Read and write a reaction

Open Posted By: ahmad8858 Date: 12/10/2020 High School Proofreading & Editing

 After you read the article, post your reaction to the article and what you learned about radical organizational change from reading it.

Category: Engineering & Sciences Subjects: Electrical Engineering Deadline: 12 Hours Budget: $150 - $300 Pages: 3-6 Pages (Medium Assignment)

Attachment 1

Memory loss? Corporate knowledge and radical change

Nicholas J. Scalzo

An organization’s ability to collect, store and use knowledge it has generated through experience

can have important consequences for its performance. Storing and using stored knowledge

effectively can buffer the organization from the disruptive effects of turnover, facilitate

co-ordination, contribute to the development of innovative products, and may even serve to

rebuild an organization (Olivera, 2000, p. 811).

Seeking ways to keep their firms viable and sustain or enhance profitability, organizational

leaders are making changes in how their organizations are run, paying closer attention to

customer needs, and restructuring whole divisions and business lines. Many are using

voluntary early retirement options, and reductions in force to balance the ratio between the

work and staffing levels that may have grown to unprecedented levels during the late 1990s.

These initiatives have a direct impact on bottom-line expenses in the current and near-term

fiscal quarters. However, few leaders look at the long-term implications these initiatives will

have on their organization. Many times these initiatives create unintended problems.

One such problem is the loss of organizational memory (the knowledge and information from

the organization’s past which can be accessed and used for present and future

organizational activities). As long-tenured staffs begin to leave, they take with them their

knowledge, skills, and other valuable job-related information – components of the

organization’s memory that may become inaccessible to the organization. Additionally, this

loss may disrupt organizational memory systems as these components are part of

organizational knowledge that may be dispersed across actors, systems, and interactions in

organizations. Organizational leaders are realizing that more of what is valuable about how

to do the work resides in people’s heads. Olivera (2000) found turnover had an impact on

accessibility of the experiential knowledge within social networks. The organizational

knowledge literature posits the importance of knowledge to an organization’s ability to make

decisions, solve problems, meet competitive challenges, and ultimately be successful.

The study

This case study was intended to expand our understanding of what happens to elements of

organizational memory systems during, and in the aftermath of, radical change initiatives (a

significant shift in structure, function, values, culture, strategy, power distribution, and

control systems). Specifically this study explored the tacit and explicit knowledge aspects of

organizational memory systems.

The impetus for this inquiry began with the events of September 11, 2001. With the terrorist

attacks and subsequent collapse of the World Trade Center towers, significant numbers of

employees were lost. One organization, the bond-trading firm Cantor-Fitzgerald, lost

approximately 700 employees, almost three quarters of its workforce. In a few hours,

successful organizations were catastrophically subjected to an event that violently

eliminated many of their physical and intellectual assets, creating a crisis of such

PAGE 60 j JOURNAL OF BUSINESS STRATEGY j VOL. 27 NO. 4 2006, pp. 60-69, Q Emerald Group Publishing Limited, ISSN 0275-6668 DOI 10.1108/02756660610677137

Nicholas J. Scalzo is based

at the Depository Trust and

Clearing Corportation,

New York, USA.

magnitude that their continued existence was questionable. How could these organizations

conduct business with many of their employees – along with the stored knowledge or

memory – gone?

Exogenous environmental factors where the environment overpowers the organization can

impose change on an organization. However, endogenous initiatives can also change the

conditions for survival. For example, relocating a significant part of a business to remote

locations, voluntary early retirements, reductions in force, restructuring, and other initiatives

can significantly change how work is done.

The primary research question for the study was, what happens to organizational memory

systems when radical organizational change occurs? Related research questions were:

B What aspects of organizational memory systems are accessed as an organization

undergoes radical change?

B What aspects of organizational memory systems are accessed in the aftermath of radical


B How is tacit knowledge accessed and shared as an organization undergoes radical


B How is tacit and explicit organizational knowledge accessed and shared in the aftermath

of radical change?

