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Poor Communciation Can Cost You
By Mark W. Sheffert
April 2001

There was a nice dog named Spot who was hanging out of the passenger-side window of his owner’s car as it backed out of the driveway. He saw the neighbor dog, Biff, just sitting in his fenced-in yard and arrogantly yelled out, "Ha, ha, ha, Biff. After we go to the post office and dry cleaners, I’m going to the vet’s to get tutored."

Spot, the star of a Far Side cartoon, learned the hard way that miscommunication can be costly and sometimes very personal. Many business managers have learned poor communication habits can be costly in business as well.

Those costs won’t neatly appear on the profit and loss statement in a category called "miscommunication," but nonetheless can add substantially to a company’s expenses. It is estimated that miscommunication can cost an organization between 25 percent and 40 percent of its annual budget.

When our firm assesses a troubled organization, we often find that declining sales and profits are only telltale symptoms of a larger problem in the company’s culture. Poor communication is usually one of those major culprits.

Sometimes it’s by accident but sometimes it’s not. Poor communication is the best way for the incompetent to hide their incompetence. No one can criticize the message if no one understands it. Also, one must realize that there are 14,000 different definitions for the 500 most commonly used words in the English language --- no wonder miscommunication can happen!

With this in mind, you must constantly evaluate the communication behaviors and methods within your own organization.

What was that?

Start at the top by evaluating communication methods and habits with board members. Are your board meetings characterized by quarterly show-and-tell presentations by management with little give and take of ideas? If so, maybe it’s time to get your board members more involved and unleash the good ideas and experience that they can contribute. Make regular informal phone calls to board members to keep them
up-to-date on strategic issues.

Create reports that convey information from which decisions can be made (not just data dumps), and send them to board members well in advance of meetings.

What about communication with your managers? Do you prefer to sit in your office and crank out e-mails and memos, or do you have regular staff meetings that are concise and productive? You’ll be well on the way to uncovering the costs of poor communication if your management team is working together with full knowledge of
what the other managers are doing. It’s your job to demand that the management team encourages good ideas, listens to one another, and reaches consensus on solutions that are clearly defined and documented.

Next, think about communication with employees. Do you have personnel policies and operating procedures written in plain language that everyone can understand? Is your mission statement written down and widely distributed? Do you have regular employee meetings where you freely discuss important issues facing your
company and where company performance is at relative to your goals (even if it’s not good news)? If you want everyone to communicate well to improve productivity and problem solving, you must set the example by following these ideas.

To be a good communicator you need to be a good listener, unlike the story of the Mother Superior at a convent in Poughkeepsie, N.J. where the nuns were asked to demonstrate their commitment by being allowed to utter only one sentence every five years. After Sister Francine’s first five years, she appeared before the Mother Superior
and said, "My room is too cold." Mother Superior thanked her and sent her on her way. After another five years, Sister Francine’s sentence was, "The food here is terrible." Mother Superior thanked her and sent her on her way again. After another five years, Sister Francine was beckoned to say her third sentence in fifteen years. She said, "My room is still cold, the food is still terrible, and I quit!" To which the Mother Superior replied, "I think that’s appropriate. You’ve done nothing but complain ever since you got here anyway."

As you can see, some managers have a difficult time listening because they only hear complaining. Don’t fall into that trap. Learn to discern between complaining and bringing your attention to serious problems. Listen attentively and take action on what your employees tell you.

Ads communicate, too

Communication doesn’t stop at your front door. Customer satisfaction and loyalty ultimately measure whether or not your company has good communication habits.

Evaluate all points of communication with customers to make sure the information provided is clear and concise. For example, do your ads announcing a new product or service make promises that you won’t be able to deliver … ever? Are your sales people adequately trained on the product’s features and performance so potential customers clearly understand what they are buying? Does your order system confirm the order with the customer and let them know when it will be delivered? Are the written instructions provided with the product easy to understand?

Many companies we’ve worked with had beautiful marketing materials and top-notch sales and customer service people, but still missed the mark because they knew what the customer should have instead of listening to the market. Remember that communication is a two-way street. Listen carefully to your customers or else they will move on without you.

Vendors are also an important audience. It’s easy to imagine the hidden costs from poor communication resulting in the late delivery of crucial parts or built-to-order components that don’t work in the completed product because of unclear specifications. Evaluate your entire purchasing process to uncover potential communication bombs.

And don’t forget to talk to your lender! Most business people would rather have a root canal than meet with their banker, but it’s just good business sense to make sure that your banker understands your business and knows what’s going on. Make a point for the two of you to review your business plan on a regular basis. If your company ever runs into trouble or is growing at a rapid rate, your lender will be more willing to work with you if you have established a relationship beforehand.

Last, but certainly not least, are the shareholders and the media. Business people are usually natural-born sales people, so it’s easy for them to give glowing presentations at the annual meeting about super-fantastic new products being prepared for enormous growing markets. Unfortunately, I know of too many companies where the shareholders and reporters were then in for a major surprise when they received the next quarter’s announcement that the company was in deep doo-doo. Poor communication with shareholders and the media can create unclear expectations, resulting in disappointment and a declining stock price.

The bad news is that being a good communicator is never easy. The good news is that you don’t have to be Ronald Reagan, Martin Luther King, Jr., or Winston Churchill to follow some of these ideas. Even we old dogs - including Spot - can learn new tricks by focusing on effective communications.

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