Saturday, June 23, 2007

Time Waits For No Man

We're all getting older.  No question.  My knee upgrade is testament to the fact that I'm getting older for a start.  At a corporate level, some companies see this "getting older" problem earlier than others.  And whilst there's nothing wrong with getting older, at some point those older people are more likely to leave the company than stay, and that can be dangerous. 

 I worked with a company a while ago where the danger was both clear and present.  I put this slide up at an internal "what are our problems" kind of conference one day:

Ageing Population

In the top left is a graph showing the curve of age (x-axis) versus frequency of that age in the organisation (y-axis).  The average age is marked by the red line.  The blue line shows the average age of the UK population.  This organisation's average age is a little over 7 years higher than the UK's - meaning that they're going to hit the retirement bulge 7 years earlier.  This is pretty typical in engineering-led organisations and is very likely the norm for public sector organisations, particularly policy-led central government ones.

The bottom right is a stacked graph showing the years of service in each age decile.  Pretty obviously, the older people get, the more likely they are to have been in the company a long time.  But what it does show is the years of experience that are going to be lost as the older deciles go into retirement.  In this case:

- 20% of the company's total experience is vested in staff aged 55 and over (and likely, therefore, able to retire there and then under what is often called the "rule of 85", i.e. when years of service plus age totals 85

- 44% of the total experience is held by staff aged from 45-54 with 2/3 of those people having more than 25 years experience

- Less than 5% of the organisation are in their first 5 years of employment

I've seen similar figures for the UK civil service - where 38% of the workforce will retire over the next 6 years and for the US airforce where in the period 2001-2006, 40% of civilian employees were scheduled for retirement. In the US as a whole, 64 million workers are scheduled to retire by the end of the decade - some 40% of the workforce again. Much of this pain, whether the UK or the US, will be felt in engineering industries - oil, gas, electricity, utilities and so on.  Government will be right behind them.

Some of the senior folks in the organisation where I showed this slide saw a looming opportunity - their pension scheme was fully funded and operating costs would fall as people retired.  That's one way of looking at it.  The other way is to wonder what the folks who will soon leave know that the rest of the organisation doesn't know.  In an organisation where things are constructed and operated over decades, not everything happens on an annual or even 5 yearly cycle.

- At times of crisis, it's usually the old hands that know how to resolve the problem.  If you were going in for a major operation would you pick a surgeon who was seeing it for the first time or one who had already carried out two dozen such surgeries?

- Much of the DNA of an organisation is typically stored in the heads of those who have been around a long time.  Few companies that I've looked at really pay attention to procedures manuals, knowledge repositories and so on, unless it's what they do/sell (consultancy companies were amongst the first to make use of tools to capture and distribute knowledge, recognising that it could give them an edge)

But like I said, these folks didn't buy that it was an issue . The idea that they had to worry about capturing the knowledge, putting less experienced employees alongside those about to retire, codifying the information, updating the procedures and so on was just too big a leap.  I called the proposal "Knowledge Continuity". It died on the operating table.

vacheron watch (WinCE)

As a result of my interest in this knowledge space, I'm always on the look out to see who is doing it well, so that perhaps I can learn a better pitch.  So, a few weeks ago I spent a pleasant afternoon with the oldest watch-making company in the world - Vacheron Constantin.  They've been around for over 250 years.  I figured that they'd know a thing or two about knowledge continuity - they promise to repair any watch ever made by them, no matter how long ago.

 

The first thing I noticed on arrival was that the premises are staggeringly modern - and, indeed, they were constructed just a few years ago.  Their building, on the outskirts of Geneva, is all steel and glass.  Inside, every room is bathed in light.  It needs to be - no point trying to repair a watch part that is no bigger than the tip of a pencil in the dark.

