Cost
Firstly, the organization has to continually re-learn its tried-and-tested practice. Induction periods of up to 12 months are typical – and expensive, with direct costs variously calculated at 46% of annual pay for a front-line employee to 240% for a middle manager.
Secondly, the body of evidence that would otherwise be available for better decision-making is reduced, a situation that affects the ability of organizations to learn efficiently from their own experiences. By encouraging high levels of job churn, organizations have consciously chosen to operate in isolation to their own hard-won and expensively acquired experience, depending on others’ unrelated experiences. This is even more expensive than having to re-learn, with experiential non-learning estimated by an international management consultant to cost up to 9.7% of gross domestic product in many developed countries.
Thirdly, with the relationship between knowledge and power intimately linked, the corporate body has – quite deliberately and entirely unwittingly – allowed their command to be displaced. No longer are individuals an aggregate part of an established institution. Individuals are the institution for as long as they remain in situ. Then, when the face changes the institution changes, or, more accurately, tries to change, bereft of its continuity and at the mercy of new brooms. Ordered evolution has become a shapeless revolution with such things as corporate culture, ethos, values and tried and tested usage struggling to maintain an even keel. In effect, the motor of the wealth machine has largely disempowered itself. The cost of this is incalculable.
Also known as institutional forgetting, corporate amnesia is among the biggest constraints to decision making excellence and a massive contributor to productivity shortfalls.
Read more about this topic: Corporate Amnesia
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“The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”
—Henry David Thoreau (1817–1862)