1. COST OF POOR
A Business Case for Engaging Employees using
Effective Internal Communications, 2014
Better Companies through Better Communications
2. 68 Point Swing
• "When employees understand their overall role in
• 91 percent will work towards that success
3. 68 Point Swing
• The number plummets to 23
percent if they
– Bill Quirke. As noted by Melcrum.
4. Leading indicator of Financial Performance
• Companies that have highly effective internal
communications had 47%
returns to shareholders
– over the last five years compared to companies with the least effective
5. ROI Impacts of Poor Internal
6. 1) Engagement
• Every employee that crosses over from being
disengaged to engaged
• adds an incremental $13,000 to the bottom line
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
8. Engagement = Opportunity
• In 2012, companies with high levels of
employee engagement reported an average
improvement of 19.2 percent in operating
– while companies with low levels of employee
engagement declined an average of 32.7
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. 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
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
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
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. 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. 6) Employee Retention
• Employees with the highest level of commitment
perform 20% better & are 87%
less likely to leave the organization.
– Paulson Training
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
– (Blessing White, 2013)
• Losing an employee can cost an organization up to
213% of the employee's salary.
– (Quantum Workplace Survey, 2013)
18. 8) Managers’ Time
• 71% of employees feel managers do not
spend enough time explaining goals &
19. 9) Corporate Change =
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
• Poor communication during change increases
misconduct by 42%.
– which affects the bottom line and shareholder returns.
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.