The conceptual framework for this study involved two constructs – radical organizational

change and organizational memory. Radical organizational change refers to a significant

shift in values, behavior, and how the organization performs the work required to meet

organizational needs. Radical change differs from routine changes experienced by

organizations in that routine change occurs through normal revisions or improvements to

work processes or efficiency initiatives over time. Radical change attempts to redefine the

organization’s structure, functions, values, culture, strategy, power distribution, and control

systems. Organizational memory is the knowledge and information from the organization’s

past, which can be accessed and used for present and future organizational activities.

Figure 1 shows the relationship between the two constructs, where radical organizational

change moderates organizational memory.

Organizational memory systems are defined as:

Sets of knowledge retention devices, such as people and documents, that collect, store and

provide access to the organization’s experience (Olivera, 2000, p. 815).

Figure 1 Radical organizational change and organizational memory


Tacit knowledge is knowledge residing in the individual mind that is personal,

undocumented, learned through experience, intuitive, and difficult to articulate or codify.

Explicit knowledge is codified knowledge that can be put on paper, formulated in sentences,

or captured in drawings. Explicit knowledge can be found in files, notebooks, on

bookshelves, in computer databases and e-mails. Knowledge is important because people

in today’s organizations contribute to organizational success through their knowledge,

ideas, judgment, and collaboration. Employee knowledge that contributes to the formation

of organizational memory is needed in order for judgment in problem solving, idea

generation, and development of new products or services that lead to higher levels of

organizational performance. Becerra-Fernandez and Sabherwal (2001) view the knowledge

possessed individually and collectively by employees as perhaps the richest resource the

organization possesses. Effective knowledge management is a key to organizational


Until this study, research was limited to the impending loss of memory when one technical

expert retired from an organization or when a few people left an organization. Most

research does not take into account the impact of the loss of memory from many

individuals leaving concurrently. Even the literature that looks at the effects of radical

change neglects to focus on the impact on organizational memory when many individuals

leave concurrently. This study explored what happened when many people left the


Research methodology

The research was conducted in the operations division of a mid-sized financial services

organization with approximately 2,500 employees. This organization had undergone radical

organizational change (significant shifts in structure, functions, values, culture, strategy,

power distribution, and control systems) over a five-year period (1999-2004). Voluntary early

retirements, layoffs, and restructurings resulted in over 450 people in the operations division

leaving the organization.

Data collection and analysis methods

Three sources were used to collect the research data – individual interviews, observation,

and review of archival documentation. This ensured triangulation and contributed to the

trustworthiness of the research. All interviews were conducted at the research site, taped

and transcribed. The 16 interview participants all had deep knowledge of the organization’s

past and present structures, routines, processes, and culture. The second data collection

method was personal observations at more than 30 meetings and events (departmental staff

meetings, talent review meetings, employee survey results sessions, town halls, succession

planning meetings, business continuity meetings, six-sigma meetings and award

ceremonies, director and officer meetings) at the case study site. Observations took

place over a seven-month period (May-November 2004). Archival documentation in the form

of annual reports, employee and customer newsletters, organizational restructuring memos,

internal memos, announcements, industry articles, presentation and training material, and

results of past employee and customer surveys, produced between January 1999 and

November 2004, were used.

‘‘ As long-tenured staffs begin to leave, they take with them their knowledge, skills, and other valuable job-related information – components of the organization’s memory that may become inaccessible to the organization. ’’



Nine themes emerged from the data:

1. Since the radical change initiatives began in 1999, leaders and managers at this

organization intentionally looked for ways to access the tacit knowledge that individual

employees possessed and convert it into explicit knowledge that could be shared and

retained. The leaders and managers used various forms of interaction to unfold tacit

knowledge and make it explicit.

2. People remained the primary source of information and knowledge during and after the

initiation of radical organizational change. Because of the staff reductions, the amount or

depth of expert knowledge and experience had decreased which caused people to seek

out multiple different staff members to obtain the information or knowledge required.

3. Use of internal and external social networks increased in the organization. Some social

networks had been disrupted; however, many of these social networks have regenerated

over time.

4. The increased use of computer-based information technologies increased.

5. Knowledge centers were created.

6. Other explicit or codified knowledge-retention devices – documents, manuals, internal

operating procedures, files, training manuals, etc. also flourished. Computer-based

information technologies, knowledge centers, and explicit knowledge retained in

documents and manuals have become more prolific and in many cases helped the

organization become more efficient.

