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Due to the Demographic Changes confronting the industry, mining companies are experiencing the most significant Talent Shortage in their history. This challenge will remain regardless of pricing fluctuations in commodity markets. As a result, mining companies are now at risk of a decline in their productivity, their growth potential and ultimately their revenue.

This talent shortage trend, largely due to attrition and retirement, is dramatically increasing the cost for individual knowledge. As the competition for the next generation of high potentials and seasoned managers stiffens, mining companies aggressively target each other’s talent pool. In order to gain the desired return on investment in new employees and protect the existing internal talent pool, companies need to implement sustainable strategies that help retain and leverage the organization’s brain pool. A key strategy in achieving this critical objective is the implementation of a knowledge transfer program that links together seasoned, new and emerging/developmental employees.

The benefits of a structured Knowledge Transfer strategy for employees and the organization include:

Employee Benefits	Organizational Benefits
Opportunities for accelerated career pathing	Greater leadership and technical bench strength
Learning from and interaction with seasoned technical and managerial employees across hierarchies and functions	Improved employee retention
Greater job satisfaction, due to shorter learning curves	Greater leverage in attracting new talent from the competition
Increase in individual productivity	Increase in overall productivity and profitability

Without effective ways to implement and manage the transfer of existing knowledge, mining corporations will experience:

• A significant shortfall of informational, cultural and organizational value;
  Barriers to effective and efficient on-boarding of employees new to the industry (i.e., recent college graduates and young professionals);
• Lack of meaningful and targeted professional development for new as well as
  existing employees;
• Loss of critical knowledge/competencies in technical, non-technical, managerial,
  strategic, value and vision areas.

The Purpose of Knowledge Transfer

David DeLong’s book, Lost Knowledge: Confronting the Threat of an Aging Workforce (Oxford University Press, 2004), describes the risks involved when organizations do not proactively address the demographic changes within their workforce.

Knowledge loss in an organization can occur in a variety of ways. One obvious way is when a key employee leaves the organization. This issue is at the forefront of our considerations due to the large number of upper and senior management professionals within the mining industry nearing retirement age. Additionally, experienced employees are routinely being enticed and/or pirated to other companies due to the talent shortage. Thus, the presenting challenge for mining companies is threefold. The first is to recognize this fact. The second is to develop strategies to identify those individuals within the organization from whom potential knowledge loss is most imminent or critical. The third is to support and implement a plan to ensure that their knowledge is captured, retained, and appropriately transferred.

Without an overall strategy and commitment toward taking action, mining companies are facing a loss of competitive industry advantage as well as escalating recruitment and staffing costs. In their book, Deep Smarts: How to Cultivate and Transfer Enduring Business Wisdom (Harvard Business School Press, 2005), Dorothy Leonard and Walter C. Swap explain that it can take up to 10 years to develop the kind of “deep smarts” that highly experienced employees will take with them when they retire.

The immediate purpose and advantage of developing a knowledge transfer strategy and supporting processes is the retention of critical knowledge. This knowledge is often not of the type that can be standardized and easily imparted (it is not “explicit”) to the successor, but is vital to the organization. This “tacit” knowledge is difficult to articulate and often the individual is not even aware that she/he has this knowledge or aware of how important it is to the organization. Such knowledge is often only acquired through hands-on experience, trial-and-error activities, and/or real-life exposure to circumstances or events.

As outlined in the Development Initiative document from the North Carolina Office of Personnel, the immediate organizational benefits and the purpose of pursuing a Knowledge Transfer strategy include:

• A reduction in the loss of knowledge held only in employees' minds when they leave the organization or retire;
• The immediate knowledge transfer to individuals who can either use the transferred knowledge themselves or have responsibility for hiring, training, mentoring, coaching or managing people within an organizational unit;
• The creation of a “next generation” of employees, managers and leaders who possess the necessary knowledge – explicit and tacit – to accomplish the organization’s goals.
  

If pursued in an integrated and systematic fashion, the transfer of key information will not only serve those who immediately replace the exiting employee, but also serve subsequent candidates and the entire organization as well.

In addition to the above, other systemic improvements of a knowledge transfer initiative may include:

• Reusable documentation of the knowledge and skills required in positions or job roles;
• Greater understanding of and appreciation for the organization’s values, history and culture;
• Integrated staffing, training, job and organization redesign, and process improvements;
• Enhanced career development;
• Improved succession planning processes;
• Lower employee turnover and reduced recruitment and staffing costs, particularly among experienced new hires.

