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The Cost Of Poor Communications

David Grossman 17 Jul 2011

Surely the main culprits in the new movie, “Horrible Bosses” are guilty of sins greater than poor communications, but as I viewed the trailer this week, it made me think (again) about the implications and costs associated with ineffective leadership. “Horrible Bosses” is full of unrealistic scenarios and laughable insinuations about how business leaders conduct themselves today. The reality, though, is no laughing matter. In my experience, some of the most unintended errors can be the most costly for companies.

Most leaders today would never begin their day by thinking. “I’m going to purposely ignore my employees today.” That said, by not recognizing the importance of good communications, leaders can incur significant costs to their organizations. I’ve seen the damage ineffective communication, miscommunication, and no communication at all can do.

As usual, data show us how hefty the cost of poor communication can be:
1. $37 billion: total estimated cost of employee misunderstanding (including actions or errors of omission by employees who have misunderstood or were misinformed about company policies, business processes, job function or a combination of the three) in 100,000-employee companies, among 400 surveyed corporations in the U.S. and U.K. (average cost per company is $62.4 million per year)
2. $26,041: cumulative cost per worker per year due to productivity losses resulting from communications barriers

Conversely:

3. Companies that have leaders who are highly effective communicators had 47% higher total returns to shareholders over the last five years compared with firms that have leaders who are the least effective communicators
4. Best Buy found that higher employee engagement scores led to better store performance. The company found that for every percentage point it boosted employee engagement, individual stores saw a $100,000 increase in operating income annually.

These few facts are the tip of the iceberg on the breadth and depth of research that demonstrates financial reward for businesses that communicate well to their employees, and the problems that result when they don’t.

Unfortunately, poor communication skills are the result of a conscious decision by leaders to not improve. “I don’t have time to communicate,” is a common myth I hear, along with the thought that “People won’t interpret actions if we don’t talk about things.”

Leaders communicate with or without intention so my point-of-view is: you might as well get good at communications.

Improving communication involves more than just disseminating the message properly so that it’s heard (though that alone can be a challenge); it means ensuring that the message resonates with and is understood by the listener(s) in a way that will move them to action. It’s hard work, but it’s worth it. Everything a leader needs to get accomplished today is done through people.

So what can leaders do to be better communicators?

1. Stop making excuses. Commit to getting better, for you, your team and your company. Allocate the necessary time, energy and resources to deliver your message with the right context and meaning to engage your employees.
2. Get a mirror. Reflect on what others are seeing and reading every time they interact with you. Understand where you are, not where you think you are. If possible, get data on how you’re doing through a 360° review or other survey.
3. Be audience-focused. Knowing where your audience is coming from helps leaders position messages in the right way so they’re meaningful and relevant. Leaders also need to leverage channels and media their audiences use so they know their communications are getting through.
4. Have a plan and be purposeful. Create a communications strategy and translate it to an action-oriented plan. Don’t expect immediate results. “Just do it” doesn’t work with communications. Leaders need to begin with a clear assessment of the business outcome they want to achieve, and then have a timeline-based plan in place to get their goals accomplished.
5. Listen and walk the talk. Ask for and take action on employee suggestions, say thank you, articulate expectations, provide meaningful information and don’t spin messages. These are ways you demonstrate that you value your employees.
6. Be persistent. Remember, good communication is a skill, and like all skills, it takes practice and feedback to get better.
Ensuring consistent and strategic communications will enable you to connect the dots for employees between their roles, your expectations, and the big picture of the business objectives. Real money is on the line, and only horrible bosses would leave that on the table.

David Grossman, ABC, APR, Fellow PRSA, is author of You Can’t Not Communicate and the follow-up, You Can’t Not Communicate 2. He is founder and CEO of The Grossman Group, an award-winning Chicago-based communications consultancy.

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