Tag Archives: Intellectual Capital

Now is the Time to Invest. . . . . . in Your Employees

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We have heard from many of our clients and prospective clients that they have significant concerns about their current employee base.  The issues that we have heard are:

  • The workforce is aging and institutional knowledge will quickly be leaving the company
  • The glut of  senior, long time resources means there is nowhere for future leaders to move
  • When the economy improves, the best and brightest will go elsewhere

Our research tells us that our clients are not unique AND like most other companies they are not quite sure what to do.   The declining economy has caused employers to cut everything from salaries and bonuses to training and development budgets. As companies are trying to figure out how to survive during these tough times, employees are being pushed to the side. Employees may be frustrated and disheartened but feel like they have nowhere to go – which is probably true. 

Smart companies are planning today for the recovery.  As retirement accounts make a comeback, potential retirees will actually begin to retire.  As they retire, years of knowledge will be following them out the door which is virtually impossible to replace.  Working with those employees NOW on Knowledge Continuity can go a long way to be prepared for their departure.  Here are a few things to think about:

  • Create paired relationships between potential retirees and a few of your potential future leaders to begin to exchange long standing institutional knowledge
  • Create incentive programs for potential retirees to share their knowledge
  • Ensure knowledge management systems and practices are in place to capture institutional knowledge
  • Create training programs for future leaders which include participation of potential retirees so that knowledge can be freely shared
  • Ensure that succession plans are in place so that as resources leave their replacements can quickly step in 

In addition, ensuring that your most critical resources are not getting lost in the shuffle is important.  Those that feel like they have been ignored may be the first to leave as new opportunities present themselves outside the company.  Let your “best and brightest” know that they are valued.  If you can’t reward them in terms of compensation then offer them other incentives such as interesting assignments, more responsibility, access to senior leaders in the company, etc.  so that they can see that someone is interested in their future.  Also, spend some time doing some career planning to chart out the future to let them know what their next move is.   These ideas can go a long way to making valued employees feel valued.

Those companies that will emerge more successful as the economy improves are those that are investing in the future – their employees.  They recognize that when business improves they are going to need to rely heavily on their people.  While things are slow, consider identifying skills gaps among your people and use focused training and on-the-job application to build / enhance skills.  Employees will see this as investment in them and you will end up with a more highly skilled workforce – one that is ready to take on the new challenges that the recovery will bring. 

As the job market opens up, many companies are going to see their talent rush out the door.  Don’t be caught off guard.  Ensure that your institutional knowledge is preserved and your “best and brightest” feel valued enough to stick around as the economy improves.  These are simple steps but can go a long way to preserving your most precious resource – your emnployees.

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Up Close and Personal?

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The March 2nd edition of The Chicago Tribune had a short article that really caught my attention.  The Supreme Court’s ruling in FCC vs. AT&T was, in a somewhat surprising outcome, unanimous agreement that corporations are not protected by a right to “personal privacy”.  While a discussion of the various reasons that may have brought conservative and liberal justices to the same conclusion would be really intriguing, I want to focus on some of the implications and risks for businesses.

First, a little more detail about the case.  AT&T was accused of overcharging schools and libraries for internet services.  The charges were investigated by the FCC and the company paid a $500,000 settlement.  Now, some of AT&T’s competitors are seeking release of the documents from that investigation under the Freedom of Information Act (FOIA).  AT&T resisted, using the argument that there is a provision in the law that allows for withholding law enforcement records if they might result in an “unwarranted invasion of personal privacy.”  Basically, the Court said that ‘personal’ does not apply to an impersonal company.

So, what are some of the implications?  First, the immediate (and presumably intended) consequence of the Court’s ruling is that the files generated by ANY investigation of your company by an agency that has police or (I assume) regulatory powers can be obtained by your competitors under FOIA.  That deserves repeating.  Get investigated, whether for criminal or other form of violation and the documentation of the case fair game and must be released if anyone, like another company, requests it under FOIA.

But, wait a minute.  The court just ruled that companies do not have personal rights!  How then does you competitor get to assert a right to information under an act that was designed to help PEOPLE obtain information from GOVERNMENT entities that might want to withhold that information?  First, your competitor may be a “person” under contract law but, according to the Court, your competitor does not have the rights of a person.  Oh, well.  I’m sure the lawyers are all over that and we’ll get another decision in, oh, say 5-7 years to clarify.  Of course, in the meantime, FCC vs. AT&T is the “law of the land” so, for the foreseeable future, you’re at risk.

Oh, and by the way, the right is retroactive.  A competitor can go get the results of investigation into your company’s alleged misdeed that was conducted in 2001, 1991, 1981, etc.  Do you say, “Hey, that was a non-issue.  The whole case was thrown out!”  Don’t count on it.  The ruling says that if a governmental agency holds the information and receives an FOIA request, they have to give it up.  Good luck trying to get ahead of that one before (or after) the spinmeisters have released the story (documented through SEC or FCC, OSHA, EEOC etc. files) as they see it.  Even your efforts to be a good citizen by self-reporting inadvertent violations could back-fire if there’s a record of the investigation.

What about the longer term issues?  What if a competitor wants to get a leg up?  How about an anonymous tip to any regulatory or police agency they can think of?  If agency opens an investigation, they can get their hands on the files.  All it takes is a little convincing that there enough smoke to go looking for a fire.  And, one has to assume that the same rules would apply to any kind of investigation.  So, the results of that audit by a regulatory agency are likely to be open as well. 

Now, I’m sure that most companies would take the high road here and we won’t see a flood of FOIA requests for information that has, in the past, been considered confidential.  But, if we look at what is going on with, for example, WikiLeaks, the potential for a huge negative impact is there.  Again, the issue was not around the requestor’s status.  It was all about whether the company that was investigated should be protected from an “unwarranted invasion of personal privacy”.  So, that disgruntled employee, extreme environmental group, unhappy consumer, or any other individual or organization can now get the goods on you and, of course, send them spinning into cyberspace. 

On final thought.  The Supreme Court reversed a lower court ruling that was based on the definition of “person” included in the FOIA.  The definition specifically includes a “partnership, association or corporation”, similar to the concept of “person” that permeates contract law.  How long a leap is it from the Court’s ruling in this case to a challenge to the broader arena in which the corporation as person is the basis for much of our entire economic system?  As if there weren’t enough drags on the economy!

Is this no big deal, something to think about, or a major sea change for businesses?  Let me know your thoughts.

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