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Corporate amnesia is a phrase used to describe a situation in which businesses, and other types of co-operative organization, lose their memory of how to do things. The condition is held, by some people, to be analogous to individual amnesia.
The causes are various. Employees have an inherent short and selective memory recall alongside a defensiveness that screens out unwelcome events with which they and their employer are involved. [1] Flanking this are the effects of the single biggest change in workplace practice for at least a century - the actively encouraged flexible labor market. In many countries, employee turnover - the rate at which old employees leave and new ones arrive - is now above the recognised annual danger level of 10% [2] in many industry sectors where productivity starts to be affected.
What happens, is that the knowledge and experience known as organizational memory (OM) - the unrecorded event-specific, organization-specific and time-specific ‘how’ of know-how that characterizes any organization's ability to perform - walks out of the front door on a regular basis. Jobs change was initially related to downsizing but it is now a general feature of the labor market, where, on average, annual employee churn exceeds 20% in many countries and up 60% in some industries.
Firstly, the organization has to continually re-learn its tried-and-tested practice. Induction periods of up to 12 months are typical – and expensive, with direct costs variously calculated at 46% of annual pay for a front-line employee to 240% for a middle manager. [3]
Secondly, the body of evidence that would otherwise be available for better decision-making is reduced, a situation that affects the ability of organizations to learn efficiently from their own experiences. By encouraging high levels of job churn, organizations have consciously chosen to operate in isolation to their own hard-won and expensively acquired experience, depending on others’ unrelated experiences. This is even more expensive than having to re-learn, with experiential non-learning estimated by an international management consultant to cost up to 9.7% of gross domestic product in many developed countries. [4]
Also known as institutional forgetting, corporate amnesia is among the biggest constraints to decision making excellence and a massive contributor to productivity shortfalls.
Both corporate amnesia and organizational memory are part of the new vocabulary associated with the broader discipline known as Knowledge Management (KM) under the even wider umbrella of the Information Age. In its conception, organisational memory (OM) consists of the institution's documentation, objects and artifacts, that are stored in the corporate library/electronic database, and which can be applied alongside resident employees who are intimate with institution-specific events and experiences. The physical evidence is known as explicit knowledge while the more cerebral is called tacit knowledge. They are integral for efficient decision-making and experiential learning to build on success, and escape the pandemic of repeated mistakes, re-invented wheels, and other unlearned lessons that litter modern industry.
Because of the high levels of jobs churn in the modern workplace, however, much of the mind-resident tacit knowledge is now non-existent within organizations, with employers believing that the imported tacit knowledge from employees hired from other institutions is an adequate stand-in that can be replaced by osmosis.
Tacit knowledge, sometimes called cognitive knowledge or coping skills, is a category of knowledge first identified by the Michael Polanyi in 1958, [5] described as the non-technical "how" of getting things done, what Edward de Bono calls "operacy" or the skill of action, and what Peter Drucker identifies in the use of the word techne (Greek for "skill"). Much of it is implicit and ambiguous, and is acquired largely by experience that is functional as well as context- and institution-specific.
The collective awareness of such knowledge and forms of practice provides the type of expertise that is both an organisation's adhesive and its lubricant - i.e. it relates to all the routines and processes (formal or otherwise) that make an organization tick. Its value represents the capability of the firm and is perhaps the main ingredient of its resilience. In broad-brush terms, it includes the individual's understanding and accommodation of their employer's individual corporate culture, habits, management, communications and decision-making style, the contacts and relationships between employees or teams of employees, the detail of job-related events and the knowledge of tried and tested usage as it applies to the organization's own market circumstances and special environment (so-called episodic memory). The qualitative application of organisational memory is closely allied to memory, which is most commonly described as knowledge retention or the difference between having acquired knowledge and having to re-acquire it. It is what is not forgotten; the reconstruction of experienced events.