The Swiss watch industry nearly died just a couple of decades ago.  The rise of quartz watches practically killed off the practice of making mechanical watches and it wasn't until Nicolas Hayek (owner of Swatch then but now a multi-billionaire owner of many of the most famous watch brands ever known) started aggregating both movement makers and watch makers that the practice revived.  All the skills were still there, amongst people who had been making watches for decades, in ever smaller quantities, but they had to teach new people the same skills - and that can take several years.

As I toured the "factory" - that word grates on me in this context, perhaps a better word is "atelier" - I saw how they were organised.   The entire operation is divided into discrete stages - a kind of conveyor belt of tasks from polishing pre-made parts to testing the final  fully put-together watch in an enormous machine that appeared to contain room to rotate two dozen watches continuously.

There were "entry level" tasks carried out by the newest (and typically youngest hires) - these folks, both male and female and in their early 20s, polished, shaped and stamped each of the watch components (many are made elsewhere in Switzerland, in the Jura and arrive ready for assembly in Geneva). 

- There were several "training rooms" where new employees were supervised by more experienced workers

- There was a clear progression from entry level to most senior employee. This being Switzerland, I would have imagines much of the progression was age-related, but I was assured that whilst the training programme typically lasted 3 years, there were plenty of opportunities to progress more quickly once that was complete.

The last stage was the construction of one of their most expensive and difficult to make watches - a minute repeater (an entirely mechanical one). I looked at the completed mechanism for this watch under a powerful microscope and was absolutely stunned at the complexity of it.  Each takes 6 months to make and they produce only 2 or 3 a year.  It's made by only one person - so, if you happen to have 500,000 euros to hand, you could say that you knew the man who made your watch.  His name is Christian, by the way, and he's been with Vacheron for 35 years.

Christian showed me all the manuals that they had prepared for how to make the watches - not just the minute repeater, but every watch in each of the collections.  They were finely detailed, showing the secrets of how to make the chime of the repeater just right (it's a secret but it involves soaking it in a special liquid made of oil and some rare flowers).  Every time a new watch was made, it had a detailed manual.  If a watch that hadn't been seen in decades came back for repair, documents were prepared that gave information on how components were reworked.

My point is, these guys knew that their output was likely to be around for years and probably decades.  The Vacheron museum (in the main store in the centre of Geneva) has a full collection including some of the earliest known pieces.  If you're in the business of producing timeless devices (forgive the pun), you want those that follow you to know how they work and how to look after them.  Likewise, if you're in the engineering business - perhaps making clean water treatment plants or jet engines for the 787  - or, indeed, government policies that are likely to be in place for a long time (PAYE is, essentially little changed in 60 years, computerisation not withstanding), you want to know what your people know and how you're going to retain that knowledge.  How you're going to safeguard it so that, when the inevitable crisis comes along, you don't all stand next to each other looking blank.

So you need to know

- What's important to know in your organisation - sometimes that's going to be a house-style of doing something, other times it's going to be a rigid template for a standard design, it might be a problem diagnosis process or it might be just the kind of noise that a minute repeater watch makes when the chime is "not right" (and therefore something that could take many moons to learn)

- Who has that knowledge and where are they on the retirement curve.  If lots of people have the knowledge, it's less important to find ways to record it now.  If only a few people have it, then they're a good place to start testing out your knowledge capture tools - whether that's a fancy system, a paper folder, a drawer full of photos, or a comprehensive manual is neither here nor there to start with

- How do you get the knowledge from that person, using video interview techniques, story-telling workshops, courses where they train the next tier of the team, simple job shadowing, codification in existing systems or whatever

- How do you keep that knowledge up to date and ensure that it's passed on continuously.  How do you spot changes as things develop and need to be enhanced, so that you don't have to go through an intensive capture exercise again

The looming retirement bulge is something that no company has gone through in the past.  This is a one-time effect from the "baby boomer" period.  Our population is ageing, no question, but it's ageing at its fastest rate now.  Any historic turnover experienced by an organisation pales when compared with what will happen between now and 2013.

 

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