+1-646-6882318
nicki@theglasshammer.com

Sharing Soft Information in a Decentralized Organization

By Melissa J. Anderson

As companies get flatter and turnover increases around the world as aging workers retire, many employers are struggling to find a way to ensure information is successfully captured and communicated throughout their workforces. Soft information, which is discretionary and difficult to measure, is also difficult to pass on.

One way to do this is through information sharing technology, where employees enter thoughts and experiences with clients or customers into a database for later use. A new study of a large credit union in the US showed that this method is far more effective than expected, and it has the results to back it up.

“Contrary to prevailing views on the limited portability of soft information, our results provide evidence that the ‘stock’ of soft information accumulated in this system has persistent effects on the lending decisions of employees,” write the authors of the study Dennis Campbell, Harvard Business School and Maria Loumioti, University of Southern California.christian louboutin online shop,cheap ralph lauren t shirts,cheap louis vuitton bags uk,cheap michael kors handbags uk,cheap party dresses online

According to Campbell and Loumioti, soft information entered in the system enables employees to “increase access to credit for borrowers, provide more favorable pricing terms, and reduce the ex post risk of their lending decisions.”

What’s more, that information was transferred between employees. They write, “These effects remain even when this information was acquired by employees other than the decision-maker, and they are not diminished by the physical separation of employees working in different business units.”

Research

As the global economy increasingly relies on information workers, companies are learning that it is critical to capture their thoughts and experiences for later use. This can be challenging because such soft information isn’t easy to document, store, or spread to others. It’s also not easy to know which parts of that information will be useful down the line. Campbell and Loumioti explain:

“We define portability of information as the extent to which it can be stored for, communicated to, and used over time and by employees other than those that originally acquired or produced the information. Previous studies show that difficulties in capturing, storing, and communicating soft information can inhibit its portability across individuals within the organization.”

Based on an analysis of a database of highly discretionary information at a regional credit union, the two found that capturing this information was extremely valuable. They also found that other employees were likely to use it in decision making down the line. It also produced measurable outcomes in product use at the company.

“Contrary to the prevailing view that soft information is not readily portable, our results provide evidence that the “stock” of soft information accumulated in this system has persistent effects on the lending decisions of employees, after controlling for consumer, loan and employee characteristics. We show that employees rely on this information to increase access to credit for borrowers and provide more favorable pricing terms.”

The information that gets stored and shared also gets used. But what may be most interesting about the study is that the practice of saving soft information was cultural.

Culture of Information Sharing

The system wasn’t initially designed as a way for employees to share soft information. According to the researchers, it was developed for “vertical communication purposes” – monitoring by management. But it evolved into something else as employees repurposed it for their own horizontal communication purposes. “In particular, while not trained, required, or explicitly motivated to do so by the organization, employees often take it upon themselves to enter notes on facts they learn about customers even during routine interactions not requiring exceptions.”

Campbell and Loumioti write that employees use the system simply because they feel it may be useful to one another. “Often, the rationale for doing so is that the information may be helpful to other employees in providing service to that customer.”

In a decentralized institution like this one, the dedication to using this system was the result of a culture in which employees care about the success of the company. According to the paper, this culture led to success. The credit union, which has $1.6 billion in assets, “has consistently ranked in the top 15 percent in productivity (revenue per employee), loan default rates (2nd lowest), and overall performance (return-on-assets).”

Leave a Reply