For practical purposes, organizational memory (OM) can be broken down into three distinct time frames. Short-term OM lasts up to about five years; medium-term OM occupies a time frame of up to around ten years, with periods in excess of this constituting long-term OM. Typically existing only in the minds of individuals, it is normally very difficult to share and to capture. Because of its contemporary and contiguous nature, short- and medium-term OM is generally more relevant to operational issues facing the organization, whilst long-term OM is more conformant with strategy and culture.
The phenomenon of corporate amnesia was first identified by the British knowledge management specialist Arnold Kransdorff in his 1998 book of the same name. [6] By then the flexible labor market had been in tow for more than two decades. Employees in many developed countries, who could previously be expected to have had one or two jobs in their working lifetimes, were now employer-hopping every four or five years in a workplace where redundancy was – and still is - commonplace.
Knowledge loss is not entirely ignored in industry and commerce. In an attempt to capture and use its departing know-how, some organizations depend on intranets, electronic bulletin boards, theatrical improvisations, social networks and mentoring, but these channels all suffer from the effects of individuals’ memory loss, their defensiveness about failures, short jobs tenure and – above all – an inability to apply employee-specific precedent to better decision-making. To date the management of organizational memory is an unformalized discipline, not least because of the widespread lack of understanding of tacit knowledge, the prevalent belief that experiential learning is all about learning from others’ experience – what is called benchmarking - and the informal and theoretical ways managers are taught how to benefit from hindsight.
The latest capture tools to get attention [7] are the traditional corporate history, usually seen as a public relations medium, and oral debriefing, an augmentation of the old-fashioned prescriptive and formulaic exit interview. The former is being produced as an induction/educational tool that transmits long-term memory while the latter, which concentrates on short- and medium-term memory, targets exiting and key occupant employees, recurring corporate events and important projects in detailed testimony of participants. Both are designed to extract tacit knowledge in an easily accessible format that also generates the ‘lessons of history’. Its permanent character also means that it does not have to be continually reproduced and that its necessary re-interpretation alongside changing circumstances is predicated on a more reliable evidential base.
In the world of evidential gathering where rigorous substantiation is a pre-requisite for experiential learning, the oral route is seen as more valuable than anything extracted from internally produced written sources. The reason its developers give is that individuals are generally better speakers than they are writers. Also, their spoken word is invariably a more efficient way of conveying the abstract and complex nature of ‘humanware’ elements like the nuances of corporate culture, management style and the often-obscure issues surrounding decision-making within groups. To further formalize what up to now has been a largely theoretical teaching process, the capture methodologies have also been applied directly to decision-making through an adaptation to the modern workplace of the experiential learning models developed by academic David Kolb and others’. [8]
Corporate amnesia can be a result of sabotage by a disgruntled employee. If an employee is sacked, or is aggrieved for some other reason, he/she may seek revenge by deleting files from the company's computer. This risk can be minimised by effective backup procedures.
Organizational learning is the process of creating, retaining, and transferring knowledge within an organization. An organization improves over time as it gains experience. From this experience, it is able to create knowledge. This knowledge is broad, covering any topic that could better an organization. Examples may include ways to increase production efficiency or to develop beneficial investor relations. Knowledge is created at four different units: individual, group, organizational, and inter organizational.
Historically there have been differences among investigators regarding the definition of organizational culture. Edgar Schein, a leading researcher in this field, defined "organizational culture" as comprising a number of features, including a shared "pattern of basic assumptions" which group members have acquired over time as they learn to successfully cope with internal and external organizationally relevant problems. Elliott Jaques first introduced the concept of culture in the organizational context in his 1951 book The Changing Culture of a Factory. The book was a published report of "a case study of developments in the social life of one industrial community between April, 1948 and November 1950". The "case" involved a publicly-held British company engaged principally in the manufacture, sale, and servicing of metal bearings. The study concerned itself with the description, analysis, and development of corporate group behaviours.
