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 I believe 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 really are. Rather that 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.” To be honest, 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 in sharing that; “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 image he had any perspective whatsoever for losses his team was experiencing from communication alone…

Don’t misunderstand me here, I also don’t believe he (or any responsible executive) would ever intentionally squander that kind of profit. But if poor communication is truly responsible for losses this large and this wide spread, 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 really grasp the significance of this profitability killer, we need to accept the reality that communication requires more than just saying a few words at a volume that can be heard. We need to make sure our message is received and understood to have any hope of capturing even a little bit of what’s so often lost… And next time we’ll look at why it’s never as simple as just saying something once, especially if we need our team members to take action and get results!