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 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 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… With that in mind, let’s 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!

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 I just referenced; 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 that will require more than a little bit of honesty: How often have you said that? I can assure you that I’ve made that statement just as much as anyone! If you don’t believe me, just ask Cindy or our son… What I’m sure I don’t have to ask here is whether or not you believe that could ever be a realistic expectation. If you have kids, or even if you’ve ever 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 47 year old usually does things for the same reasons as a 7 year old. I don’t say that to belittle the 47 year old (or the 7 year old), just 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 taken 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 make sure the messages they need their teams to receive and act on ever 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 one of those things, I have no doubt that someone had misunderstood 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. Truth be told though, 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 though! 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 10 years!

If we want to capture any of that 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 full years to make a change within Chick-fil-A that, at least from the outside looking in, seemed like something fairly 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? It can’t possibly be that hard to get a smaller team to take action on something new…

 Think back to the statistic from SIS International Research that I referenced before that said, “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 of the participants was quick to suggest 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 as a result of poor communication and there were far less 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 all on the shoulders on this particular supervisor or even the entire management team in that facility. Poor communication is a profitability killer that has an impact at every level of leadership AND everywhere else throughout an organization!

All too often, I hear the term “individual contributor” tied to the suggestion that as long as the folks who are 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 interacts with another co-worker. I can’t think of a single person 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 or not 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 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… With some perspective in mind for 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 exactly why poor communication is the second 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 possibly do to get a handle on it. Stay tuned!