Knowledge transfer is the sharing or disseminating of knowledge and the providing of inputs to problem solving. In organizational theory, knowledge transfer is the practical problem of transferring knowledge from one part of the organization to another. Like knowledge management, knowledge transfer seeks to organize, create, capture or distribute knowledge and ensure its availability for future users. It is considered to be more than just a communication problem. If it were merely that, then a memorandum, an e-mail or a meeting would accomplish the knowledge transfer. Knowledge transfer is more complex because:
Work design is an area of research and practice within industrial and organizational psychology, and is concerned with the "content and organization of one's work tasks, activities, relationships, and responsibilities" (p. 662). Research has demonstrated that work design has important implications for individual employees, teams, organisations, and society.
Job rotation is a technique used by some employers to rotate their employees' assigned jobs throughout their employment. Employers practice this technique for a number of reasons. It was designed to promote flexibility of employees and to keep employees interested into staying with the company/organization which employs them. There is also research that shows how job rotations help relieve the stress of employees who work in a job that requires manual labor.
Cooperative education is a structured method of combining classroom-based education with practical work experience.
A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees for business reasons, such as personnel management or downsizing an organization. Originally, layoff referred exclusively to a temporary interruption in work, or employment but this has evolved to a permanent elimination of a position in both British and US English, requiring the addition of "temporary" to specify the original meaning of the word. A layoff is not to be confused with wrongful termination. Laid off workers or displaced workers are workers who have lost or left their jobs because their employer has closed or moved, there was insufficient work for them to do, or their position or shift was abolished. Downsizing in a company is defined to involve the reduction of employees in a workforce. Downsizing in companies became a popular practice in the 1980s and early 1990s as it was seen as a way to deliver better shareholder value as it helps to reduce the costs of employers. Research on downsizing in the US, UK, and Japan suggests that downsizing is being regarded by management as one of the preferred routes to help declining organizations, cutting unnecessary costs, and improve organizational performance. Usually a layoff occurs as a cost-cutting measure. A study of 391 downsizing announcements of the S&P 100 firms for the period 1990-2006 found, that layoff announcements resulted in substantial increase in the companies’ stock prices, and that the gain was larger, when the company had prior layoffs. The authors suggested, that the stock price manipulation alone creates a sufficient motivation for publicly-traded corporations to adopt the practice of regular layoffs.
Experiential learning (ExL) is the process of learning through experience, and is more narrowly defined as "learning through reflection on doing". Hands-on learning can be a form of experiential learning, but does not necessarily involve students reflecting on their product. Experiential learning is distinct from rote or didactic learning, in which the learner plays a comparatively passive role. It is related to, but not synonymous with, other forms of active learning such as action learning, adventure learning, free-choice learning, cooperative learning, service-learning, and situated learning.
Recruitment is the overall process of identifying, sourcing, screening, shortlisting, and interviewing candidates for jobs within an organization. Recruitment also is the process involved in choosing people for unpaid roles. Managers, human resource generalists, and recruitment specialists may be tasked with carrying out recruitment, but in some cases, public-sector employment, commercial recruitment agencies, or specialist search consultancies are used to undertake parts of the process. Internet-based recruitment is now widespread, including the use of artificial intelligence (AI).
Career management is the combination of structured planning and the active management choice of one's own professional career. Career Management is an umbrella term that covers Career Planning & Career Development on an individual level or at an organizational level. Career management also covers talent management, as part of a talent retention strategy. Career management was first defined in a social work doctoral thesis by Mary Valentich as the implementation of a career strategy through the application of career tactics in relation to chosen career orientation. Career orientation referred to the overall design or pattern of one's career, shaped by particular goals and interests and identifiable by particular positions that embody these goals and interests. Career strategy pertains to the individual's general approach to the realization of career goals, and to the specificity of the goals themselves. Two general strategy approaches are adaptive and planned. Career tactics are actions to maintain oneself in a satisfactory employment situation. Tactics may be more or less assertive, with assertiveness in the work situation referring to actions taken to advance one's career interests or to exercise one's legitimate rights while respecting the rights of others.