7. Time to access information needed to solve problems increased. The number of

resources and length of time to obtain all the needed information and knowledge to solve

problems and make decisions in specialized situations has increased.

8. While there was some loss of specialized, historical, or experiential knowledge, the

organization was not handicapped. The data showed that a solid base of information and

knowledge still exists in the organization. There has been some loss of specialized,

historical knowledge because of people leaving or being transferred to other areas, but

according to the interview respondents and people in attendance at meetings and events

observed, the loss has not had any material impact on organizational performance or


9. Some of the knowledge lost was obsolete. The data show that some knowledge was in

decay, obsolete, and no longer needed by the organization. Archival documentation

reviewed for this study shows organizational performance and effectiveness is strong. In

fact, according to financial documents in the annual reports, the organization is more

efficient and profitable than in its history.

Conclusions and recommendations

This study provides organizational leaders, human resource practitioners, and scholars with

a greater understanding of how knowledge is accessed, shared, and retained when an

organization experiences radical change.

What happens to the tacit and explicit knowledge aspects of organizational memory

systems (OMS) during, and in the aftermath, of radical change? The OMS morphs – it takes

‘‘ Radical change attempts to redefine the organization’s structure, functions, values, culture, strategy, power distribution, and control systems. ’’


on a new shape. The OMS components (individual people, social networks,

computer-based information technologies, knowledge centers, and other knowledge

retention devices) do not change. The OMS components that were used to access

information and knowledge while the organization was experiencing radical change are the

same ones in existence in the aftermath of the radical change initiatives. What has changed

is the degree or proportion of use of each of the components. For example, while social

networks were in use before, during, and after radical change initiatives, there was an

increase in the active use and frequency of social networks.

Moreover, the nature or makeup of organizational memory has changed as the organization

intentionally set out to specifically access and make more of the tacit knowledge explicit and

codified for use by the whole organization. In the aftermath of initiatives such as voluntary

retirement, layoffs and restructuring that resulted in the loss of many employees, the degree

of dependency on one component shifted to other components. The usual social

interactions or structurally coupled relationships were disrupted, changing the dynamics

and communicative action venues and patterns previously established. Using a puzzle

metaphor, Figure 2 illustrates how the configuration of OMS devices morphed in the

aftermath of radical organizational change.

As the organization was experiencing radical change, managers accessed tacit knowledge

through verbal communications and interaction by asking questions and bringing people

together to work on items, projects, or problems. Through the social interaction of working

together and the ensuing discussion, people became conscious of their tacit knowledge

and began to articulate this knowledge, thereby making it explicit to others.

Results of this study suggest that organizations undergoing radical organizational change

can successfully manage the process in order to retain the wealth of information and

knowledge that exists in the organizational memory. The findings showed that the subject

organization of this research study followed three key management practices throughout the

entire change process (ongoing communications, senior management commitment, and

planning) that enabled it to access, share, and retain its organizational memory while

undergoing radical change. These practices are reminiscent of Barnard’s (1938) Functions

of the Executive.

Ongoing communications

This is perhaps one of the more important aspects in the implementation of radical change

that helped maintain the organizational memory.

Use of clear, continuous, personal communication on a face-to-face or small group basis is one of

the primary characteristics of effective change programs (Goodman et al., 1996, p. 121).

Figure 2 Morphed OMS devices


The findings demonstrate how constant communication can help an organization manage

change and the message about change so that the change and the rumors around it have

less of a negative impact on staff and customers.

The organization produced print materials on a regular schedule that kept people informed.

There was one publication devoted entirely to communicating what was happening with the

integration, the organization’s structure, merging of departments, the mission, vision, and

values. The publication talked about the culture, employee survey results, and action teams.

Progress was reported in each issue along with any new items of interest for employees. As

each change in structure was made, organizational change memos were issued to all

employees. These materials were provided to employees not just in print form but also using

computer-based information technology so they could be accessed from and retained in the

organizations’ memory for future use.

A regular publication to customers was also created and distributed detailing the

organization’s changes. Customers were notified of any changes that may affect how they

were served and who would serve them. New products and services were explained in the

publication. Information sessions were presented at industry conferences. Customer

surveys and focus groups were conducted to obtain feedback. These also became part of

the organizational memory system by being distributed and stored using the organizations’

computer-based information technology and knowledge center devices.

