Leveraging GenAI to Mitigate the Cost of Losing Institutional Knowledge in Enterprises
Adam Hoey — Senior Advisor
March 5, 2024
In the intricate ecosystem of modern enterprises, institutional knowledge serves as the cornerstone of sustained success. However, when seasoned employees retire or depart, they take with them a wealth of expertise, insights, relationships and institutional memory, leaving behind a void that can prove costly for the organization. On top of that workplace tenure has decreased on average.
According to a report by the American Productivity & Quality Center (APQC), “Organizations lose 45% of their institutional knowledge every time an employee leaves.” This loss extends beyond mere data or documents; it encompasses the intricate understanding of processes, relationships, and organizational dynamics that can’t be easily quantified.
Financially, the toll can be substantial. According to an analysis by Panopto in an interview with HR Daily Advisor they calculated “ ..the average U.S. enterprise-size business may be wasting $4.5 million in productivity annually just due to failing to preserve and share knowledge and thereby, making new hire onboarding more inefficient.”
The Society for Human Resource Management (SHRM) notes, “The cost of replacing an employee can range from one-half to two times the employee’s annual salary.” This includes expenses related to recruitment, onboarding, training, and the inevitable dip in productivity as new hires acclimate to their roles.
Moreover, the loss of institutional knowledge can disrupt workflow, impede decision-making, and compromise service quality. As Dr. Christina Ellwood, a researcher in organizational behavior, emphasizes, “The departure of experienced employees often leads to increased errors, delays, and inefficiencies, as their replacements struggle to replicate their level of expertise.”
Within the context of the US Federal Government for example, consider the Federal Acquisition Regulation (FAR) — an intricate regulation used by executive agencies for procurements and the acquisition of supplies and services can take years to master. Loss of knowledge can increase contract errors that can dramatically slow down cycle times or even worse completely derail a project which in order to be successful would have required intricate knowledge of allowable exceptions to reduce the regulatory burden. With significant numbers of retirements expected, agencies are scrambling to drive employee mentoring programs to document and transfer this institutional knowledge.
Enter Generative Artificial Intelligence (GenAI), a transformative force poised to reshape how enterprises manage and leverage institutional knowledge. By deploying AI-driven knowledge management systems, organizations can capture, organize, analyze and share vast troves of data with unprecedented speed and accuracy.
AI-powered solutions offer intelligent search capabilities, enabling employees to quickly access relevant information and insights buried within mountains of data. Furthermore, AI-driven virtual assistants can serve as virtual mentors, guiding employees through complex tasks and providing real-time support. AI facilitates knowledge sharing and collaboration across departments and geographical locations.
With Knowledge AI from Morfius, knowledge workers can get quick access to accurate and personalized AI answers to complex questions from private enterprise documents, data, media catalogs and knowledge bases. Public sector and enterprise can leverage Knowledge AI to retain institutional knowledge, speed onboarding and tackle common business challenges.
In essence, AI acts as a force multiplier, augmenting human capabilities and mitigating the impact of losing institutional knowledge. As businesses navigate an era of unprecedented change and disruption, leveraging GenAI to preserve and harness organizational wisdom isn’t just a competitive advantage — it’s an imperative for long-term success.
Let’s talk GenAI for government and enterprise. contact@morfius.ai
