Why Unshared Knowledge Destroys a Company’s Bottom Line

A new report quantifies how much money companies lose when their employees don't share knowledge.
By: | July 17, 2018 • 3 min read

Unshared knowledge costs organizations money every year.

Just how much money?

According to the Panopto Workplace Knowledge and Productivity Report, the average large organization (with 17,700 employees, per its survey data) loses $47 million in productivity annually due to inefficient knowledge sharing, while an organization with 1,000 employees would expect to lose $2.7 million and an organization with 100,000 employees would lose $265 million.

(The cost of inadequate knowledge sharing to the average U.S. enterprise business was calculated by combining expected annual productivity losses from inefficient information exchange with expected productivity losses from inefficient information exchange during new employee onboarding.)

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“Every employee in every company contributes to institutional knowledge,” says Eric Burns, co-founder and CEO of Panopto. “However, employee expertise is fleeting when it’s only shared through conversation. To remain competitive, businesses must provide the tools to preserve institutional knowledge and instill a culture of teaching among employees.”

In order to quantify the amount that unshared knowledge costs companies each year, Panopto surveyed 1,001 American employees across a variety of industries to “learn about their experiences using—and having to cope without—unique knowledge.”

What they found is that “companies suffer from unshared knowledge in two ways: first, in making employee transitions less efficient, and second, in making day-to-day work less productive.”

Whether their careers are decades old or just getting started, most employees appreciate how hard it is to replace personal and professional experience. But the study found that the longer they’ve been working, the greater employees’ appreciation is.

Of employees with less than 15 years in the working world, 71 percent feel that experience is harder to replace than education and training. That’s a large majority—but it gets even larger among employees who have worked for 30 or more years:

“As time goes on, more and more workers find experience to be the most irreplaceable source of knowledge, while fewer and fewer feel that way about training and education. In other words, the people with the most experience place the greatest value on experience.”

Essentially, the report finds, “the longer a person works, the more they understand that unique knowledge, gathered and refined over time, truly is one of a kind.”

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The Panopto report also finds the lack of sharing knowledge is costing organizations $24.2 million annually on the inefficient onboarding of new hires.

“On average,” it states, “new hires spend 28 inefficient hours per month for 6.5 months learning how to do their jobs.”

Additionally, the average new hire won’t be fully up to speed in their role for 6.5 months—fully four months after the typical onboarding process has wrapped up. It takes a new employee an entire year or more to get up to 100 percent productivity in 20 percent of the surveyed companies.

“Of course, getting up to speed at a new job will always take some amount of time,” the report says. “How much depends on the knowledge that employees have access to along the way.”

To access all the shared knowledge in the report, click here.

Web Editor Michael J. O’Brien has been with HRE for more than a decade and holds a degree in economics from Boston College. He can be reached at [email protected]