This document outlines the costs of poor internal communication in businesses. Some key points include: employees are 91% likely to work towards business success if they understand their role, but only 23% if they don't; companies with highly effective internal communications saw 47% higher returns; disengaged employees cost $416 billion alone in 2009 due to lower productivity; miscommunication costs $26,041 per employee annually in lost productivity; and high employee turnover due to disengagement can cost 50-150% of an employee's annual salary to replace them. Effective internal communication through strategies like PDP can create high performance cultures with engaged employees aligned to business goals.

1. COST OF POOR
COMMUNICATION
By the Numbers – A Business Case for Effective of Internal
Communications

2. 68 Point Swing
• "When employees understand their overall role in
the business,
• 91 percent will work towards that success
but…

3. • The number plummets to 23 percent if they
don’t."
– Bill Quirke. As noted by Melcrum.

4. Leading indicator of financial performance
• Companies that have highly effective internal
communications had 47%
higher total
returns to shareholders
– over the last five years compared to companies with the least effective
internal communications.

5. ROI Impacts of Poor Internal Communications
1. Engagement
2. Direct Cost of Miscommunication
3. Opportunity Cost
4. Safety
5. Turnover

6. 1) Engagement
• Every employee that crosses over from being
disengaged to engaged
• adds an incremental $13,000 to the bottom line
each year

7. Gallup Says!
• 71% of U.S. employees
are not engaged.
• The cost of ‘actively
disengaged’ workers at
$416 billion for
2009 alone!

8. Payroll Efficiency Factor
• Payroll Efficiency Factor of disengaged
employees is on average 63%
• meaning for every $100,000 spent on
payroll there is only $63,000 worth of
work performed

9. 2) Miscommunication
• $26,041 is the cumulative cost per
worker per year due to productivity
losses resulting from communications barriers.
– According to internal communications expert, David Grossman.

10. 3) Opportunity Cost
• A business with 100 employees spends an
average downtime of 17 hours
a week clarifying communication.
• Translates to an annual cost of $528,443.

11. 4) Safety Costs Add Up
• $63 = average cost of a safety incident
for an engaged employee.
• $392 = average cost of a safety
incident for an unengaged employee.

12. 5) Turnover
• Employees with the highest level of commitment
perform 20% better & are 87%
less likely to leave the organization.
– Paulson Training

13. 5) Turnover
• The national turnover for disengaged employees is
23%
• Cost of replacing an average worker equals 50%
annual salary
• and 150% annual salary for highly skilled
employees

14. 1 More To Boot!
• 71% of employees feel managers do not
spend enough time explaining goals &
plans.

15. PDP Creates High Performance
Cultures
Using the Power of Internal Communications
• PDP is proven to
– Accelerate alignment to strategy
– Engage employees
– Extend the CEOs reach
www.pdpsolutions.com