CHAPTER 1
Introduction
KNOWLEDGE IS A critical ingredient people apply daily in their transactions whether in an organization or the society. When it is transferred, it provides a means of maintaining values and legacies in the society whether in families, governments, monarchies, organization or the society in general. Specifically, in an organization, knowledge determines the competitive advantage of the organization, which makes its transfer a critical success factor if the organization intends to survive in a dynamic market condition. It also provides the means to structure the resources of an organization. This suggests that if an organization does not have a means to transfer its core competence from the knowledgeable employees to others, more especially from a departing leader to an incoming leader, the tendencies for the organization to lose its comparative advantage or longevity will be likely. In concurrence, Rothwell (2010a) noted that an organization that is without an efficacious scheme for knowledge transfer amongst its employees stands the risk of liquidation and extinction when sudden disaster affects its human resources. Obviously, understanding the factors that influence knowledge transfer amongst the members of an organization would also enhance the organizational competitive advantage and its business longevity. Put differently, knowledge retention is indeed crucial to an organization as it is to the society, more especially, during a leadership succession process, where a predecessor is required to pass his or her legacies to a successor. In situations where legacies are not passed on from one leader to another, the organization stands the risk of losing its core competences and that may lead to loss of the organizational memory. Correspondingly, in our contemporary society when parents do not pass on their core values and legacies to the succeeding generation, it leads to generational memory loss. Generally, when these legacies are not passed on, it becomes a memory loss to the organization or the society because the legacies reside in the heads of the people whether in an organization or the society. From the reasoning above, it is evident that when employees leave an organization without transferring part of their core competence, the organizational memory becomes less of its original state since the organizational memory is the total sum of all the memories of the employee in the organization. Similarly, in the society, where parents do not pass their legacies or life experiences to their children, this causes a generational memory loss because the children would not leverage on their parents' legacies. In other words, without legacies transfer, it becomes challenging for an entity to have longevity while remaining relevant in the society.
Knowledge Transfer Practices and the Dynamics of the Environment
The transfer of skills and experiences (tacit knowledge) from one organizational leader (predecessor) to another (successor) is not only challenging to both the predecessor and the successor, but also for those planning the knowledge transfer initiatives. The phrase "from one leader to another" suggests that the skills and experiences are neither a documented knowledge nor a knowledge that may be transferred through training by an external source or any other person within the organization. As if the challenge of transferring knowledge from one leader to another is not enough, the factors in the business environment are also volatile, for example, to enhance the flow of knowledge from one leader to another during leadership succession, during training for researchers and practitioners, performance review, creation of talent pool, job rotation, and so on, as an effective means of supporting the organizational memory (Brull, 2007: Kleinsorge, 2010; Thakkar, 2012). Nevertheless, these leadership succession practices are rather succession processes and do not enhance effective knowledge transfer from a departing leader to an incoming leader during leadership succession. It is even more obvious, when the knowledge transfer involves the transfer of skills and experiences from a departing leader to the incoming leader. In fact, the design of these protocols does not consider the knowledge (skills and experiences) of the predecessor as key to what is to be transferred to the successor. The continued application of these ineffective knowledge transfer protocol in leadership succession is associated with colossal loss of organizational memory. This is evident in the suggestion of Lamourex, Campbell, and Smith (2009) that executives take away 80% of the knowledge they have acquired in the organization. What do these statistics suggest? It means that despite the thousands of dollars spent on developing employees, organizational leaders have not been able to device a scheme to motivate the employees to share their skills and experiences with other employees while they are still in the organization. Furthermore, the statistics also suggest that because of the ineffectiveness of the knowledge transfer schemes, organizational leaders, at the point of exit will most likely transfer only 20% of the expertise to their successors while the predecessors exit the organization with 80% of expertise acquired while in the organization. What a colossal loss to the organization! This proposes that most of the leadership succession practices do not necessarily yield the required knowledge retention. Rather, it is often about replacing one leader with another leader and not necessarily replacing the talent. In concurrence, Dean and Carol (2006) observed that many organizations that have adopted leadership succession practices still suffer from poor leadership because they lack an effective knowledge transfer process for the succession. To quantize the magnitude of the leadership deficiency, Cheese, Thomas, and Craig (2008) observed that the 24% to 74% leadership deficiency in organizations is due to the lack of effective knowledge transfer between the predecessor and successor. The above statistic is consistent with the observation that, the literature on succession planning focuses on the succession process, rather than how to transfer skills and experiences from predecessor to successor.
