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Writer's pictureMaria Repova

"The Cost of Bad Communication: Why Companies Don't Always Invest in Improving It & Why They Should

Updated: Jun 29, 2023


Over nine in 10 business leaders say poor communication impacts productivity, morale, and growth, citing impacts such as increased costs, missed or extended deadlines, and reputational erosion. One in five leaders even reported losing business or deals due to poor communication. https://www.shrm.org/

Research has shown that miscommunication can cost companies in various ways. For example, a study by David Grossman revealed that a survey of 400 companies with an average of 100,000 employees each cited an average loss per company of $62.4 million per year due to inadequate communication.

A survey by Holmes Report found that companies with effective communication practices are 50% more likely to report lower turnover rates compared to companies with poor communication practices. These studies suggest that miscommunication can be a significant cost for companies, leading to lost revenue, decreased productivity, and increased turnover rates.

These are all excerpts from surveys and research done by different organizations on how poor communication affects companies and organizations.

The overall consensus is that bad or poor communication does cost money. When I went over this subject in communication science, it opened my eyes to how this personal & professional development could help companies so directly with costs.


How Does Bad Communication Manifest As Costs For a Company?


Communication is a crucial aspect of any organization, and it plays a significant role in

determining the success or failure of a company. Poor communication can cost a company, and it can lead to a plethora of problems that affect the overall performance of the organization including:

  1. Loss of productivity. When communication channels are not clear, employees may not know what is expected of them, which can lead to confusion and a lack of direction. This can result in wasted time, missed deadlines, and an overall decline in productivity.

  2. Loss of revenue. When employees are not on the same page, they may make mistakes that can result in lost sales, missed opportunities, and a decline in customer satisfaction. This can lead to a loss of revenue and, ultimately, a decline in the company's bottom line.

  3. Decline in employee morale. When employees feel that they are not being heard or that their opinions are not valued, they may become disengaged and less motivated to perform their job duties. This can lead to a decline in morale, which can ultimately lead to high turnover rates and difficulty in attracting top talent.

  4. Increased turnover: When communication is poor, employees may become disengaged or feel undervalued. This can lead to higher turnover rates, which can be expensive in terms of recruiting, hiring, and training new employees.

  5. Damage a company's reputation. When employees are not communicating effectively, it can lead to misunderstandings with customers, partners, and other stakeholders. This can result in negative reviews, poor customer service, and a decline in brand reputation.


Why Are Companies Not Promoting Improved Communication Skills When It Costs Them Not to Do So?


Cost for poor communication skills

While it may seem logical for companies to prioritize proper communication skills given the potential costs of bad communication, there can be several reasons why this doesn't always happen. Here are a few possible explanations:

  1. Lack of awareness: Some companies may not be fully aware of the extent to which bad communication is costing them money. They may not have systems in place to track communication breakdowns or measure the impact on productivity, efficiency, and revenue.

  2. Priorities: Companies may have competing priorities and limited resources, which can make it difficult to invest in initiatives that don't have an immediate or obvious return on investment. Communication skills training or initiatives may not seem as urgent as other priorities, such as sales or product development.

  3. Resistance to change: Improving communication practices may require changes in organizational culture, processes, or leadership. Some companies may be resistant to these changes, especially if they perceive them as too difficult, time-consuming, or disruptive to current practices.

  4. Lack of skills or resources: Some companies may not have the skills or resources to implement effective communication strategies. They may not have trained communicators on staff or may not have the budget to hire outside consultants.

Tackle the Problem with Poor Communication Skills Instead of Shying Away from It



To address the costs of bad communication, companies should invest in improving communication skills, channels, and practices. Viewing it as a skill in their professional development and promote it as any other soft skill that professionals should work on would be a better solution. This can include providing training and resources for employees to improve their communication skills and implementing clear communication guidelines, to facilitate communication. Prioritizing positive communication and encourage employees to speak up and share their ideas and opinions should be promoted and that mid and high level managers also work and show their dedication in improving their own communications skills. This can help to promote a culture of collaboration and innovation, and it can lead to better decision-making and increased productivity. This can be hard to achieve by oneself therefore taking outside help can be a good option.

In conclusion, bad communication can be a significant cost for companies. It can lead to lost productivity, a decline in revenue, low employee morale, conflict, and damage to the company's reputation. To mitigate these costs, companies should prioritize communication and invest in improving communication channels and practices. By doing so, they can create a more productive, engaged, and successful workforce.


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