The importance of knowledge development in a recession

In today’s world where knowledge is power, it should come as no surprise that the most valuable asset for any business is the knowledge of its employees. And within our current knowledge-based economy, competent and confident employees are the foundation for a successful business, according to Mary Clarke, CEO of Cognisco.

Focusing on the continual development of employee knowledge is an important step for businesses to take if they hope to stay competitive in the ever-changing global business environment. This becomes even more important during unstable economic times when businesses are looking to gain ground wherever they can. One successful way companies can stay competitive is to implement training and development programmes to help maintain a high level of knowledge and understanding among their employees.

Despite the recent trends pushing us toward an economy increasingly dominated by knowledge-based activities, many businesses are not currently making the necessary investment in their employees. A new study by Paul Mizen, economics professor at the University of Nottingham and fellow at the Centre for Growth and Business Cycle Research at the University of Manchester, found that in the midst of the current economic downturn, many of the world’s top economies, like the UK and US, have been decreasing their focus and investment in knowledge development, as well as other human capital initiatives like mentoring, coaching, and training. In fact, in 2008, more companies actually reported a decline rather than an increase in staff development in these industrialised countries.

In the developing markets of Asia, however, research has shown that fewer firms are planning to decrease their training budgets and staff investments, and are coping with the recession by reducing budgets elsewhere. These results suggest that by keeping a stronger focus on employee knowledge development, emerging market countries are putting themselves in a viable position to surpass industrialised countries when the economic upturn comes. 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 invest in their employees now to better prepare themselves for the future.

Whilst these findings may be shedding new light on the importance of companies’ investment in their knowledge base, employers still need to figure out how to accomplish this. One method is to implement knowledge training and development programmes. Often, these programmes are 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.

Employee misunderstanding, resulting from a lack of training and knowledge assessments, can be very costly for businesses; not only in terms of time and money, but also customer relations and business reputation. Additionally, a lack of knowledge and understanding of corporate and industry regulations could potentially result in high costs for the company. Business regulations seem to be constantly changing within every industry, across all sectors, and if employees are not conducting their business in compliance with new laws and policies, they are putting their company at risk of being fined and incurring other such penalties.

Identifying top employees

Another benefit of assessment programmes is that they help identify a company’s top employees, the ‘go-to’ people that have mastered the ins and outs of the business and are a consistent and reliable 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 they help to determine which employees are the most valuable to their business and should be retained. Identifying these employees is important, not only in order to know who can help keep the company afloat, but also who will be able to pass on vital industry knowledge and experience to new employees when the company starts hiring again.

Until the economy does pick up, however, these knowledge assessments can be used to help executives appropriately redistribute job roles and delegate additional responsibility to those who deserve and can manage it. They also provide valuable insight for employers to administer other forms of intervention, such as redeployment, coaching, mentoring, and training for certain employees. And 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.

Being able to improve and build on existing training programmes is another benefit of assessment-based knowledge development programmes. Because they demonstrate what employees have learned and what areas need more attention, executives can shape their training programmes to be more specific and effective in the future. This kind of information will help better prepare future employees for their roles and could save companies the time and money that would otherwise be lost in misplaced and ineffective training programmes.

Implementing knowledge training and development programmes is a vital step to help companies stay competitive on a global scale, especially as more and more markets (both emerging and well-established) are realising the importance of maintaining knowledgeable staff. Such programmes not only help identify top performing employees, but also provide the insight to help executives improve business processes and reduce risks - two essential goals any successful executive should strive toward.