Cost of poor communication
Why on-going development of communication matters
Working as a trainer and coach for many years I have noticed that the value of poor communication has never really been quantified. This is an attempt to put a value on it.
Poor communication is not just about the processes of sending (intention) and receiving (interpreting) a message. It is about the impact of language used and the ability to listen authentically, together with other broad interpersonal factors, such as; personal lack of enthusiasm, lack of motivation, reduced service mindedness, unclear organisation (who does what), level of personal responsibility and so on.
Estimate of costs incurred due to poor or bad communication
Assume company/organisation with 3000 – 500 employees
Assume each person miscommunicates (misinterpret/misunderstand) 20 minutes/day
Allow 220 working days /person / year
|Poor communica-tion/day||Number of employees in company / organisation||Labour cost Hourly Cost (employer’s expenditure)||Total time of poor communica-tion/day||Total Cost of poor communication / day & (/year)||10% & (5%) of total time miscommunicating in English|
|20 minutes||3000||35 €||1000 hours||35 000 €/day7.7m €/yr.||3500 (1750) €/day 770 000 €/yr.(385 000 €/yr.)|
|20 minutes||1000||35 €||333 hours||11 655 €/day2.6m m €/yr.||1165 (583) €/day 260 000 €/ yr.(130 000 €/yr.)
|20 minutes||500||35 €||166 hours||5810 €/day1.3 m €/yr.||581 (290) €/day 127 820 €/yr.(63 910 €/yr.)
Poor communication results in misunderstanding and misinterpretation of the message, or the information/message is not as clear as it should have been
20 minutes is extremely low. In face-to-face interviews most interviewees say it is much higher!
Costs include, salary, insurance, pensions and other employer costs.
It is difficult to know how much time employees spend using English; of course it all depends on the nature of an organisation or company’s business. But we have taken 10-5% as average representations.
- Communication includes language and intercultural communication in all its forms; spoken, written, on-line, video-conference, telephone, etc.
- The actual ‘real’ cost of poor and sub-standard communication cannot be quantified and is liable to be much higher than the figures shown here. However, as we are all aware, poor communication can result in lost business, contracts, customer/ client irritation and frustration, and so on
- Time wasted or lost within an organisation, due to poor communication, is worse the higher up the organisation it occurs.
For example, a poorly written e-mail sent to 5 people will need to be interpreted by those 5 recipients. Thus, 2 minutes trying to understand what has been written, takes up a total of 10 minutes work-time. In addition, it often leaves employees unsure of what to do, frustrated, demotivated or taking no action at all.