Senior management commitment

The chairman, senior management, and other members of management were strongly

committed to implementing changes and providing the resources necessary to prepare and

transform the organization. They were intimately involved in overseeing the staff reductions

in a way that would maintain the tacit and explicit knowledge aspects of the organizations’

memory through the implementation of cross-training initiatives and investment in training

designed to access, share, and store knowledge. They invested in delaying the departure of

individuals eligible for voluntary early retirement to ensure specialized knowledge was

transferred to others and became part of the organizational memory. This management team

invested heavily in the enhancement of the technology and knowledge centers necessary to

support the access, sharing, and retention of organizational memory.


Planning is another key lesson scholars and practitioners can take from this research study.

The organization planned each of the changes it was going to encounter. A transition team of

senior managers was put in place to purposely reflect upon and manage each step. They

were held accountable for meeting the deadlines and moving the ball forward. Where

responsibilities were changing, management planned the lead-time to make the switch.

Senior management put a great deal of thought and effort in the eventual reduction in staff

and took the precautions to ensure smooth transitions would be made. The organization

provided fair and equitable packages to displaced employees including outplacement

counseling, regardless of level. So that no department or unit would be caught short of

knowledge or expertise, due diligence was done prior to each staffing action. Where an

individual had specific knowledge valuable to the organization, that individual was held,

sometimes up to a year or more, until others could learn the job, function, or become part of

the individuals’ network. These actions provided purposeful access to and sharing of

experiential, historical, and specialized knowledge, which was then retained in the

‘‘ People remained the primary source of information and knowledge during and after the initiation of radical organizational change. ’’


organizational memory system devices for future use by the organization. The result was

an organization that successfully managed radical change while retaining the relevant

organizational memory.

Saving organizational memory

This research study did not seek to create or establish a new theory on memory. It sought to

understand what happens to organizational memory systems in an organization that is or has

undergone radical change initiatives. What was uncovered is different from what one would

expect from reading most of the literature that precedes this case study.

Much of the literature on memory, talks about the problems organizations had when people

left an organization and took the tacit knowledge they possessed with them. One study,

however, conducted by Casey (1994), showed that memory remained in the organization

even though there was a high turnover in staff. Similarly, in exploring this organization’s

experience, no one interviewed felt the loss had any detrimental impact to the operation or

that the knowledge that was lost caused the organization to ‘‘skip a beat.’’ And this was the

operations division of an organization that lost over 800 people in the past five years –

almost 25 percent of its staff. The findings showed that they did not lose much knowledge

when people left and the knowledge that did leave was not critical to the organization. The

organization has transformed itself from a ‘‘sleepy’’ industry utility to a fast moving, product

driven, customer-centric organization.

Additionally, management was persistent in its efforts to sustain organizational memory by

accessing tacit knowledge within the organization and, for the most part, codifying and

sharing or disseminating the knowledge within specific work units or departments and, in

some cases, making the knowledge explicit through documentation and training initiatives.

Preventing knowledge loss

Looking at these results causes one to wonder, how did this organization manage to lose

significant numbers of people and knowledge and have that loss have little or no impact on

the organization’s memory system? The answer lies in the industry type, degree of

automation, organizational forgetting, and planning for change.

Industry type

Most of the literature discusses manufacturing, pharmaceutical, consulting, or

entrepreneurial organizations. This study examined a niche organization within the fast

paced securities industry. Trillions of dollars worth of trades are made every day and

processed at lightning speeds. The technology to handle those trades has to be cutting

edge and capable of handling ever-increasing peak volumes. Redundancy in system

capability is part of the infrastructure, and these duplicate systems function on real time. The

organizations in this industry are not the cottage industries of the past that manufacture and

sell automobiles, lumber products, airplane parts, household goods, or food products.

