Knowledge is Power Ensure that important company clients, projects and processes aren't lost when an employee walks out the door.

Four years ago, Cliff Smeed and Paul West learned all about the importance of capturing company history before it walks out the door. The business they worked for had fired a remote worker whose company laptop was so damaged nothing could be retrieved from the hard drive. The details of an important project were lost. "Getting a hold of the person wasn't an option," Smeed says. "Corporate just had to stitch the project back together again."

Today, Smeed, 46, and West, 33, are the co-founders of SharePoint360, a 3-year-old San Diego company that hosts Microsoft's SharePoint collaboration software for various Fortune 500 companies, government agencies and small enterprises. Perhaps not surprisingly, they've taken steps to ensure the same thing doesn't happen to their business.

You just don't know what you've got until it's gone, especially when you're dealing with an ex-employee who holds the keys to a client, project or process. It's hard to know the exact cost of lost employee knowledge, but experts put it in the millions. "Some people call it the cost of stupidity," says Tom Davenport, a knowledge management expert and the co-author of Working Knowledge: How Organizations Manage What They Know. Unfortunately, companies that haven't picked employees' brains may find it's too late to start. "If you're on the verge of layoffs," Davenport says, "you've blown it."

David DeLong, author of Lost Knowledge: Confronting the Threat of an Aging Workforce, sees a paradox: As the need for knowledge retention grows in this recession, the resources put into it are likely to be cut back. "The risks of knowledge loss [are being] hidden by the sudden preoccupation with economic survival," he says. A February business survey by the Institute for Corporate Productivity found that only 20 percent of the companies surveyed thought they were retaining knowledge well.

West and Smeed haven't forgotten just how much lost knowledge can hurt productivity. The 34 employees at SharePoint360 upload reports and messages to a centralized portal, and online collaboration has become a big part of the culture. Company history is at employees' fingertips. "We don't push work around; we come to the work," West says. SharePoint360 projects sales of $5 million in 2009.

Portals and collaboration software aren't the answer for every company, of course. Weekly meetings and brown bag lunches are easy, low-tech ways for employees to share what they've learned. If you want employees to document what they're doing, you'll have more success if the documentation is central to the work instead of an afterthought that feels like a waste of time. For example, you might have your salespeople write short, periodic status reports for clients that are also filed away for reference by future employees.

As the economy picks up, many companies will start paying for what they've lost. "Leaders are going to suddenly realize that they've let go [of] people and knowledge that's critical to their future," DeLong says. Well, at least they'll have their memories, right?

Chris Penttila is a freelance journalist whose work has also appeared in The Costco Connection, Oregon Business magazine, QSR Magazine, TheStreet.com and other publications. She lives in the Chapel Hill, North Carolina, area, where she manages two kids, a husband and a feisty cat when she's not writing.