The high cost of communication

August 3, 2000
You’ve probably heard the expression, “Nobody ever tells me anything,” or “I’m always the last to know,” more than a few times.

It’s often a cop-out, but if the complaint is legitimate, it usually can be traced to forgetfulness or ignorance. I see that a lot in children who conveniently feign ignorance when they are reminded that it is time to take out the garbage or clean their room. I usually tolerate that logic once in a while from my own kids.

But what if that happens a lot in your workplace? Do you really know if a worker is uninformed by what they say or what they do? For example, how often do you or your department heads hold staff meetings? Once a week? Bi-weekly? Monthly? When something meaningful occurs that affects your employees?

I know that many owners and managers are conscientious about holding regular staff meetings. They know the value of communication. Without knowledge, we open ourselves up to uncertainty and speculation, which results in lost time and more importantly, lost revenue. If an employee is unaware of a policy, procedure, or new product, how much are they hurting the company?

Worse yet, how much are employees hurting the company because they spend too much time worrying about their next move or if they are doing the right thing?

If I seem to be asking a lot of questions, it’s because the answers are so important — and should come from you. I’ll give you an example of what it costs in ignorance and uncertainty.

In the book Five Frogs on a Log, a story about gut-wrenching changes brought about by mergers and acquisitions, authors Mark J. Feldman and Michael F. Spratt discuss the costs involved when one does not communicate with employees. They discuss the cost of uncertainty about mergers and acquisitions.

Their calculations — “The Cost of Confusion” — center on a fictional company with 2,000 employees. These employees all work for a newly formed company that was merged from two others. The problem is, the employees are uncertain about the aftershock of the merger and what it means to them — namely their jobs and their future.

Because management does not address their concerns, the cost of the merger multiplies exponentially each day. If each employee spent one hour a day “wondering, speculating, and trading gossip about their future,” it would result in the following (based on an average compensation of $40 per hour, salary and benefits):

  • 2,000 hours of lost production each day; and

  • $1.6 million of lost productivity each month.

I doubt that too many businesses could absorb those losses and retain a tolerable profit margin.

I know there aren’t too many of our readers who employ 2,000 workers but if you scale that back to 200, the equation works out to $160,000 each month. If you employ 20 workers, that’s $1,600 a month. OK, you just installed a free 10-SEER central air conditioner. Can you afford to do that each month?

Don’t keep your people in the dark. Communicate with them. Let them know what’s going on — positive or negative. The communication can be in the form of a daily e-mail or pager message from you or one of your department heads. Include an inspirational message or “happy note” with each communication.

For few minutes of your own time, take the time to communicate with your employees. Avoid the cost of confusion and add to your bottom line.

I am always looking for good ideas on how you motivate and compensate your workers or coworkers. A happy and informed staff is a productive and efficient one. I have some regular respondents who have given me some great ideas — how about you?

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