From the beginning of 2016, economists have been speculating the advent of a new recession phase in the next year. However, 2017’s economic scenario has not turned out to be as gloomy. Economically, everything seems good till now this year. But the threat of speculated global recession can not be ignored just yet.
The recession is a phase in a business cycle in which the consumption declines, consequently trade reduces. When a number of trade transactions fall, businesses are not able to earn money and sustain their operations.
With the awareness that recession might be approaching, businesses must formulate a contingency plan to protect their interests.
Knowledge management is one of the resources that can help business prepare for recessions.
Though knowledge management hardly seems to be of any significance in the crisis period of recession, it can actually help to sustain and revive trade.
Here are 5 ways of how knowledge management can be helpful during the recession:
1. Information retention
During the recession, businesses have to reduce their resources and sometimes they even have to reduce their scale of operation. The diminished scale of operation and scarce financial resources force businesses to get rid of some of their employees. But employee attrition comes at a huge cost to the company. Not only does it lose an experienced workforce, but it also loses the knowledge that the employees acquired on the job that could have been useful in future projects.
But, if a company maintains a detailed knowledge base in which employees document their tasks, operations and procedures were undertaken, knowledge leakage from employee firing can be prevented. During the recession, if a company has to let go of its employees, it can at least retain the information they had acquired. This information can be used in organizational operations when the company recovers from the ill effects of the recession.
2. Helps employees to learn more skills
The recession is the time when the source of income dries up and there aren’t enough resources available to carry on regular operational processes. At that time what companies have to do is use every resource to its maximum utility and eliminate resources that are redundant. In order to reduce workforce during the recession, companies fire some employees and assign their responsibilities to existing employees.
If a company has a sophisticated and updated knowledge management system, training the existing employees about the roles and responsibilities of the eliminated employees becomes very convenient. The retained employees can refer to the company’s knowledge base to understand their new set of work activities.
3. Process optimization
In the time of recession, businesses have to deal with the dearth of resources, they have to produce outputs with as fewer resources as possible. A knowledge base has detailed information about operations and procedures undertaken in a company. This information can be used to identify and analyze the activities that waste resources or/and time. These activities can be then optimized or eliminated completely so that outputs are achieved out of minimum resources.
4. Churn more value from existing resources
During the recession when demand for goods and services decline, organizational operations come to a standstill. This time can be utilized to improve the functioning of the business. More value from knowledge management system can be churned out when all other resources are drying out. Information extracted from knowledge base software can be used to devise future strategies, train employees better and improve regular organizational processes. All the knowledge resource can be put to full use when the operational load has reduced during the recession.
5. Formulate new business models
Many businesses are unable to survive in recession due to the scarcity of resources when they are unable to adapt to the new harsh conditions. But those who have a good knowledge management system can find a way to cope and survive during this time. They can use the information that they have in their knowledge base to chalk out fresh business models which use fewer resources but is still functional.
These are 5 ways in which knowledge management can help a business survive during the recession. Knowledge management is a resource that smoothes and simplifies workflow during normal operation as well as in the time of crisis. It provides value and establishes the organization in every phase of business.
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