By Steve Trautman March 8, 2013

Who Pays for Your Knowledge Transfer Strategy? [KT Strategy Series, Sidebar D]

Posted by Steve Trautman on Mar 8, 2013 8:21:07 AM

Pay for knowledge transfer -- weighing time and lack of productivity vs knowledge transfer budgetAs with any business initiative, the executive sponsor of a knowledge transfer strategy needs to find funds for knowledge transfer. Funding includes not only paying to put the program in place and any outside support and tools, but also for things like making expert employees available to teach their peers and transfer their critical knowledge. So who should pay for knowledge transfer becomes an important strategic question.

KNOWLEDGE TRANSFER IS NOT FREE
Every company is different, but somebody needs to expect to pay for knowledge transfer. It is not free. Just like you pay for office space, hardware and employee training, you have to expect to invest in this as well.

That may seem an obvious statement, but the pitfall for executives is that they are accustomed to thinking that knowledge transfer is free. The default thinking is: “We can pretend it’s free, because on-the-job training has been happening organically here for years.” Of course, executives rarely complete that thought: “Sure, it took five years for anyone to learn a new job, and we paid for projects taking too long and for costly mistakes, rework, and loss of talent.” The knowledge transfer strategy is going to shorten the duration to worker productivity and retain critical knowledge, but there’s going to be some cost involved in that. So your strategy better address this.

COMMON WAYS TO BUDGET KNOWLEDGE TRANSFER
There’s many ways knowledge transfer could be paid for, and your choice depends entirely on your business model. Here are a few examples and questions that address each:

  • If you are outsourcing—Should knowledge transfer be paid for by the outsource partner, or by you? Usually there’s contractual language around that. If there isn’t, there should be.
  • If you’re building a fee-for-service, specialized product for a client—Should the client have to cough up some of the dough to ensure that your team is ready to go because it’s in their best interest to reduce this risk? What if the client is asking for increased capacity (e.g. building versions of the product in multiple countries) or a faster build rate—again, should the client be required to invest in the team’s readiness?
  • HR can pay or a Learning/Training unit—If your budgets are set up for learning, should learning budgets be tapped for this because this is absolutely employee development? Should it be built into overhead, as some percentage for every head count? (e.g. “We’re going to have the equivalent of investing in five days of training for every employee.”)
  • Operating budget of the line or business unit—Line management has the most to gain by reducing talent risks. They already find budget to cover overages, rework, lack of consistency, and retraining due to attrition. If they choose to invest in knowledge transfer, these other costs will go down. This is “pay me now or pay me later.” For this reason, should your knowledge transfer be paid for out of operating budgets?

IS YOUR STRATEGY TO EXPECT EMPLOYEES TO PAY FOR KNOWLEDGE TRANSFER?
Whatever approach you choose, it is important when building your strategy to acknowledge when you are expecting your employees to pay for knowledge transfer out of their own pockets. We expect this as managers all the time by effectively saying to our workers, “Well, do your day job, but that’s your first 40 or 50 hours a week. Then do this other knowledge transfer stuff, too, as part of your second 40 hours a week.” We expect our employees to pay for knowledge transfer by giving us their time for free. I’m not saying this is never a legitimate short-term strategic choice for an organization. There are many times when we ask our employees to “take one for the team.” The trouble is that this is a high risk approach that can lead to unintended consequences like more rework, burnout, and turnover. And, if your newest employees see their future in the stress levels of your most senior employees, that will definitely affect their desire to put down roots and make a career with your firm.

Lots of companies unknowingly choose to make knowledge transfer the employees’ problem. They effectively say, “Our strategy is to leave the situation as status quo and hope for the best, because we’re not that worried.” They rely 100% on the unlikely expectation that employees will pay for knowledge transfer themselves through uncompensated free time. And if that’s your status quo, and your status quo has been working for you, then your strategy has been excellent. But if you need to make a change—if you need people to get up to speed faster, if you need tasks performed with greater consistency or to a higher standard, if you want more employees able to capitalize on opportunities for innovation, or if you want more workers ready to go to improve a market position or to enable greater operational capacity—then you must intentionally decide how much you will to turn that investment knob and meet your employees part way.

MAKE A STRATEGIC CHOICE
Your knowledge transfer strategy should clearly answer the degree of investment you expect employees to make versus the investment the company will make. Will you change your knowledge transfer investment from relying 100% on employee goodwill to 60% on employees? Or 30% on employees? Or completely remove the employee burden? Once you answer this, you will have clarified where the investment needs to come from and can plan budgets accordingly.

Topics: Outsourcing, Workforce Risk Management, Knowledge Transfer Planning, Knowledge Transfer Strategy, Best Practices

Steve Trautman

Steve Trautman

Steve Trautman is corporate America’s leading talent risk management and knowledge transfer expert. With two decades of application inside blue chips and Fortune 1000s, his pioneering work in the field of talent risk management and related knowledge transfer tools are now the nationally-recognized gold standard. He is known for a high energy style that combines humor, street smarts, and board room wisdom.

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