November 13, 2018

Is Customer Interface Institutional Knowledge or Intellectual Property?

Randal Walker

Randal Walker
Growth and Transition Coach/Aldas, LLC

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Where do the relationships that your employees have with your customers fit in your company asset column? Is it the Intellectual Property (IP) that is quantified or is it the soft asset of Institutional Knowledge (IK)?

This question is important as you look at retention of employees and protection of your assets. If Customer relations and retention are a product of employee efforts and relationships, as I believe, then it is IK. 

How much money and effort do you spend on creating or protection IP?  A 2016 report from the Economics and Statistics Administration showed that in Industries where IP was considered core, that on average 11.6% of all revenue was generated by the organizations IP. This shows a significant revenue stream, correspondingly we see the most aggressive companies spending about 3% of their total revenue to protect these assets*. (*Doug Lufkin, Corporate Counsel, Lecorpio) This is tremendously high when compared to average companies spending of about .33% of total revenue for legal services.

Here is where I believe we are missing the boat. We are choosing to replace or downsize our highest paid employees in an effort to cut costs without measuring their actual contribution by customer relationships. If we treated this IK like we do our IP, we would both measure the impact of new customer growth and customer retention as part of our retention strategy.

Maybe it is time for some new KPI's to be measured and tracked by our HR professionals.  

Comments? You can contact me directly via my ExecRanks profile.

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