Since these knowledge transfer initiative in leadership succession are not effective, it cannot hedge the effect caused by the volatility in the business environment, thereby causing continuous organizational memory drain each time an employee, especially a leader departs. Eaton (2010) explained that the changes in the business environment have consistently increased the difficulty of retaining leadership talent in an organization. For example, in recent years, the volatility of the business environment such as rapid technological change, globalization, aging of the workforce, workforce mobility, and increased competition have further increased the difficulty of retaining leadership talent in several ways. First, uncertainty in the business environment such as globalization and competition has increased the leadership deficit in organizations. According to Mbekeani (2007), globalization has encouraged workforce mobility by removing the barrier to mobility; consequently, it has increased the attrition rate in most organizations. For instance, globalization has opened up new frontiers for entrepreneurs and employees in terms of business and job opportunities that were previously not accessible. As the restrictions to trade become weaker, entrepreneurs, investors, and employees alike can now transact business with less boundary and trade restrictions. This has made the world a global marketplace. Consequently, organizations now have the opportunity to source for talents without boundary. 'Without boundary' implies that employees now have several opportunities that were previously not available. This has definitely exposed most organizations to the effect of workforce mobility due to competition. In this case, as the employees move from one organization to another, they also leave with the core competences they have acquired from the organization, which further widens the organizational memory loss. Ultimately, if the organization does not have an effective knowledge transfer scheme for sharing of skills and experiences, the organizational memory loss becomes visible. In accordance, Henderson (n. d) asserts that globalization has made it challenging to retain leadership talents in an organization, particularly when increased competition leads to the loss of critical employees. This further buttresses the need for an effective knowledge transfer scheme that will motivate employees to share their skills and experiences without which most organizations will lose its critical employees to the whims and caprices of its competitors as globalization further opens-up new frontiers.
Also, in terms of how sudden exist of an employee affects the organizational memory, Rothwell (2010a) warned that an organization How Do Businesses and Generations Maintain Its Legacy? 7 would experience difficulty surviving, if a successor does not have the required expertise to meet the demand of the volatile market when the time comes for a leadership transition. He cited the case of the tragedy at the World Trade Center, where 172 corporate vice presidents lost their lives unexpectedly on September 11, 2001. His analysis reveals that an organization is vulnerable to unexpectedly losing its leadership talents. This is in concurrence with Halter's (2009) warning that no one can live forever. Hence, leaders must understand that they have a fixed tenure in an organization and that uncertainty could make it shorter. Such unforeseen circumstances have further increased the talent deficit in many organizations where, most especially, there is no continuous transfer of skills and experiences. The case of the World Trade Center, as cited, reinforces the need to transfer knowledge — be it in an organization or in the society. Consider the cost of the development of these executives who died in the World Trade Center. How could their organizations recover the investment made on these executives? Just imagine if the organizations that lost these executives in the World Trade Center do not have an effective expertise transfer scheme. It is unimaginable to visualize the setback that the organizations must have suffered. Some may argue that the talents of employees are easily replaceable or the employees would always return to the organization, and as such, retaining their expertise in the organization might not be necessary. This perspective has several flaws. For example, if the intention is to hire an experienced person to replace the existing employee that will suffice. On the other hand, what this perspective has ignored is that, the newly hired talent does not have the skills and experience specific to the organization, as does the employee of the organization that has just left. The exit of an executive is a colossal memory loss to the organization and it could happen to any organization or family at any time because of the dynamics or uncertainty in the society.
Again, the aging workforce is another factor that has further widened the organizational memory loss and this creates a potential leadership gap in many organizations. This concurred with the suggestion of Favaro, Karlsson, and Neilso (2012) that over 12 years in the United States, the attrition rate of executives last reported as 14.2% in 2011, has increased. This is often associated with considerable organizational damage due to organizational memory loss. Statistics from the U.S. Census Bureau revealed that while the ages of the individuals between 55 and 60 constitute 54% of the U.S. workforce, the population of those ready to enter the workforce age has only increased by 8.8% (Rothwell, 2010a). These statistics imply that, there would be continuous retirement of much of the U.S. workforce, especially, those with leadership roles, without possible replacement.