Participatory management is the practice of empowering members of a group, such as employees of a company or citizens of a community, to participate in organizational decision making. It is used as an alternative to traditional vertical management structures, which has shown to be less effective as participants are growing less interested in their leader's expectations due to a lack of recognition of the participant's effort or opinion.
Business simulation or corporate simulation is simulation used for business training, education or analysis. It can be scenario-based or numeric-based.
In human resources, turnover is the act of replacing an employee with a new employee. Partings between organizations and employees may consist of termination, retirement, death, interagency transfers, and resignations. An organization’s turnover is measured as a percentage rate, which is referred to as its turnover rate. Turnover rate is the percentage of employees in a workforce that leave during a certain period of time. Organizations and industries as a whole measure their turnover rate during a fiscal or calendar year.
On-the-job training is an important topic of human resource management. It helps develop the career of the individual and the prosperous growth of the organization. On the job training is a form of training provided at the workplace. During the training, employees are familiarized with the working environment they will become part of. Employees also get a hands-on experience using machinery, equipment, tools, materials, etc. Part of on-the-job training is to face the challenges that occur during the performance of the job. An experienced employee or a manager are executing the role of the mentor who through written, or verbal instructions and demonstrations are passing on his/her knowledge and company-specific skills to the new employee. Executing the training on at the job location, rather than the classroom, creates a stress-free environment for the employees. On-the-job training is the most popular method of training not only in the United States but in most of the developed countries, such as the United Kingdom, Canada, Australia, etc. Its effectiveness is based on the use of existing workplace tools, machines, documents and equipment, and the knowledge of specialists who are working in this field. On-the-job training is easy to arrange and manage and it simplifies the process of adapting to the new workplace. On-the-job training is highly used for practical tasks. It is inexpensive, and it doesn't require special equipment that is normally used for a specific job. Upon satisfaction of completion of the training, the employer is expected to retain participants as regular employees.
Oral debriefing is the interview process of obtaining detailed verbal testimony from individuals. Analogous to interviews that are undertaken in journalism and sociology, its outcome in a comprehensive form is also known as ‘oral history’. Its application is additionally evident in disciplines ranging from psychotherapy, witness interrogation in crime investigations and in industry and commerce, both in oral and visual formats.
Organizational memory (OM), sometimes called institutional memory or corporate memory, is the accumulated body of data, information, and knowledge created in the course of an organization's existence. The concept of organizational memory includes the ideas of components knowledge acquisition, knowledge processing or maintenance, and knowledge usage like search and retrieval. Falling under the wider disciplinary umbrella of knowledge management, it has two repositories: an organization's archives, including its electronic data bases; and individuals' memories.
A workplace is a location where someone works, for their employer or themselves, a place of employment. Such a place can range from a home office to a large office building or factory. For industrialized societies, the workplace is one of the most important social spaces other than the home, constituting "a central concept for several entities: the worker and [their] family, the employing organization, the customers of the organization, and the society as a whole". The development of new communication technologies has led to the development of the virtual workplace and remote work.
Arnold Kransdorff is a British author, business historian and publisher who was the first to identify and directly address the phenomenon of corporate amnesia in the early 1980s, soon after the flexible labour market started to make a significant impact on job tenure and related productivity growth. He specialises in the Knowledge Management (KM) discipline of knowledge transfer of Organisational Memory (OM) to successive generations of replacements.
Corporate architecture refers to the use of architectural design to construct physical spaces that can promote the corporate image of a corporation. During the 20th century corporate architecture was able to transition from designs with mainly function in mind to more creative endeavours, which are able to be an architectural expression of the firm’s institutional identity and play a role in stakeholders’ image of the organisation.
Corporate DNA refers, in business jargon, to organizational culture. It is a metaphor based on the biological term DNA, the molecule that encodes the genetic instructions in living organisms.