The high cost of (mis)communication

If an internal memo takes several days or weeks to trickle-down through your organization, do you know how that affects your business?

If a product recall or new marketing initiative is sent through many channels and passes through many hands before it reaches everyone, do you know how that directly impacts operational goals and objectives?

If your organization suffers from ‘communication chaos’, do you know how much that costs your company?

Does your C-suite understand all of the costs associated with miscommunication?

It’s a pretty safe bet that most organizational executives and leaders fail to consider that missed revenue projections and anemic profit margins can be a direct result of internal miscommunications.

In fact, if leaders were told that inefficient and ineffective internal communications were costing them millions every year, they might reconsider when asked to fund and prioritize your communication projects.

Your Communication Chaos

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In a publication released last year by The Grossman Group, the hard facts surrounding missed, misunderstood, and/or misinterpreted internal communications are jarring to consider.

  • An estimated $37 billion is lost annually in UK and US enterprises due to employee misunderstanding*.
  • On average, employee misunderstanding costs a 100,000-employee company $62.4 million each year.
  • Misaligned communication costs small-and-medium-sized businesses an average of $26,041 for every knowledge worker dealing with ineffective communication, and could cost a 100-employee company more than $500,000 a year.

*“Employee misunderstanding” refers to actions or errors of omission by employees who misunderstood, misinterpreted or were misinformed about company policies, business processes, job function or a combination of the three.

Miscommunications are costly, but strong internal communication methods positively impact financial performance. Companies with highly effective communication practices had 47% higher total returns to shareholders over five years (2004-2009) compared to those with less effective communication.

How can organizations cure their communication chaos disease?

One immediate antidote is a commitment to ‘overcommunication.’ Are you worried that over communication is just like the chaotic mess image above? Not at all.

In The Advantage: Why Organizational Health Trumps Everything Else in Business, Patrick Lencioni states that internal communication messages need to be said many times, ie, ‘overcommunicated’ before they are actually heard and believed by employees.

How many times? The exact number varies (between 5-7), but Lencioni’s argues that to dispute the exact number of times misses the point. Lencioni shares:

… the point is that people are skeptical about what they’re being told unless they hear it consistently over time.
… great leaders see themselves as Chief Reminding Officers as much as anything else.

Lencioni goes on to say that “employees are not analyzing what leaders are saying based solely on whether it is intellectually novel or compelling, but more than anything else on whether they believe the leaders are serious, authentic, and committed to what they are saying. Again, that means repetition is a must (pgs. 141-143).”

Effective communication can save and make money

The cost of miscommunication and lack of overcommunication is significant for every organization, no matter the size. The next time you are seeking both budgetary and human resources support for your internal communication initiatives and projects, remember that your project plan must consider more than just the methods or digital communication platforms you and your team plan to use. The C-suite wants to know how your project will either save or make money.

Start by calculating the cost of miscommunication for your organization based on the number of employees you have. Ask various departments to share stories of times that effective communication could have saved or made the company money.

After gathering information, share it with your colleagues to show just how much it would cost if the company chose NOT to implement your ideas. Overcommunicating the ROI of strong and consistent internal communications to your company’s senior leadership team is worth every penny.

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