How does communication impact business metrics?

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How does communication impact business metrics?

Key Takeaways

  • A study by Grammarly and Harris Poll found that out of 22% of business leaders who admit to losing business due to inefficient communication, 86% believe that the loss was $10,000 or greater.
  • The same study found that companies with 15%+ employee turnover were 34% more likely to report communication issues in the past year.
  • According to a survey by Corel, 64% of global employees believe that poor collaboration at work results in them losing at least three hours weekly in productivity, while 20% think that they waste over six hours.
  • Based on a study by Crucial Learning, which surveyed 1,100 people, 43% of employees think that their organization lost at least $10,000 because they didn't communicate effectively in a critical moment, while 30% estimate the loss at over $25,000, and 19%—at $50,000.
  • 60% of employees are unhappy because of ineffective communication in the workplace, 70% find it overwhelming, and 80% are stressed by it, as per a study by Dynamic Signal.

Introduction

The report presents quantitative data on the impact of the quality of communication on revenue, productivity, employee retention, and employee happiness. To provide more comprehensive findings, we made several assumptions about issues closely associated with communication (e.g., engagement and workplace culture) and used two reports older than 24 months.

Impact of Communication on Business Metrics

Assumptions

  • The response includes two additional data points on the business impact of highly engaged employees. Multiple studies emphasize the link between employee engagement and communication, which is why statistics around engagement were deemed reflective of the outcomes of poor or good communication.
  • For example, Gallup's research shows that meaningful conversations with managers (especially about goals and successes) make employees 2.8 times more engaged, Grammarly and Harris Poll include lower engagement among the four key consequences of poor communication, while a study by Dynamic Signal states that good communication makes employees 71% more engaged.
  • Similarly, we provided a supporting data point on the correlation between employee happiness and workplace culture due to how intertwined the latter is with communication, according to experts. Research by Harvard Business Review found that workplace communication is a good indicator of the workplace culture, while the International Labour Organization notes that effective communication is the main pillar of company culture.
  • We also included data points on collaboration from a study by Corel, which repeatedly notes that effective communication is at the center of collaboration, and poor collaboration may both start with communication issues and end with further miscommunication. The same view is reflected in some older studies, including Slack's "Good Collaboration, Bad Collaboration," in which a significant share of employees defines collaboration as "being able to communicate with colleagues easily."
  • The report includes data points from studies older than 24 months. While we prioritized sources from the last two years (including Grammarly and Harris Poll, Gallup, Corel, Loom, Crucial Learning, and Glassdoor), a 2019 study by Dynamic Signal and a 2018 survey by Mitel were used to provide additional valuable context. The most recent data points are provided at the beginning of each section.

Revenue and Revenue Growth

  • According to a Harris Poll study commissioned by Grammarly, 92% of US business leaders from companies that observed revenue growth in the past year claim that their communication was very effective, compared to 81% of leaders from businesses without revenue growth.
  • The same study found that out of 22% of leaders who admit to losing business due to inefficient communication, 86% believe that the loss was $10,000 or greater.
  • 62% of global employees believe that better workplace collaboration would bring business growth opportunities, as per the 2022 State of Collaboration Survey by Corel.
  • The "Employee Communication and Engagement Study" by Dynamic Signal discovered that 52% of US employees saw adverse financial outcomes of ineffective communication, including lost sales.
  • In a global survey by Mitel, 24% of employees said that poor communication was stunning their organization's growth or change, while 17% claimed it resulted in lost business opportunities.

Productivity

  • The study by Grammarly and Harris Poll also found that the direct cost of poor communication is $12,506 per employee per year, which adds up to the annual total of $1.2 trillion for the US economy. These figures reflect lost productivity, as they are based on the estimation that nearly 7.5 hours per team is lost weekly due to communication issues.
  • According to the survey by Corel, 64% of global employees believe that poor collaboration at work results in them losing at least three hours weekly in productivity. 20% think that they waste over six hours.
  • Based on research by Harvard Business Review and New York University, the combination of "poor collaboration and inefficient work practices have reduced productive time by 2% to 3% for most organizations."
  • In a study by Crucial Learning, which surveyed 1,100 people, 43% of US employees think that their organization lost at least $10,000 because they didn't communicate effectively in an important moment, while 30% estimate the loss at over $25,000, and 19%—at $50,000.
  • Gallup's "2021 State of the Global Workplace Study" estimates that engaged teams are typically between 15 and 18% more productive.
  • Scheduling and rescheduling calls cost US businesses $1.85 billion weekly, resolving miscommunication on a digital platform—$361 million a week, and rereading and/or overthinking emails—$337 million per week, according to a survey of 3,000 employees by Loom.

Employee Retention

  • Grammarly and Harris Poll uncovered that companies with 15%+ employee turnover were 34% more likely to report communication issues in the past year.
  • The previously mentioned survey by Corel found that 41% of employees think about leaving their job due to poor collaboration.
  • According to Gallup's "2021 State of the Global Workplace Study," disengaged teams have 18-43% higher turnover rates.
  • Turnover related to poor communication can result in up to $1.2 billion in costs for an average Fortune 500 company, as per the study by Dynamic Signal.

Employee Satisfaction and Happiness

  • In the survey by Loom, 62% of US and UK respondents said that miscommunication and/or wrong interpretation of online messages negatively impacts their mental health.
  • According to the poll by Corel, 60% of employees expressed that improved collaboration would boost workers' morale.
  • A study by Glassdoor, which analyzed millions of employee ratings in its database, determined that culture and values are the most important employee satisfaction predictor for US workers, with 19.1% prioritizing them over other factors (such as senior leadership and career opportunities).
  • In the study by Grammarly and Harris Poll, 43% of knowledge workers said that inefficient communication made their job more stressful.
  • 60% of employees are unhappy because of poor communication in the workplace, 70% find it overwhelming, and 80% are stressed by it, according to Dynamic Signal.

Research Strategy

We sourced the quantitative data points from studies conducted by Harris Poll, Gallup, Glassdoor, Dynamic Signal, Corel, and Crucial Learning, among others. They each included a sample size of at least 1,000 employees.

As explained in the dedicated section above, based on the available data, we assumed that selected issues closely related to communication illustrate its impact on business outcomes. We also used two studies older than 24 months to provide more comprehensive findings (the full reasoning is also provided above).

We used both the US and global data, due to the limited data availability for the former. The first mention of each study indicates whether it provides global or US data. When possible, we provided both the effects of poor and good communication. However, when the positive outcome of good communication was not available across any of the studies we identified, we replaced it with data points on the overall impact of communication. The majority of the sources (e.g., Harris Poll, Dynamic Signal, and Crucial Learning) focus heavily on the consequences of poor communication.

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