Research cited by SHRM reveals that for companies with 100,000 employees, the average annual cost of inadequate communication is $62.4 million. For companies with 100 employees, the cost is calculated at $420,000 per year.
Those are staggering numbers and may even be understated; it’s probably impossible to account for every cost of poor communication. In this post, we’ll look at four ways that poor communication can be costly for your business. Watch out especially for No. 4.
1. Reduced efficiency
In business, poor communication leads to confusion, time spent requesting and waiting for clarification, and incorrect actions being taken—all efficiency killers. Here’s a quick look at how poor communication can occur with three of the most common communication tools:
- Email and other online communication—Lack of clarity. A landmark study found that online messages are misinterpreted 50% of the time.
- Text messages—Incomplete information. Brevity is usually good, but it doesn’t always equal clarity if the information is insufficient. Too little information can leave recipients with uncertainty, leading to mistakes.
- Documentation—Incorrect, outdated, or insufficient information. Poor organization. Lack of clarity. Too much information. Important resources such as standard operating procedures, work instructions, reports and handbooks are critical to get right and can go wrong in a lot of ways. The results: workers are uncertain of what to do next or take the wrong actions, or they might flat out ignore the documentation (especially if it’s too dense or poorly organized).
2. Reduced innovation
Innovation requires a collective effort. If your team can’t communicate instructions effectively or explain new ideas and developments in an understandable way, people can’t work well together. The result: your company’s innovation efforts will become bogged down by delays and confusion.
3. Lower employee morale
Poor communication can damage how employees view their employer, which negatively impacts productivity and engagement. Part of this damage results from reduced efficiency and innovation: workers grow frustrated by poor communication that slows, even halts, the progress of their work. But other communication factors are also damaging. For example, if changes in the company, new products, and other developments that are important to workers aren’t communicated, employees can become disillusioned and left unsure about both the direction of the company and their role in it.
4. Communication shipwrecks
The first three items are like termite infestations: it’s over time that these problems become disastrous. Communication shipwrecks, however, put your company on the rocks in a hurry. They’re mishaps in which poor communication causes direct damage to your company or brand.
A quick example of a communication shipwreck helps illustrate this. This example involves Target. In spring 2013, the retail giant described a regular-size dress on its website as available in “dark heather gray.” Elsewhere on the website, the same dress, in the same color, was described as “manatee gray.” The only difference: the latter dress was in the plus-size department.
A manatee, of course, is a large aquatic animal that looks like a walrus and is also called a “sea cow.” Larger women were justifiably upset. It turned out that Target’s different buying teams had failed to consult each other when naming the colors for the dresses. When plus-size women noticed the difference in wording, Target found itself swimming in dangerous PR waters.
One lesson here is that documents within a company and across company departments should be checked for consistent terminology. Why? Because inconsistent terminology can confuse readers. Another, even more important lesson, is this: word choice matters. Thoughtless wording can hurt feelings and cost your company customers and sales.
To read about 20 other communication shipwrecks, download our white papers “Communication Shipwrecks: Part One” and “Communication Shipwrecks: Part Two.” They’re fun reads and include the common-sense tips that will help you improve your company’s communication.
You’ll read about shipwrecks involving:
- LeBron James
- Santa Claus
- Air Force One
- General Motors
- Hurricane Sandy
- And many more!