How Does Poor Communication Affect Business Outcomes?
Effective company communication is essential to the success of any business. It is the blood flow of the company, delivering the information that employees need to get work done and providing the mechanism for building and strengthening relationships at work.
The impact of poor communication in the workplace can be felt across the board, even leaking externally to customers. At the individual level, employees feel disconnected with no clear direction from management, leading to low satisfaction, engagement and performance. At the department level, silos keep teams from working together efficiently and the absence of a clear vision and goals from the top can lead to unsatisfactory performance.
Organizations that fail to prioritize communication and ensure that employees are connected to company goals are likely to experience a range of negative outcomes. Here’s how poor communication commonly affects the workplace:
1. Increased employee turnover
Employee retention is a huge metric because it is not only costly but also impacts the company’s ability to serve its customers. Research estimates that replacing an employee can cost as much as 3x the person’s salary. On the flip side, when companies do communicate effectively, they are 50 percent more likely to report turnover levels below the industry average.
2. Poor customer service
Customer service is impacted in two ways by poor communication in the workplace. First, employees don’t have the information they need to do quality work, which can be quite detrimental for customer-facing roles such as field service technicians.
Second, low employee morale is felt by customers during their interactions and creates a negative experience. Sears found that a five-point improvement in employee attitude resulted in a 1.3 percent increase in customer satisfaction and thus a 0.5 percent increase in company revenue.
3. Lower shareholder return
Research by Towers Watson has shown year after year that companies with highly effective communication practices see 47 percent higher total returns to shareholders compared with firms that are the least effective at communicating. These higher shareholder returns are also complemented by an increased market premium.
[Related: 5 Team Communication Strategies That Benefit Your Bottom Line]
4. Lower employee productivity
With poor communication in the workplace comes lower productivity because employees don’t have access to the people, knowledge, and resources that help them do their jobs and don’t have the passion and motivation to perform well or even exceed expectations.
5. Greater incidence of injury
Poor communication around health and safety hazards is not only dangerous, resulting in higher rates of injury and death, it also gives employees the feeling that the company doesn’t care about the well-being of its employees.
Blueline Rental is the 4th largest construction equipment rental company in North America, saw this first-hand after deciding to prioritize communication and culture across the company. By using Zinc, BlueLine took its TRI safety score (which needs to be 1 or below) from over 3 down to 0.74 – making it one of the safest companies in the industry.
Similarly, Pepper Construction used real-time safety Broadcasts to increase project safety to 98 percent safe – an impressive feat for employees working in one of the most dangerous professions.
6. Increased absenteeism
The impact of poor communication in the workplace shows up pretty significantly in employee satisfaction and engagement rates. If employees aren’t up and leaving the company, research shows that many of them will choose to simply not show up for work. One company revealed that 18 percent of the variation in sickness and absence rates were due to variations in communication practices. Another study revealed that when employees feel fully informed, absence rates are below average.
Improving Workplace Communication
It’s undeniable that poor communication in the workplace impacts the bottom line. For companies to stay competitive, effective communication skills, strategies, and tools are a must.
Luckily, much research has been done to identify exactly what organizations can do to drive business results through communication.
Learn what communication strategies are proven to increase the bottom line in our blog: 5 Team Communication Strategies That Benefit Your Bottom Line.
