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The knowledge crunch: Communication is key


Communicate with your staffIs there a need, now more than ever, to communicate with your staff? As unemployment soars and the credit crunch bites, Kevin Condon warns of an impending ‘knowledge crunch’.

We are all aware that it’s gloomy out there at the moment; business is tough, so I hate to jump onto the band-wagon and be the harbinger of another ‘crunch’ – the ‘knowledge crunch’. I define the knowledge crunch as the threat which commerce faces through the loss of its intellectual capital, its knowledge.

Second only to cashflow, knowledge is of immense value; at a fundamental level it’s what differentiates one business from another. More often than not, the larger part of this knowledge is stored in that most sophisticated of computerised jellies; the brains of the employees.

So why am I predicting a knowledge crunch and why should you take action to avoid it?

Well, all the ingredients to cook a ‘knowledge crunch’ are currently in abundant supply:

  • You need a population of influential baby boomers who are close to retirement, a breeding explosion, which took place in the late 1950s and early 1960s

  • You then need to add mass redundancies to the recipe

  • Then sprinkle on some job insecurity

  • Finally, add in early retirement options and hey presto, you’ve got a flow of vital knowledge and experience haemorrhaging from the business.

Barring any unforeseen medical breakthroughs that allow us to miraculously halt or reverse the aging process, the baby boomer generation is set to retire over the next five to 10 years.

You may recall the war for talent, whereby the government challenged firms to fill the baby boomers’ high-ranking jobs when they started retiring in the late 1990s. Some larger corporations may have put succession planning strategies in place, but baby boomers are a defiant and powerful breed and when they retire from their offices for the last time, I can assure you they will be carrying a treasure trove of experience, expertise and relationships that will not have been passed on.

The effect of this knowledge crunch is set to hit, just as the UK recovers from the credit crunch. But things could get worse, as firms implement their restructuring strategies to prepare for the downturn and heads continue to roll, many of the baby boomers will flee to the fairways, five years early than they anticipated. This could leave a gaping knowledge gap which exposes businesses to a distinct competitive disadvantage.

“During these uncertain times it is vital that businesses retain their best employees and their knowledge”

Businesses should be implementing a structured strategy for knowledge transfer and succession planning. Organisations must not only retain the knowledge held by the aging babyboomers, but ensure that the new generation of workers benefit from the old-timers experience and their skills are passed down.

The further risk that I have witnessed during these troubled and turbulent times is that employers are placing so much emphasis on streamlining their businesses, making cost savings and managing cashflow, and what that they are forgetting about is the importance of their employee’s welfare.

Right now the majority of employees don’t feel great. Many workers feel insecure about their future, on top of this their prime assets (their houses) are not worth what they were a year ago and they couldn’t sell them if they needed to.

It’s a sad statistic that stress-related illness is becoming ever more common amongst UK workers, with an estimated 442,000 workers expressing that they were experiencing work-related stress at a level that was making them ill (Labour Force Survey 2008). As fears regarding job security escalate, the potential health impacts will be wide ranging; this in turn will affect workplace performance and sickness absence rates.

During these uncertain times it is vital that businesses retain their best employees and their knowledge. Any employee that feels threatened and insecure will test the market and potentially seek employment elsewhere. They may even seek assurances with competing firms, further compounding the risk of a knowledge crunch.


The first thing that any business owner should do is communicate, communicate and communicate again – don’t be afraid of telling the staff that we are in difficult times, the staff will know this already but it will give them reassurance that the business owner is concerned for the wellbeing of the staff. If they feel that the work force does not trust them, then bring in a third party professional source, to explain all the good and bad things that are happening. You will be surprised at how good a picture can be painted, explain to the staff the full range of benefits, starting at the basics from car parking facilities on site (saving them money), free coffee, tea making facilities, right through to the bigger benefits such as the pension scheme. Once again you will be surprised how many of the staff do not appreciate or even realise they have such benefits; it costs nothing to communicate this.

Having a healthy, productive workforce is essential to business performance, particularly during these hard economic times. Good businesses need to become ’employers of choice’ more now than ever. To remain competitive in a down-turn employees must be at their best, they must be delivering full value and working a peak performance.

The key to achieving this is to understand that workers are an asset to be enhanced and in which to invest. Businesses that take notice of their responsibility to look after the health and welfare of their staff will not only reap the benefits of a happier workforce but enhance on their business capital.

One of the main ways to achieve a happier and healthier workforce is to ensure that employees understand the real value of their benefits. Now more than ever it is imperative that businesses review their Employee Benefits Schemes to ensure that they are delivering a maximum return on investment.

“One of the main ways to achieve a happier and healthier workforce is to ensure that employees understand the real value of their benefits”

As with all investments employers are currently looking to reduce expenditure. To reduce the cost of their Employee Benefit schemes business owners should talk to their staff and organise a staff survey; you will be surprised how many staff do not value the pension scheme but would rather purchase extra holiday entitlement. They are probable doing this already by taking extra sick days, sick days costs all businesses an average of £700 per person per annum; multiply that by the workforce number and it is costing business owners a fortune! Businesses should offer the flexibility of purchasing holidays to not only reduce sick days, but also reduce the salary and national insurance contributions their employees make.

To ensure that businesses are getting maximum return on investment, business owners need to communicate with the workforce and ask them what they would value as a true benefit and then deliver that benefit. By benchmarking what they have now with what the workforce would like and appreciate, it can be surprising at how costs can be reduced; but as importantly businesses will be able to deliver the right benefits at the right cost for valued staff allowing businesses to become ‘Employer of Choice’ .

A business’s workforce represents 70% of the operating expenses of a company. Companies are right to be nervous right now; they are aware that they could lose their best people. Now more than ever, it is vital that employers take steps to reduce the impact of the ‘knowledge crunch’ and review their employee benefit schemes to ensure that they are employers of choice.

By following some relatively simple steps such as safeguarding knowledge and benchmarking their employee benefits schemes, businesses can keep ahead of their competition and avoid getting crunched.

Kevin Condon is managing director of 3D Employee Benefits

Got any employee benefit questions?
Have you got any burning employee benefits issues that need to be addressed in your organisation? Stressed about share schemes or confused about childcare? If so, all you have to do is post your query or question below, by clicking on ‘add comments to this article’, and Kevin Condon will try to help. Kevin has had 20 years’ experience in senior positions within the field of employee benefits and he is waiting to answer your questions! We will then publish a selection of them in the coming months.

One Response

  1. Every crunch has a silver lining
    Well done Kevin for highlighting this issue, but I would suggest that the knowledge crunch has been on the cards for a long time. In fact the current economic climate may help defer it by causing greater numbers of older workers to defer (early) retirement and stay in the workforce for longer than they had planned. A silver lining indeed!

    As you point out, employers have known about the forthcoming babyboom retirement implications for some time, but it would seem that many have chosen not to take action.We can only hope that the severity of the current economic situation will help employers to take a fresh view of their human capital and include older employees in their review of talent.

    Although many babyboomers will still have good pension prospects, others will not. Many may find themselves affected by the redundanices of children or partners, even if they themselves retain their jobs. And that’s not taking into account the downturn in the housing market in a climate where many have been anticipating property value to replace pensions shortfall.

    If ever there was a sign for employers to start amending their policies and practices towards older workers this recession and the knowledge crunch has got to be it. Let’s hope that in a few years time we can look back and see a change in employer attitudes as one of the positives that emerged from the current bleak situation.

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