Institutional knowledge is the secret ingredient that keeps a business running smoothly, even in the face of change. It’s the expertise, insights, and know-how that long-time employees have built over time— a source of information that is so ingrained, it’s often overlooked.
The most common way this knowledge gets lost is when an employee moves on, and the consequences often mean wasted time, disrupted workflows, and costly setbacks.
Preserving institutional knowledge isn’t just a safeguard; it’s a strategic advantage that ensures continuity, accelerates onboarding, and strengthens your organization’s resilience.
Here, we will explore how to protect knowledge from being lost, and ultimately strengthen your organization’s resilience.
What is institutional knowledge?
Institutional knowledge is the expertise and information unique to an organization, built over time through employee experiences. It includes processes, best practices, historical data, and cultural insights.
To define institutional knowledge, it’s helpful to view it as an organization’s collective memory. Experts accumulate knowledge, practices, and insights over time. Institutional knowledge can include everything from procedures to critical client information, and organizational values.
Institutional knowledge includes two key types:
Explicit knowledge
This type of knowledge consists of easily documented information. Think policies, procedural guides, and training materials.
They are typically stored so everyone can easily access them company-wide. An enterprise LMS can serve as a centralized repository. Here, explicit knowledge is easily accessible.
Tacit knowledge
Team members gain this knowledge from hands-on experience and personal interactions. It’s usually harder to document because it can be nuanced. Think of things like customer relationships, or problem-solving methods that are unique to certain employees.
Because it is less formalized, people find it harder to capture and share tacit knowledge.
Why is institutional knowledge important?
Institutional knowledge is critical to organizational efficiency. It allows your staff to build on proven processes instead of constantly reinventing the wheel. It saves time, prevents errors, and ensures operational continuity.
When employees leave a position or the company, having well-managed institutional knowledge matters. It ensures new team members can pick up where others have left off, minimizing disruptions and preserving consistency.
For example, when a new regulation or client demand pops up, teams can make informed decisions with institutional knowledge. When your staff makes these decisions quickly, it avoids delays.
Being a new hire can be overwhelming. When a new staff member has access to shared institutional knowledge, they feel more competent and confident in their roles. This support provides higher job satisfaction while strengthening employee engagement. It can lead to reduced turnover and lower costly training and recruitment efforts.
An enterprise LMS plays a critical role in sharing essential institutional knowledge. It gives new hires instant access to the curated knowledge of seasoned employees.
Having a centralized knowledge base shortens onboarding time, improves engagement, and reduces training costs. Your new employees are able to make meaningful contributions quicker.
The high cost of losing institutional knowledge— and how to prevent it
The most obvious cost of lost institutional knowledge is through hiring and onboarding.
Replacing an employee typically costs between 50% to 200% of their annual salary. C-suite turnover can cost up to 213% of their salary. These are very expensive replacements.
Streamlining the transfer of knowledge can help negate some of the costs associated with transitions.
When your staff works in information silos, productivity plummets. Without easy access to institutional knowledge, teams spend too much time searching for answers.
A McKinsey report shows that employees spend an average of 1.8 hours each day— or 9.3 hours per week— searching for and gathering information. For new employees, this time spent searching is likely higher.
In the coming years, approximately 4.1 million Americans each year will reach the traditional retirement age of 65. This mass retirement is known as The Silver Tsunami. The retirement of this seasoned workforce is accelerating the loss of institutional knowledge. They take decades of unique, experience-based knowledge with them.
Documenting and sharing this knowledge before it’s lost helps companies protect themselves. Bridging generational gaps and securing critical knowledge for the future must happen before it’s too late.
Examples of institutional knowledge
When you’re ready to start preserving institutional knowledge, it’s important to understand the areas to focus on.
Here are some of the more common places you’ll find opportunities in:
1. Historical project data
Keeping records of past projects should include timelines, budgets, and outcomes. These valuable insights will help in planning future initiatives. Be sure to capture lessons learned from both successes and failures. Add strategies that have proven to be effective over time.
2. Customer relationship management (CRM) data
Detailed profiles should include customer preferences, communication history, and interaction logs. These are critical for maintaining and improving client relationships.
Patterns and customer purchase behavior can also help guide sales and marketing strategies.
3. Industry-specific expertise
Here, you’ll want to focus on market trends, competitors, and regulatory compliance requirements. Relationships with suppliers should also be included.
