Retention Management as a Means of Protecting Tacit Knowledge in an Organisation : A Conceptual Framework for Professional Services Firms

Despite the recent economic downturn, retention management remains one of the most relevant and significant topics in international Human Resource Management (HRM). The most common explanation for such a significance is that excellent retention management has become a major source of competitive advantage in the modern and rapidly globalising business world. Another key reason that is mentioned by a majority of companies is that it just simply costs too much money to replace even one valuable employee. Hence, the main task of retention management is twofold. Besides applying the correct motivation techniques to retain its top talent and maintain a competitive advantage, the organisation also has to reduce the replacement cost and especially its ‘soft’ component (the cost of losing employees’ experience, professional expertise, key customer relationships, etc.) if or when an employee does decide to leave. Most of the academic literature on retention deals with general and unspecific preventive strategies pertaining mainly to industrial companies. This paper concentrates particularly on the retention techniques designed to protect the important tacit knowledge in Professional Services Firms (PSFs), which would help them reduce their overall replacement costs and increase their competitiveness in the marketplace