The need to transfer knowledge within the organization, over time, may ultimately create a culture of continuous learning. Retirees and other exiting employees should be encouraged and rewarded for sharing their knowledge with those who will replace them. They should partner, mentor and apprentice with their successors to ensure a seamless transition of roles. As this model potentially breaks down information barriers, it may erode the obstacles to transferring knowledge between formal and informal organizational silos. In a similar fashion, employees who may not share reporting relationships or departmental affiliations should be encouraged to transfer knowledge between themselves. This helps to ensure that information is available to the people who need it and is both understandable and usable. The organization becomes what Nancy Lockwood describes as a “knowledge friendly culture” (Organizational Learning, SHRM Research, December 2005).

Is your Organization ready for Knowledge Transfer? In order to make knowledge transfer successful, the following aspects of an organization should be evaluated by the organization’s leadership:
Vision	Does your organization and leadership have a clear vision of what you want to accomplish by implementing a knowledge transfer program?
Leadership	Are the leaders in your organization committed to supporting and driving knowledge transfer within your organization?
Resource Commitment	Is your organization willing to allocate the resources (money, loss of short term revenue, organizational focus, etc.) necessary to ensure success?
Individual Versatility	Are the knowledge transfer participants versatile enough to adapt to the requirements necessary to make this kind of change?
The purpose of knowledge transfer is to transform the capability of an organization to create, share, apply and value knowledge, in order to improve personal and organizational business performance.

Visual Aid 1: The Purpose of Knowledge Transfer

Does Your Organization Value the Transfer of Knowledge?

How companies “value” knowledge is an integral part of an organization’s culture. An organizational needs assessment is critical in determining how effectively information is utilized and transferred within in the company. This evaluation should asses:

• What Leadership Initiatives are in place that hinder or facilitate knowledge transfer?
  It is necessary to determine how compelling the vision and communication plan are to employees, how strongly both are linked to real business needs, strategies and work processes;
  
  
• What Process Initiatives are in place that hinder or facilitate knowledge transfer?
  It is necessary to determine the effectiveness and efficiency of the standard business processes for authoring, archiving and accessing information. This includes the identification of the existing “knowledge-sharing” systems and processes;
  
  
• What Technology Initiatives are in place that hinder or facilitate knowledge transfer?
  It is necessary to explore the methods used for storing, accessing, navigating and searching for specific data, and the “user-friendliness” of these methods;
  
  
• What People Initiatives are in place that either hinder or facilitate knowledge transfer?
  It is necessary to have adequate employee buy-in to the business and leadership communication issues and to align employees on how knowledge is shared and how “right” behaviors are recognized, encouraged and rewarded. Any organizational knowledge transfer design should be supported by training, coaching and mentoring programs.

Visual Aid 2: Scope of an Organizational Needs Assessment for Knowledge Transfer

Once the needs assessment is completed and reviewed, it is important to develop an integrated plan that clearly identifies what improvements to current systems/processes/ programs are needed. Then, it is essential to identify how performance management, training, coaching and mentorship programs will support the interpersonal transfer of knowledge.

The responsibilities of the employees involved in a knowledge transfer process are significantly different. Therefore, it is crucial to provide coaches and mentors with the tools and skills necessary to build strong interpersonal relationships between the exiting and the emerging/developmental employees.

Summary

The ability of an organization to implement knowledge transfer is fast becoming a key qualifier for candidates seeking out potential employers. Transforming a company’s culture to embrace continuous learning and on-going exchange of knowledge is a core element of a successful talent acquisition and retention strategy. This enables mining companies to maximize their productivity and profitability. The speed at which mining companies adjust to the current talent challenges will successfully differentiate them from those who do not – they will continue to be drained for talent by the competition.

Kevin Schmidt, Dr. Knute Sorenson, Croft Edwards and Patrick Reilly are Senior Consultants with MRC’s Business Consulting Group. Lindsey Schultz is the Corporate VP of the MRC Group of Companies.

Links and References

Deep Smarts: How to Cultivate and Transfer Enduring Business Wisdom
Demographic Changes
Harvard Business School Press
Knowledge Transfer
Lost Knowledge: Confronting the Threat of an Aging Workforce
North Carolina Office of Personnel
Oxford University Press
Recruitment and Retention Challenges in the Mining Industry
SHRM Research
Talent Shortage in the Mining Industry