4. Operational know-how
Your past employees have likely worked hard to fine-tune workflows. They’ve done this through experience and troubleshooting. Their knowledge of common issues using informal networks allows for quick problem-solving, which will help smooth out daily operations.
5. Compliance practices
Past audits or regulatory changes can help maintain ongoing compliance. If you’re in a regulated industry, you know the importance of getting these right.
6. Employee safety protocols
Every industry has some sort of safety protocol. Some focus on them more than others. Detailed historical knowledge will help everyone maintain high standards.
7. Cultural knowledge
To preserve your company’s culture, you need to know the practical application of your company’s values and mission. Unwritten norms, along with decision-making processes, further define your unique identity.
8. Product development insights
Knowledge of the evolution of product features, design choices, and methods for integrating customer feedback is crucial for continuous improvement. Understanding effective cross-functional collaboration methods also supports innovation in product development.
How to preserve institutional knowledge
With the understanding of how important institutional knowledge preservation is, you need a plan for how to keep it. The good news is that an enterprise LMS can serve as the foundation for this process. With one, you can ensure knowledge is efficiently captured, stored, and shared.
First, you’ll need a clear knowledge management strategy.
An LMS facilitates an organized transfer of knowledge. Employees can access the knowledge they need when they need it. Efficiency improves, and knowledge silos are reduced.
Document essential processes and develop comprehensive onboarding materials. Always be sure to keep policies up to date.
Next, you’ll want to encourage mentorship and peer learning. You can do this by establishing mentorship programs and peer-led training sessions. Be sure mentors document what they know and share their expertise. These sessions thrive when supported by an LMS.
Collaborative environments encourage a knowledge-sharing culture. They provide spaces for experienced employees to share their knowledge and insights with newer team members. This helps you foster a culture of continuous learning.
Here are a few ideas on how to cultivate this:
- Lunch-and-learn events
- Open forums
- Daily stand-up meetings
- An employee or topic spotlights
Clear communication channels will help everything come together. Reduce information silos and improve collaboration by making sure that everything is easily accessible across departments. Transparent and efficient communication pathways help information reach everyone.
The downsides of over-relying on institutional knowledge
Today’s business world is fast-paced. Burnout is real, and combatting it matters. When a few individuals are heavily relied on for their institutional knowledge, they face higher stress and risk burnout.
If burnout leads to turnover, you’ve missed the point.
To avoid this, create a way to balance the distribution of knowledge. Document what your key team members know, log it in a place that everyone can find, and share it across the organization.
Another potential downside when relying too heavily on institutional knowledge is resistance to innovation. Leaning too much on established methods can stifle creativity.
In this case, a balanced approach is the answer.
Combine established practices with new ideas to encourage knowledge sharing. The goal is to have a culture that’s open to growth and change, while remaining efficient.
FAQs
- What is the difference between tribal knowledge and institutional knowledge?
Both tribal knowledge and institutional knowledge contain valuable information collected over time. But, tribal knowledge isn’t exactly an institutional knowledge synonym. It’s common for team members to hold tribal knowledge informally, making it difficult to transfer. Institutional knowledge is documented and shared.
- What does institutional knowledge mean?
Institutional knowledge meaning is the accumulated know-how that an organization and its employees develop over time.
- How do you define institutional knowledge in the workplace?
The institutional knowledge definition refers to the knowledge base built through employees’ experiences, best practices, and processes. These all shape a company’s daily operations.
Building a resilient team through effective institutional knowledge-sharing
When used correctly, institutional knowledge is the heartbeat of a resilient organization. It’s what keeps teams running smoothly, even through times of change. But, managing this knowledge effectively isn’t just about saving on the high cost of training. It’s about creating a workplace where everyone feels empowered and highly capable.
By capturing and sharing knowledge effectively, you’re protecting your company’s future and investing in a stronger, more connected team. It’s a win-win for all.
Key takeaways
- Institutional knowledge includes both documented information and hands-on experience. Both are crucial for continuity in operations.
- The financial impact of losing institutional knowledge is considerable.
- Using a centralized system like an enterprise LMS to preserve and share institutional knowledge helps combat its loss.
- Balancing established knowledge with Innovative approaches encourages growth and keeps your organization adaptable.