These organizations do not provide medical or drug research, social services, or

government services. These organizations are a totally different breed, and they are indeed


One area where they are different may be the number of people performing identical

functions. In the operations areas of the organizations that make up the industry (brokers,

dealers, money-center banks, exchanges, clearinghouses, and transfer agents) there are

many employees who perform the same function. A dividend area might have 30 or 40

people doing the exact same work, and a deposits area may have upward of 50 or 60 people

doing the exact same work. Work routines follow specific steps – there are specific

procedures to allocate dividend payments, process deposits, or handle a global corporate

action. The procedures for processing the work or transaction are the same each time,

whether the dividend payments are for a few million dollars on a regular day or for 5 to 6

billion dollars on a peak day. This may be one factor that explains why, when this

organization lost a portion of the staff performing the job, the loss of memory was

insignificant. A department may lose five people or more, but there are still 25, 35, 45, or 55


still on the job, performing the same functions. The work is still being done – there are just

fewer people performing the job.

Degree of automation

Another key factor is automation. The financial and securities industries had the most risk as

the year 2000 approached. Many of the advances in automation and legacy systems can be

attributed to the potentially economic cataclysmic event of Y2K, which necessitated the

redesign or elimination of some legacy platforms and systems. To anticipate Y2K and to

mitigate risk, the organizations that make up the financial and securities industries spent

billions of dollars on computer system enhancements, hiring thousands of people to ensure

that the industry’s computer systems would be able to handle the change to Y2K. As a result,

many computer system programs that handled financial and settlement transactions were

updated with new capabilities or were totally rewritten. Each redesign, enhancement, or new

system created requires less manual intervention to process transactions. This creates less

need for people to manually process work and reduces the level of specialized or

experiential knowledge required to perform the job. ‘‘Automation has helped get around the

loss of a lot of people’’ one interviewee explained. Errors caused by variation are drastically

reduced, which in turn requires fewer people to conduct research and correct error


Organizational forgetting

When information or knowledge is no longer valuable, retaining it can be counterproductive.

For example, suppose a team consists of only a few developers responsible for writing and

developing a computer program for a particular system. As new and better systems are

developed, the knowledge of the old system is no longer needed. As the developers of the

old system leave the organization with their expertise and specialized knowledge, there is no

loss to the organization – the old system had become obsolete and no longer served a

useful purpose to the organization or the industry. In cases such as this, specialized

historical knowledge and experience is lost, but since that specialized historical knowledge

and experience no longer has value to the organization, it matters not.

Another factor why the apparent loss of some knowledge, experience, or memory in this

organization’s case is not detrimental may be that some industry products and business

functions are in decay and are disappearing or already obsolete. Again, as the people

performing those antiquated processes leave, there is no longer any organizational value in

the historical knowledge, experience, or expertise that people performing those functions

possessed. The knowledge is no longer needed for the organization’s survival.

Planning for change

As mentioned earlier, the senior management team of this particular organization

purposefully planned its transformation from an industry utility to a product-driven,

customer-centric organization. Senior management took the time to comprehend and plan

the change initiatives that would impact people (the early retirements and layoffs, voluntary

severances, and restructuring of departments and business units) and anticipated the

impact on the operation and knowledge. For example, the lists of candidates eligible for the

early retirement were reviewed and the information, expertise, and knowledge that they

‘‘ Through the social interaction of working together and the ensuing discussion, people became conscious of their tacit knowledge and began to articulate this knowledge, thereby making it explicit to others. ’’


possessed were assessed. In certain situations where expertise or knowledge was at risk,

the individual’s date for leaving the organization was extended.

For reduction in force, each individual targeted for reduction was reviewed from a due

diligence perspective. Questions were asked as to why a particular individual or group of

individuals were selected for reduction. The subjects’ knowledge and expertise were

assessed along with the impact to the unit or department. When restructuring departments,

an assessment was made to understand the impact that the action would have on the work

and to ensure that the right profile of staff was in place to perform the functions of the

department. These planning actions affirm that organizations that anticipate radical change

and implement ways to store and use knowledge effectively are better prepared to minimize

the negative effects of turnover.

Protention generates success and growth

Study results show that protention in thinking was a critical contributor to this organization’s

successful management of radical change and its ability to access, share, and retain

information and knowledge in organizational memory. In describing present-time

consciousness, Varela (2002) discusses protention, which has a future orientation and

consists of anticipations of what is yet to come. Organizational awareness requires

present-time consciousness. Data from interview respondents, archival documents, and

observation presented evidence of management awareness and future-oriented behaviors.

