The value of institutional knowledge is almost impossible to quantify and organizations are often totally inept at assessing the risks that come with losing it. Even if the risks are properly assessed and understood, the cost of mitigating them is immediate for a potential return on investment which is unknown.

I know from personal experience that getting an organization to mitigate these types of risks is usually an up hill battle. Even when the organization can easily afford it.

It’s easier to stick their heads in the sand and it goes way beyond just “white color” professionals. If you own a manufacturing plant, you could potentially lose a machinists annual salary, or more, in one hour of downtime. But I’ve seen at least a few large operations where the tool and die shop consists of one very overworked machinist. Management’s attitude is “oh, well we’ll just hire his replacement off the street whenever he finally decides to retire.”

The only problem with that is that the current guy has been there for 20 years, knows where ALL the bodies are buried, and has the skills to bring the plant back online with a welder and some scrap metal.

Even if the next person is really good at their job and magically shows up at the front door, it’s going to take them a while to get up to speed. That “while” costs money. In fact, it costs a lot of money. But there’s no way to reflect that on an income statement so nobody does anything about it.