What Is Institutional Knowledge? Meaning, Examples and How to Keep It

Institutional knowledge is what an organisation knows about how it works and why. It covers the reasons behind decisions, the history with clients and suppliers, the workarounds that keep processes running and who to ask about what. Some of it is written down. Much of it sits in the heads of the people who have been there longest. When they leave, that part goes with them.

What institutional knowledge means

Institutional knowledge is knowledge the organisation depends on. It does not have to be stored in a system. A contract clause that exists because of a dispute in 2019 is institutional knowledge. So is the fact that a customer's warehouse stops taking deliveries at two on Fridays. So is knowing that the finance director wants bad news by phone before it appears in a report.

Researchers use a close term: organisational memory. James Walsh and Gerardo Ungson set out the idea in a 1991 paper in the Academy of Management Review. They described it as information from an organisation's past that can be used in decisions today.

That gives a simple test. Would knowing it change a decision someone makes this week? Then it is institutional knowledge.

Institutional knowledge and related terms

• Tacit knowledge is know-how a person cannot easily put into words. Much institutional knowledge is tacit knowledge. Some of it could be written down in a minute. Nobody has asked yet.

• Explicit knowledge is written down or easy to write down. A procedure is explicit. The reason for each step in it is often missing.

• Tribal knowledge is mostly used for the same thing, especially in engineering and manufacturing. The term is debated and some people avoid it.

• Organisational memory is the research term. It includes records and systems as well as people.

• Knowledge management is the work of collecting and sharing what an organisation knows. Institutional knowledge is one of the things it manages. Knowledge transfer is how it moves from one person to the next.

Where institutional knowledge lives

Walsh and Ungson named six places where an organisation keeps what it knows. Five are inside the organisation. One is outside it. The list helps at work because it shows where to look before someone leaves.

1. Individuals. What people remember and believe. The account manager who knows why a client left in 2022 and came back a year later.

2. Culture. The shared ways of working and talking. How formal a board paper should be. What counts as urgent in this team.

3. Transformations. The procedures that turn work in into work out. The approval flow for an invoice. The steps to set up a new supplier.

4. Structures. Roles and reporting lines. A role carries expectations about what its holder does, often without a job description that says so.

5. Ecology. The physical workplace. Why the samples are kept in the cold room on the second floor. Which machine runs the urgent orders.

6. External archives. What sits outside the organisation. Former employees, the external accountant, the auditor's files, old press coverage.

Only the first of the six leaves when someone resigns. It often holds the reasons for the other five. The approval flow stays in the system. The person who knows why step four was added may be gone.

10 institutional knowledge examples from real jobs

1. Procurement. Why the company stopped using a cheaper supplier in 2021, and what would have to change before using them again.

2. Finance. Which cost centre takes the costs that fit nowhere else, and which auditor once asked about it.

3. Sales. Which large client was promised a price freeze on a phone call, and who made the promise.

4. Legal. Why the standard contract has a clause that no outside template contains.

5. IT. Which old server nobody dares to switch off, and what still depends on it.

6. HR. Which agreements with the works council were made in a meeting and never added to the policy.

7. Operations. Why the weekly stock count happens on Thursday.

8. Customer service. Which customers get a phone call instead of an email when something goes wrong.

9. Management. Which projects were tried before, and why they were stopped.

10. Product. Which features were removed after complaints, so nobody builds them again.

Each example has a fact and a reason. Systems tend to hold the fact. The reason usually sits with one or two people. We wrote about the agreements nobody wrote down and why they are so easy to miss.

What happens when it is lost

Two things go wrong when the reasons leave.

People repeat old mistakes. A new buyer goes back to the cheap supplier. A new manager restarts a project that failed for a reason nobody remembers.

People also keep rules that have lost their reason. An office keeps filing a form years after the law that required it changed. Nobody knows why the form exists, so nobody dares to stop.

The scale is large. In a 2018 survey of US workers by Panopto and YouGov, 42% of institutional knowledge was unique to the individual. None of their coworkers shared it. The same survey found that workers lose 5.3 hours a week waiting for information from colleagues or working out again what someone already knew. Our knowledge loss statistics list the figures that hold up.

How to keep institutional knowledge

Ask for the reasons. When someone explains a process, ask why each step is there. Process documents list the steps. They rarely say why a step was added.

Ask about history. What has been tried before? What went wrong? Which decision would they make differently today?

Ask about people. Who outside the team do they call, and for what? Which client contact needs a personal call?

Write decisions down when they are made. A short decision log with the date, the decision and the reason takes a few minutes. It saves the next person hours of guessing.

Let someone else do the asking. People cannot see the gaps in their own knowledge from the inside. A colleague or interviewer who does not know the work asks better questions. The expert then checks the write-up.

Start when someone resigns. The notice period is the last stretch of time when the person can still be asked. The first 72 hours after a resignation are when the most time is left. Our 42 knowledge transfer interview questions are a starting point for the interviews.

Frequently asked questions

What is institutional knowledge in simple terms?

What an organisation knows about how it works and why. Much of it is held by the people who have been there longest.

What is the difference between institutional knowledge and tacit knowledge?

Tacit knowledge is knowledge that is hard to put into words. Institutional knowledge is knowledge the organisation depends on. The two overlap. Much institutional knowledge is tacit, and some of it is written down but hard to find.

Is institutional knowledge the same as tribal knowledge?

The terms are mostly used for the same thing. Tribal knowledge is more common in engineering and manufacturing. Institutional knowledge is the more neutral term.

What is an example of institutional knowledge?

Knowing why a supplier was dropped three years ago. The supplier list shows that it happened. Only the people involved know why.

How do you preserve institutional knowledge?

Ask the people who hold it for the reasons behind processes and decisions. Do it with structured interviews, ideally led by someone else. Start as soon as someone resigns, and keep a decision log for new decisions.

Want the institutional knowledge captured before someone leaves? See how Rinto interviews the people who leave, asks the follow-up questions and turns the answers into onboarding for the next person.

Sources

• James P. Walsh and Gerardo Rivera Ungson, Organizational Memory, Academy of Management Review, vol. 16, no. 1, 1991, pp. 57-91.

• Panopto and YouGov, Inefficient Knowledge Sharing Costs Large Businesses $47 Million Per Year, 17 July 2018. Link