This continuous retirement will further drain the organizational core competence, which will lead to organizational memory loss if effective knowledge transfer schemes to preserve the expertise of the departing employees is not in place. This analysis agrees with the results of a study of oil and gas executives in the States of Texas. The ages of the participants revealed that those of 41 years and above constituted 91.9% of the sample proportion whilst those of the ages of 40 and below constituted 8.1% (Bestman, 2015). A noticeable trend from the age demography revealed that, in the oil and gas industry in the State of Texas, there would be more of leadership retirement than those qualified to replace them. Such a gap will definitely lead to leadership vacuum or too many inexperienced leaders in the industry. The implication of this is that many succession events would involve the loss of organizational memory and the knowledge unique to the previous leaders would have been lost.
Deficiencies in Knowledge Transfer Strategies
These uncertainties in the business environment has further worsened the organizational memory drain because the existing knowledge transfer schemes are not designed to enable departing leaders share his or her skills and experiences with their potential successors. This inability to predict the uncertainty in the business accurately has made researchers to evaluate what affects knowledge transfer closely, and proffer solutions to organizational leaders on how to mitigate the organizational memory losses due to planned and unplanned employee exit. In an attempt to mitigate the effect of the uncertainty in the business environment, most investigators concentrated their studies on the specific factors that influence knowledge transfer amongst the members of an organization, rather than to examine succession practices as a means of knowledge transfer. For example, Kachra and White (2008) reported that knowledge transfer is more likely where there is a relationship between the knowledge source and the knowledge seeker. In a different study, Makela and Brewster (2009) found that the interpersonal trust between the knowledge source and the knowledge recipient has the tendencies to influence knowledge sharing behavior. According to Liao (2009), the expertise of the knowledge recipient has a positive influence on knowledge sharing behavior of a manager. In a similar study, Kang and Kim (2010) pointed out that the expected reward has a significant effect on the level of knowledge transfer. In spite of these knowledge transfer factors as proposed by studies, organizations still suffer colossal losses of skills and experience because these processes lack the capacity as effective knowledge transfer schemes; more especially when it involves disseminating the skills and experiences of employees to another employee. It might be that the knowledge transfer is ineffective because the knowledge transfer mechanism does not align with how to transfer skills and experiences. In fact, these factors, as espoused in the various studies cited, do not inform the average knowledge seeker in an organization what to do or how to motivate the knowledge source to share his or her skills and experiences. The inherent limitations in these practices have further obstructed the knowledge seeker and the knowledge source from sharing experiences.
Moreover, these knowledge factors espoused is more of how to transfer documented knowledge rather than the transfer of skills and experiences of a departing knowledgeable employee. These knowledge transfer factors are ineffective in terms of it ability to motivate a knowledge source to transfer or share his or her skills and experiences with a knowledge seeker for several reasons. In the first place, the relative importance and the nature of the skills and experience (tacit knowledge) are the obstacle these knowledge transfer protocols must overcome before it would motivate a leader to share his or her skills and experiences with an incoming leader. The shortcoming of these protocols is that, the designers of these knowledge transfer practices assume that knowledgeable employees will willingly share their skills and experiences with others. Whereas, in reality, employees regard their knowledge as an asset and do not willingly transfer it to others. Occasionally, they might transfer the knowledge they consider not important to them; that is, the information that has no significance in their power base or cycle of influence. If knowledge is power as popularly noted, why would a knowledge source willingly share his or her source of influence and economic power with others without a reward? Obviously, sharing knowledge without any benefit to the knowledge source may mean losing his or her economic, social, and transactional power. Davenport (2005) reported that those who understand the value of knowledge would always provide the enabling condition for the knowledge source and knowledge seeker to interact. The enabling condition suggests that knowledge sources do not easily share their knowledge, especially when it has an economic value or a controlling influence. By ignoring the importance of the knowledge to the knowledge source, the designers of these schemes assume that in leadership transition, the skills and experiences transfer from the predecessor to the successor is seamless. While, in reality it is not. The foregoing indicates that there would be continual loss of organizational memory if the existing knowledge transfer protocols do not address the issues of how to motivate a knowledge source (predecessor) to share his or her expertise with a knowledge seeker (successor).
