The Cost of Poor Communication
If we're serious enough about capturing our best return to invest the energy into building a leadership culture that starts from the top and cascades throughout our organization, we'll have a solid start toward achieving quantifiable results in addressing our profitability killers. And when we do, we can expect that to impact every other individual issue that's been eating away at the profitability of our organization! The next profitability killer that deserves our focus is poor communication. More specifically, how much poor communication really costs.
In the second lesson of our Emerging Leader Development course, I share stats from Salesforce.com and SIS International Research to emphasize how significant these costs are. Instead of citing those yet again here, consider how an article I found on the Society for Human Resource Management's website opened in making their case for what they called "A Business Rationale for the Communications Competency." "David Grossman reported in 'The Cost of Poor Communications' that a survey of 400 companies with 100,000 employees each cited an average loss per company of $62.4 million per year because of inadequate communication to and between employees." Even after working close to twenty years for a large manufacturing company, I have a hard time wrapping my head around companies that size and losses that big. Thankfully, that opening paragraph closed with an example that hit a bit closer to home: "Debra Hamilton asserted, in her article 'Top Ten Email Blunders that Cost Companies Money,' that miscommunication cost even smaller companies of 100 employees an average of $420,000 per year."
Another article from BusinessWire.com in early '22 referenced a study done by Grammarly and Harris Pole digging into the "far-reaching impacts of poor workplace communication on U.S. businesses and employees" estimated "up to a $1.2 trillion annual loss among businesses due to ineffective communication." As I think back to the conversation I had on a Friday evening several years ago when my friend told me he "didn't have time for all that touchy-feely stuff; he was responsible for growing the business," I can't imagine he had any perspective whatsoever for losses his team was experiencing from communication alone...
Don't misunderstand me here; I don't believe he (or any responsible executive) would ever intentionally squander that kind of profit. But if poor communication is genuinely responsible for losses this significant and this widespread, it seems to confirm George Bernard Shaw's suggestion that "The single biggest problem with communication is the illusion that it has taken place."
To truly grasp the significance of this profitability killer, we need to accept that communication requires more than just saying a few words at a volume that can be heard. We need to ensure our message is received and understood to have any hope of capturing even a little bit of what's often lost. With that in mind, let's consider why it's more complex than just saying something once, especially if we need our team members to take action and get results!
Once Ain't Enough!
One communication issue I've seen kill profitability as much as any other ties directly back to the illusion George Bernard Shaw suggested; we can't assume we've gotten our message across just because we shared it once.
Have you ever heard someone say, "I'm only gonna say this one time!"? Here's another question requiring more than a bit of honesty: How often have you said that? I can assure you I've made that statement as much as anyone! If you don't believe me, ask Cindy or our son... I'm sure I don't have to ask whether you think this could ever be a realistic expectation. If you have kids or have never been around kids, you know it's not.
One of the most important lessons I learned in all those years of behavior-based safety is that a forty-seven-year-old usually does things for the same reasons as a seven-year-old. I don't say that to belittle the forty-seven-year-old (or the seven-year-old), but to emphasize that we all tend to act according to what's expected of us, and saying something once will rarely be sufficient-especially if we need a specific action based on that message.
In lessons two and four of our Emerging Leader Development course, we open by citing statistics John Maxwell shared on the first page of his 2010 book, Everyone Communicates, Few Connect:
? "We're bombarded with thirty-five thousand messages a day."
? "Most people speak about sixteen thousand words each day."
After sharing those, I challenge participants to consider how much the first has increased since John wrote the book over a decade ago. Then I ask them to consider what they're doing to ensure the messages they need their teams to receive and act on make it through all that noise.
A painful reality that compounds how much profitability poor communication can kill is that few organizations tie it directly to what they typically measure. In all my time in manufacturing, we kept meticulous records of things like scrap, downtime, tooling replacement costs, and nearly anything else you can imagine. If we had ever worked through a 5 Why Analysis for any of those things, I am confident that someone had understood something somewhere along the line! But since that would have fallen into the touchy-feely category, I'm not sure anyone would have taken it seriously. I believe the real reason would have been because they wouldn't have known how to do anything about it.
If you've ever had one of God's chicken sandwiches, your Thank You was acknowledged with a My Pleasure. And because that's just what we've come to expect at Chick-fil-A, it's hard to imagine anything else. It wasn't always that way, however! I heard Jeff Henderson share a story detailing how long it took Truett Cathy to make the cultural change from the traditional You're Welcome. This wasn't something Truett said once like it was written on a stone tablet he had received on the mountaintop; it took ten years!
If we want to capture any profit lost to poor communication, we cannot take the "I'm only gonna say this once" approach. Even then, though, we'll still need a lot of support from every team member around us.
Impacting Every Level of the Organization!
Learning that it took ten whole years to make a change within Chick-fil-A that, at least from the outside looking in, seemed like something relatively simple, I'm guessing you're tracking with me as to why we cannot expect to say anything just once and get our entire team on the same page with us. But that example was tied to getting a whole bunch of people at all levels of a large organization in cities across the country to change something that was likely a deeply ingrained habit; no wonder it took so long-right? Getting a smaller team to take action on something new can't possibly be that hard...
Think back to the statistic from SIS International Research I referenced before, which tells us that "the cumulative cost per year due to productivity losses resulting from communication barriers is more than $26,000 per employee. Not only that, the study found that a business with 100 employees spends an average downtime of 17 hours a week clarifying communications. Translated into dollars, that's more than $530,000 a year." When we covered this in a public Emerging Leader Development course recently, one participant quickly suggested that he thought these numbers were way too low! As a third shift supervisor at a local manufacturing facility, most of his employees were some of the newest in his company, and he felt sure his shift had that much downtime each week due to poor communication. And there were far fewer than 100 employees on his team!
Before I go on, consider just how much profitability that's killing! And don't make the mistake of hanging those numbers on the shoulders of this particular supervisor or even the entire management team in that facility. Poor communication is a profitability killer that impacts every level of leadership AND everywhere else throughout an organization!
I often hear the term "individual contributor" tied to the suggestion that as long as the folks lumped into this category are proficient in the technical skills required for their role, no other type of development is necessary. That's crap! On the most basic level, I'll challenge you to consider how many people you've seen in any organization you've ever been a part of or done business with who ONLY perform their specific job and never interact with another coworker. I have yet to think of anyone I've ever seen who would qualify, although I can picture quite a few who would have been much better suited for something like that if it existed.
Now consider how frequently we need our team members who are at least somewhat competent in their technical roles, those individual contributors, to train new team members coming into our organizations. If they've mastered their jobs, poor communication shouldn't impact how effectively they train someone, should it? And that couldn't possibly have anything to do with whether that new employee ever makes it through the orientation and onboarding process... Oh, wait a minute! Maybe it does! Could that possibly be creating some of the downtime referenced in the SIS study?
I'd also challenge you to consider how these issues grow exponentially when (not if) our team members butt heads, but that's likely beating the ole dead horse... Considering how much of a profitability killer poor communication is with our so-called individual contributors, is it safe to think similar issues don't exist at the supervisory, manager, or even executive levels? I certainly wouldn't take that bet! And that's precisely why poor communication is the second specific profitability killer we're working through in this process!
Moving forward, we'll look at other profitability killers that are fed by poor communication, and I'll make a case for why violating the golden rule could very well be one of the best things we can do to get a handle on it.
