Statistics for Making the Case

  • The typical productivity cost of an employee leaving is 85% of their base salary due to their replacement's mistakes, lost knowledge and lost skills ( Beazley et al, 2002). (Yelden, 2004)

  • Related to this is the concept of knowledge half-life, from which it is found that knowledge reaches obsolescence, on average, in 500 days, but can be much quicker in some areas.  This lost knowledge obviously has a cost.  It has been estimated that $115 billion sits idle in lost knowledge affiliated with production technologies. An astounding example of this is the loss of the original computer source code, written in the 1950's, that spawned the Y2K software crisis, has cost businesses worldwide an estimated $1 trillion (Petch, 1998)." (Yelden, 2004)

  • Most tacit knowledge is an invisible line item in corporate budgets. However, it is tacit knowledge that plays a key role in leveraging the overall quality of knowledge (Wah, 1999) 

  • Companies like IBM and Xerox Corporation transform databases and information into useable formats that are readily shared and accessed. These databases are also used to create new knowledge. To illustrate, IBM consultants who used knowledge sharing cut proposal-writing time from an average of 200 hours to 30 hours (http://www.uky.edu/~gmswan3/575/KM_roles.pdf )

  • Research estimates indicate that hiring and training a replacement worker for a lost employee costs approximately 50% of the worker's annual salary (Johnson et al. 2000) - but the costs do not stop there. Each time an employee leaves the firm, we presume that productivity drops due to the learning curve involved in understanding the job and the organization. Furthermore, the loss of intellectual capital adds to this cost, since firms not only lose the human capital and relational capital of the departing employee, but competitors are also potentially gaining these assets.  (cite: Voluntary Turnover: Knowledge Management Friend or Foe Meaghan Stovel, Dr. Nick Bontis with link to  https://www.emerald.com:443/doi/full/10.1108/14691930210435633