COST OF POOR
INTERNAL COMMUNICATIONS
A Business Case for Engaging Employees using
Effective Internal Communications, 2014
...
68 Point Swing
• "When employees understand their overall role in
the business,

• 91 percent will work towards that succe...
68 Point Swing
• The number plummets to 23
don’t."

percent if they

– Bill Quirke. As noted by Melcrum.
Leading indicator of Financial Performance
• Companies that have highly effective internal
communications had 47%

higher ...
ROI Impacts of Poor Internal
Communications on:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Engagement
Payroll Efficiency
Communication Ba...
1) Engagement
• Every employee that crosses over from being
disengaged to engaged
• adds an incremental $13,000 to the bot...
Gallup Says!

• 70% of U.S. employees
are not engaged.
• Actively disengaged employees cost the U.S.

$450 to $550 billion...
Engagement = Opportunity
Operating Income
• In 2012, companies with high levels of
employee engagement reported an average...
Engagement = Opportunity
Earning Per Share (EPS)
• Organizations with an average of 9.3
engaged employees for every active...
Engagement = Opportunity
• A Work Foundation study showed that
organizations that increased practices related
to engagemen...
2) Payroll Efficiency Factor
• Payroll Efficiency Factor of disengaged
employees is on average 63%
• For every

$100,000 s...
3) Communication Barriers

• $26,041 is the cumulative cost per
worker per year due to productivity
losses resulting from ...
4) Downtime
• A business with 100 employees spends an

average downtime of 17 hours
a week clarifying communication.
• Tra...
5) Safety Costs Add Up

• $63 = average cost of a safety incident for
an engaged employee.

• $392 = average cost of a saf...
6) Employee Retention
• Employees with the highest level of commitment

perform 20% better & are 87%
less likely to leave ...
7) Turnover
• The U.S. national turnover for
disengaged employees is 23%
Current Reality -- Turnover
• 70% of companies say that retaining talent is their
top HR challenge this year.
– (IO Partne...
8) Managers’ Time

• 71% of employees feel managers do not
spend enough time explaining goals &
plans.
9) Corporate Change =
Communication Challenge

09 Jun 2013

Employees Don't Receive Enough Information During Corporate Ch...
Better Companies through Better
Communications
– Updated, January 2014
– www.pdpsolutions.com
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Cost of Poor Internal Communications 2014

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Improve employee engagement and profitability by communicating effectively. Understand how poor communication is affecting companies.

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  • I loved the idea of creating your own ted-x event. I also recommend making your own employee engagement app as tool to share knowledge and pushing a lot of content. there are platforms like http://dronamobile.com available to do that bit.
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  • Another best practice is to remember that communication must be ―7 times in 7 different ways.‖ The 7 ways could be face-to-face, at a shift meeting, in a memo, from a CEO session, weekly newspaper or perhaps front line to front line. It is also important to realize the responsibility for making sure the message is received lies with the individual sending the message. Faux pas
  • Organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher earnings per share (EPS) compared with their competition in 2011-2012. In contrast, those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period. ••Gallup estimates that active disengagement costs the U.S. $450 billion to $550 billion per year.
  • Cost of Poor Internal Communications 2014

    1. 1. COST OF POOR INTERNAL COMMUNICATIONS A Business Case for Engaging Employees using Effective Internal Communications, 2014 Better Companies through Better Communications
    2. 2. 68 Point Swing • "When employees understand their overall role in the business, • 91 percent will work towards that success but…
    3. 3. 68 Point Swing • The number plummets to 23 don’t." percent if they – Bill Quirke. As noted by Melcrum.
    4. 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. 5. ROI Impacts of Poor Internal Communications on: 1. 2. 3. 4. 5. 6. 7. 8. 9. Engagement Payroll Efficiency Communication Barriers Downtime Safety Employee Retention Turnover Managers’ Performance Corporate Change Internal Communications Profits Employee Engagement
    6. 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. 7. Gallup Says! • 70% of U.S. employees are not engaged. • Actively disengaged employees cost the U.S. $450 to $550 billion per year in lost productivity. • http://www.gallup.com/strategicconsulting/163007/state-american-workplace.aspx
    8. 8. Engagement = Opportunity Operating Income • In 2012, companies with high levels of employee engagement reported an average improvement of 19.2 percent in operating income – while companies with low levels of employee engagement declined an average of 32.7 percent. • http://www.thankgoditsmonday.com/blog/2013/06/09/connectingengagement/?inf_contact_key=0b72a1e41ec9a7c991710a8b5436c03bd6e45f51d647 ba88a542eec43955369b
    9. 9. Engagement = Opportunity Earning Per Share (EPS) • Organizations with an average of 9.3 engaged employees for every actively disengaged employee in 2010-2011 experienced 147% higher EPS compared with their competition in 20112012. – Those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period.
    10. 10. Engagement = Opportunity • A Work Foundation study showed that organizations that increased practices related to engagement by just 10 percent • increased profits by an average of $2,400 per employee per year. • And the engaged organizations grew profits as much as three times faster than their competitors.
    11. 11. 2) Payroll Efficiency Factor • Payroll Efficiency Factor of disengaged employees is on average 63% • For every $100,000 spent on payroll there is only $63,000 worth of work performed. http://resourcedevelopmentsystems.com/seblog/2010/06/the-payroll-efficiency-factortm/
    12. 12. 3) Communication Barriers • $26,041 is the cumulative cost per worker per year due to productivity losses resulting from communications barriers. – SMB Communications Study. Prepared by SIS International Research, January 2009. Sponsored by Siemens Enterprise Communications.
    13. 13. 4) Downtime • A business with 100 employees spends an average downtime of 17 hours a week clarifying communication. • Translates to an annual cost of $528,443.
    14. 14. 5) 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. – engaged employees were five times less likely than non-engaged employees to have a safety incident and – seven times less likely to have a lost-time safety incident. – By strengthening employee engagement, the company saved $1,721,760 in safety costs during 2002. – Engagement improved sales performance at Molson Coors: Low-engagement teams fell far behind engaged teams in 2005 sales volumes. – The difference in performance-related costs of low- vs. high-engagement teams totaled $2,104,823.
    15. 15. 6) Employee Retention • Employees with the highest level of commitment perform 20% better & are 87% less likely to leave the organization. – Paulson Training
    16. 16. 7) Turnover • The U.S. national turnover for disengaged employees is 23%
    17. 17. Current Reality -- Turnover • 70% of companies say that retaining talent is their top HR challenge this year. – (IO Partners, Employee Retention Report, 2013) • 44% of employees in North America say they may or will leave their current organization within the next 12 months. – (Blessing White, 2013) • Losing an employee can cost an organization up to 213% of the employee's salary. – (Quantum Workplace Survey, 2013)
    18. 18. 8) Managers’ Time • 71% of employees feel managers do not spend enough time explaining goals & plans.
    19. 19. 9) Corporate Change = Communication Challenge 09 Jun 2013 Employees Don't Receive Enough Information During Corporate Change • Two thirds of employees do not receive enough information during corporate change. • 84% of workers are caught up in some sort of change. • Poor communication during change increases misconduct by 42%. – which affects the bottom line and shareholder returns. • • CEB http://www.holmesreport.com/expertknowledge-info/13511/Employees-Dont-ReceiveEnough-Information-During-Corporate-Change.aspx#sthash.15F1P1xy.dpuf
    20. 20. Better Companies through Better Communications – Updated, January 2014 – www.pdpsolutions.com

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