Communicate and Prosper
How much has poor communication cost your company in the past twelve months? Chances are, you have no idea. Chances are even better it's a lot more than you can afford.
But you won’t find the numbers in the financial statements or year-end departmental reports. Nothing shows up saying "lost productivity due to miserable meetings" or "missed business opportunities through sorry selling skills" or "employee quit because there's no communication around here."
Why? Because most people aren't sure what communication really is.
Consider this: When companies conduct internal needs assessments, communication virtually always surfaces near the top of the list. But if you ask ten people who put it on the list exactly what they meant, you’ll get ten different answers. People often can’t pinpoint the problem—they just have a vague feeling communication isn’t happening. Unfortunately, this vagueness relegates communication to the bottom of the action list.
Truth is, communication isn't some warm and fuzzy "nice to have"— it is nothing less than the lifeblood of your organization. If blood doesn’t circulate at just the right pressure and speed to all parts and extremities of the human body, that body sickens and eventually dies. So, too, does an organization where communication doesn't flow freely.
Communication isn’t limited to vision and mission statements from the top; it’s not just news releases publicizing financial results or new product announcements; it’s not just internal or client newsletters, annual reports or videotaped messages to the troops. These are all important, but they form just a fraction of the communication—and miscommunication—that takes place every day in the workplace.
What I call applied communication is written, spoken and non-verbal interaction among people in order to get things done. It takes co-operation to create a product. It takes collaboration to approach a new market. It takes teamwork to implement a strategy. It takes this applied communication to oil and run the machinery of business. And if that machinery breaks down—as it often does—a great deal of money is lost. It's in this area, applied communication, that we need to look for the financial drain.
Loss of time
What does your time cost the company for each hour you are at work? A good rule of thumb in calculating hourly cost is: annual salary divided by 2000 (based on 50 40-hour weeks). When you know this figure for your own time as well as that of your staff, you can begin to calculate the cost of applied communication at work.
Consider meetings that are supposed to last an hour but somehow expand to use up most of the afternoon. Calculate the hourly cost of total participant time and multiply by the length of the meeting—and keep in mind that the higher level the participants the more expensive the time. The result may not sound too alarming, until you consider how many of those meetings take place in your organization every day, every week, every year. Do the arithmetic.
If a $40,000-a-year employee spends just two hours a day reading, writing and managing e-mail, that’s a $9,000 annual cost. Judging from what people tell me about their work habits, two hours a day is a conservative estimate. And what about those at much higher salary levels who spend much longer writing every day? Do the arithmetic.
Loss of business
Sometimes salespeople know their "pitch" so well that they totally ignore any input a prospective customer might give them. They barely shake hands and sit down before they start talking. They blithely prescribe their product or service as the cure for a problem, without even finding out if such a problem even exists.
But an effective sales process is, in fact, a conversation, a two-way exercise in applied communication. Done poorly, it can result in lost sales and missed opportunity for ongoing business relationships.
Customer loss doesn’t happen only in the sales process, but can also be spurred by an inept "customer service" exchange. When someone calls to complain, the client relationship is at a fragile point. It can be repaired through the right message well delivered, or broken beyond repair by poor communication. When we consider the total lifetime value of a customer relationship, we can truly appreciate the real dollar cost of poor communication.
Loss of people
Whatever people tell their bosses about their reasons for leaving the company, exit interviews often tell a different story. One of the most common reasons cited is that they don’t feel anyone listened to them.
Day after day in the workplace, millions of people go through the motions of talking with each other in person and on the phone, constantly connected through technology, and never truly communicating with one another. Study after study tells us that recognition and respect are more motivating than money, and one of the best ways to show people they are valued is to listen to them. Sadly, listening is probably the most underused of all the communication skills.
So people leave. How much then does it cost to replace them? Studies give a wide range, from a low of 25% of salary, plus benefits, to a whopping 150%. Employee replacement represents yet another huge cost that can at least sometimes be charged to poor communication.
By improving the way people (and I mean people at all levels) interact in order to get things done, we can increase productivity—with its attendant positive impact on the bottom line.
Helen Wilkie is a professional keynote speaker, workshop facilitator and author, helping companies save their money and people save their sanity through better communication. Her latest book is "The Hidden Profit Center —a tale of profits lost and found through communication." For more articles and other information, visit http://www.mhwcom.com. While you're there, sign up for Communi-keys and receive monthly communication techniques directly from Helen.
(This article was originally published in The Globe and Mail, Canada's national business newspaper).
Many more articles in Communications in The CEO Refresher Archives