The ROI of Better Knowledge Management

Kristen Craft | May 8, 2018

How many times per month do you answer the same question or do the same task? How often do you help your co-workers find a document, a data point, or a piece of information? Do you struggle to regain focus on whatever you were doing before the interruption?

For many of us, interruptions are a common part of each day. We take it for granted that they exist…they’re the cost of doing business, right? What if you could eliminate them or at least reduce them dramatically? By documenting and aggregating information better, you can minimize repetitive work and conversations in the future. Let’s take a look at how better knowledge management can help you save your future self.

The Costs

The costs of poor knowledge management often fall into predictable categories: hiring costs, attrition, and wasted work. These costs vary, depending on what kind of work you do, what sorts of people you employ, and how individuals communicate with one another. But given our experience working with thousands of different teams, we’ve seen a lot of common ground when it comes to costs.


Generally, the cost of losing an employee is cited at 50-200% of that person’ salary. The percentage tends to increase, the more experienced an employee is. Where does that figure come from? Some of these costs are purely financial: recruiter fees or signing bonuses, for example. Others are harder to measure but significant nonetheless. For example, how do you gauge the cost of having a new person on board who doesn’t yet know the ropes? This phase comes with significant costs even if you can’t quite pinpoint a dollar amount.

According to the bestselling business book, The First 90 Days, most new leaders take six months to hit the “break-even point.” This is defined as the point where the new person has contributed as much value to the organization as they’ve extracted. If you can reduce this period from six months to three, you eliminate costs equivalent to roughly 25% of that person’s annual salary plus benefits. Now multiply this by the number of people you generally hire in a year.

To make the math easy, let’s say you’re a 100 person company with average salaries (plus overhead) of $150k per employee. If you lose and replace 10 people, and you hire another 10 people on top of those replacements, you’re facing costs of 20 people x 50% x $150k = $1,500,000. Reducing your time to break even from six to three months means you save $750,000.

Duplicated or Unnecessary Work

This one is harder to measure, but all too often, we start a task, only to realize that someone else is working on the same thing. Or we realize that someone has done this task historically, but they didn’t document it anywhere. Not only is there the frustration of realizing your time has been wasted, but you may also bump into uncomfortable territory conflict where both parties believe they should “own” the task.

This kind of fruitless work is a waste of time, so it has a measurable cost. But it also comes with organizational costs in the form of employee strife and unhappiness. If it happens too often, you become more likely to lose a great employee, compounding your employee turnover costs.

The Rewards

Teams that document and share knowledge effectively can expect to reap big returns. These often come in the form of increased close rate, higher customer value, and productivity gains. Not to mention the employee satisfaction of being part of a well-oiled machine, (and therefore, hopefully, greater employee retention.)

Increased Close Rate and Deal Size

Anyone who’s ever worked closely with sales teams knows that knowledge is power during the sales process. If a prospect needs product specifications, and you don’t have them, the likelihood of losing the deal skyrockets. On the other hand, if you have the right customer reference or case study at the right time, it can fast-track your ability to win the contract.

Make sure you’re arming your sales team with the information they need to answer any customer question or handle any objection. Not only will this lead to a higher close rate, but it can also help to increase the size of a deal or extend the lifetime value of a customer. Answering questions quickly and effectively bolsters confidence in the brand and loyalty to the team.

Increased Productivity

Research coming out of UC Irvine found that people are interrupted every three minutes and five seconds at work. The trouble is, it takes a whopping 23 minutes and 15 seconds to get back on track with the previous task. Some of this is self-imposed: we jump around because we’re bored by what we’re doing, we get curious about something new, or we simply crave the feedback of seeing a new message in our inbox. But the other 50% of interruptions happen because people need information from us. If you share information in a better way, your team can get some of this time back and boost productivity.

Let’s assume a 40-hour work week. Given our ratio of 3 minutes of work and 23 minutes of getting back on track, only about 12% of a week is spent productively. Your company faces a cost equivalent to 88% of the workweek. What happens if we can reduce half of the external interruptions, (ie not self-imposed context switching)? You increase your productive time by 25% with good knowledge management. The cost savings are even better when you use your own documentation to get back on track with a task more quickly.

The False Dichotomy: “I don’t have time for documentation and my regular work”

We hear this a lot at Tettra, but really, it’s a false choice. If we have time to spend 88% of our week on interruptions, we have time to document things better. If we have time to email instructions to someone once, we have time to put those instructions in a place where others can access them. Really, we don’t have time to not do this. Every time we fail to document something properly, we’re creating more work down the road: for ourselves or for others.

More importantly, when done correctly, knowledge sharing doesn’t need to take up time. It can be done as you’re working on other things and can be tackled only when truly needed. The most high-functioning teams recognize that they don’t need to create documentation from scratch. Rather, they use Tettra as a hub for pre-existing resources. They import documents from elsewhere or set up workflows (with Zapier, for example), to mirror the flow of their week. Your future self will thank you.