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Firms ignore the ‘knowledge is power’ mantra in the recession

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30th Jun 2009
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With many businesses under immense economic pressure to increase efficiency and cut costs, some are neglecting employee training and knowledge development, but this could be a costly mistake says Mary Clarke, CEO of Cognisco.

A study published in April 2009* revealed that many of the world’s top economies have decreased their investment in knowledge development. The study revealed that while US and UK companies scale back funding for employee training and development, firms in emerging markets such as Asia are doing the opposite – a move which could put them in a viable position to surpass industrialised countries when the global economy recovers.

Companies everywhere should take note of this, whether they are part of a well established industrialised nation or are new to the global market, and continue to target staff investment where it delivers the best return now and in the future.

Employee assessment
One effective solution is to implement customised knowledge training and development programmes. These programmes are usually centred on regularly administered employee assessments, which are designed to measure knowledge and competence, in conjunction with confidence. The additional measurement of confidence is critical because it provides a more complete view of the employee. If employees lack complete confidence in a certain job area, they are less likely to perform to their highest potential. Conversely, if they have total confidence in incorrect knowledge, they are more likely to pose a risk to the organisation.

Such assessments give managers complete visibility of the skills, knowledge levels and competence of their entire workforce, often for the first time, enabling them to make informed and accurate decisions on how best to use them.

Delivering regular customised employee assessments can also help companies tackle employee misunderstanding which can be incredibly costly not only in terms of time and money, but also customer relations and business reputation. A recent report from industry analysts IDC** revealed that one in four employees do not understand certain aspects of their job role and major knowledge gaps remain unaddressed in many organisations.

A misunderstanding can range from misinterpreting a policy, process or job function, to a combination of all three. These kinds of misunderstandings are inevitable, but they can also be incredibly expensive - the report estimates that UK and US businesses lose £18.7bn a year as a result of employee misunderstandings.

Identify knowledge holders
Assessment programmes also help identify ‘knowledge custodians’, the ‘go-to’ people that have mastered the ins and outs of the business and are a consistent and reliable knowledge resource for other employees. The discovery of these knowledgeable employees is vital for employers, especially when companies are faced with difficult lay-off decisions, as this critical information provides additional selection criteria when determining which employees have the most knowledge about the business and should be retained. Vital industry knowledge, experience and understanding can then be transferred to new employees when the company starts hiring again.

Whilst the economic downturn continues, employee assessments can be used to identify those employees with transferable skills. Managers can use the information provided by assessments to redistribute individuals into other job roles confident in the knowledge that they provide the ‘best fit’ for the new positions. They also provide valuable insight for employers to administer other forms of intervention, such as redeployment, coaching, mentoring, and training for certain employees. With today’s rocky economic climate, it’s critical for executives to have a clear view of their workforce so they know how best to utilise their staff.

Similarly, such assessments offer insight for employees and are something staff members should be requesting of their employer so that they can be assured that they are up-to-date on company policies and industry standards. They also help employees know that they are doing their job accurately and reaching their full potential - something everyone would like to be assured of during such unstable times.

Rather than put employee development and training on hold in a recession, investing in knowledge now will deliver a competitive advantage in the long term. Delivering regular employee assessments provides managers with critical insight into their employee base, enabling them to make intelligent and accurate decisions about how to best use their staff to maximise business performance. What’s more, they highlight the company’s vulnerabilities so they can be addressed immediately.

www.cognisco.com

* ‘Knowledge - The New Commodity’, by Paul Mirzen, economics professor at the University of Nottingham and fellow at the Centre for Growth and Business Cycle Research, University of Manchester.
http://cognisco.com/files/oldaweb-downloads/Knowledge-TheNewCommodityRep...
** ‘Counting the Cost of Employee Misunderstanding', IDC, 2008.

 

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Mark Lee headshot 2023
By Mark Lee
01st Jul 2009 15:04

I keep hearing how firms of accountants have been cutting back o
Seems almost counter-intuitive given the importance of well trained staff who are of course a firm's only real asset.
Still, it's a consistent but sad story.

Mark Lee
Tax Advice Network

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