Consideration of time is important to organizational change. Croswell (1996) indicated that

time invested is a variable that influences the development of organizational memory and

subsequent organizational learning.

Organizational leaders took the time to plan for the changes, communicate with the staff, and

develop the resources needed to generate the explicit knowledge needed for the future of

the organization. This was accomplished through protention in thinking and an awareness of

the present.

Awareness . . . serves as a catalyst for planned change, transformational leadership, and

sustainable development (Croswell and Holliday, 2004).

Through awareness and protention in thinking, organizations can counterbalance the

potential negative effects of radical organizational change on organizational memory.

Implications for practice

This research provides information for practitioners who may be helping their organizations

transform through radical change and are concerned about the potential loss of information

and knowledge resident in organization memory systems. Organizations undergoing radical

change can successfully manage the process in order to mitigate the degree of loss and

retain the wealth of information and knowledge that exists in the organizational memory.

This case study points to some important practical lessons that may assist others as they

embark on radical change initiatives. The following actions can be taken to create a blueprint

or best practices for how to manage radical organizational change and preserve the tacit

and explicit knowledge aspects of organizational memory:

B Have a senior management team whose collective present-time consciousness is

oriented toward the future of the organization and who see the organization as generative

in nature.

B Have a senior management team with strong commitment intentionally plan each aspect

of the radical change, considering and anticipating the impact that each action will have

on the organization and its people.

B Assess who possesses information or knowledge needed for the current and future

activities of the organization, and take actions to access, share, codify, and retain that



B Establish formal apprentice or mentoring relationships and training initiatives to help

disseminate individual tacit knowledge among other individuals and convert the tacit

knowledge into explicit knowledge.

B Leverage automation systems to increase the use of computer-based information

technologies and knowledge centers.

B Use ongoing and frequent communications to manage expectations and keep

employees informed.

B Prepare business continuity programs that result in replication of process, procedures,

and systems.

B Assess what information and knowledge has decayed, is obsolete, and ‘‘let it go.’’


Change management,

Knowledge management


Barnard, C.I. (1938), The Functions of the Executive, 13th ed., Harvard University Press, Cambridge,


Becerra-Fernandez, I. and Sabherwal, R. (2001), ‘‘Organizational knowledge management: a

contingency perspective’’, Journal of Management Information Systems, Vol. 18 No. 1, pp. 23-55.

Casey, A. (1994), Collective Memory in an Organization: Content, Structure and Process, The George

Washington University, Washington, DC.

Croswell, C.V. Jr (1996), ‘‘Organizational learning in nonprofit organizations: a description of the action

patterns of a professional association’s governing network and leadership role in turbulent times’’, UMI

Number: 9634624, UMI Dissertation Services, Ann Arbor, MI.

Croswell, C.V. Jr and Holliday, S.B. (2004), ‘‘The new science of awareness: triggering the emergence of

consciousness in living systems’’, The International Journal of Knowledge, Culture, and Change

Management, Vol. 4.

Goodman, M.B., Holihan, V.C. and Willis, K.E. (1996), ‘‘Communication and change: Effective change

communication is personal, global and continuous’’, Journal of Communication Management, Vol. 1

No. 2, pp. 115-33.

Olivera, F. (2000), ‘‘Memory systems in organizations: an empirical investigation of mechanisms for

knowledge collection, storage, and access’’, Journal of Management Studies, Vol. 37 No. 6, pp. 811-32.

Varela, F.J. (2002), ‘‘Present-time consciousness’’, in Shear, J. (Ed.), The View from Within: First-person

Approaches to the Study of Consciousness, Imprint Academic, Bowling Green, OH.

About the author

Nicholas J. Scalzo earned his Doctorate at The George Washington University. His areas of expertise include organizational change, organizational memory, and team performance. He is a Director in Human Resources for the Depository Trust and Clearing Corporation (DTCC). This article is adapted from his dissertation, ‘‘Radical organizational change and organizational memory systems: a qualitative case study in tacit and explicit knowledge.’’ Nicholas J. Scalzo can be contacted at: [email protected]


To purchase reprints of this article please e-mail: [email protected]

Or visit our web site for further details: www.emeraldinsight.com/reprints