Corporate Amnesia

Corporate amnesia is a phrase used to describe a situation in which businesses, and other types of co-operative organization, lose their memory of how to do things. The condition is held, by some people, to be analogous to individual amnesia.

The causes are various. Employees have an inherent short and selective memory recall alongside a defensiveness that screens out unwelcome events with which they and their employer are involved. Flanking this are the effects of the single biggest change in workplace practice for at least a century - the actively encouraged flexible labor market. In many countries employee turnover - the rate at which old employees leave and new ones arrive - is now above the recognised annual danger level of 10% in many industry sectors where productivity starts to be affected. What happens is that the knowledge and experience known as organizational memory (OM) - the unrecorded event-specific, organization-specific and time-specific ‘how’ of know-how that characterizes any organization's ability to perform - walks out of the front door on a regular basis. Jobs change was initially related to downsizing but it is now a general feature of the labor market, where, on average, annual employee churn exceeds 20% in many countries and up 60% in some industries.