always be considered in the context of the entire “workforce supply-chain” instead of focused on the narrow issue of an aging workforce. Interliance looks at the cost of knowledge in the following ways:
| The Cost of Obtaining Knowledge |
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Recruiting programs |
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New hire qualifications |
| The Cost of Developing Knowledge |
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New employee training programs |
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Training plan applicability and efficiency |
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Standards and procedures |
| The Cost of Retaining Knowledge |
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Knowledge capture from retiring employees |
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Inefficiencies caused by capturing the wrong knowledge |
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Supplemental training by pairing junior and senior employees |
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Documentation of unwritten procedures |
| The Cost of Lost Knowledge |
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Amount that attrition will erode the skill base |
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Reinventing the wheel in terms of best practices |
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Increased error rates |
| The Cost of Missing Knowledge |
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Inefficient processes |
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Human errors |
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Low productivity and pace |
What Are the Relationships Between these Cost of Knowledge Issues?
The Organizational Cost of Knowledge process uses many factors. Below are some of the factors and how they relate.
| Employee Capability |
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Attrition is forecast based on employee demographics and company retirement policies.
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Lost skills occur when replacing retirees with lower skill level new-hires.
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The organizational Learning Rate is the rate at which employees gain skills during their tenure.
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Supplemental Training for fully qualified employees slows or even reverses the level of Lost Skills.
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Non-retirement attrition impacts headcount and training costs.
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The level of Skills determines the Pace of work. A 100% Pace indicates maximum efficiency. Employees with lower skill sets have a lower Pace of work.
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| Process Capability |
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The relationship between Skills and Standard Processes is used to determine the level of Human Errors.
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Benchmark data and client experience are used to apportion the causes of overall Unplanned Downtime.
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The required headcount is impacted by the frequency of Equipment Problems and the productivity measured in Wrench Time.
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Our system is designed as a simulation tool to allow organizations to modify all of the above parameters with: existing data, benchmark information provided from our databases, and forecasted needs, to allow a range of knowledge optimization opportunities.
The value of our proprietary analytical model is the assessment of business decisions in the areas of recruiting, new-hire training programs, workforce development, process improvement, productivity enhancement and many other variables to provide vital knowledge for our clients.
