Cynosura

Failing to communicate costs money

Probably the hardest job for any communications specialist is to persuade potential clients of the financial benefits of good communications.

Most organisations see communications as an add on, a nice to have rather than a need to have. Yet the media is littered with examples of companies who, through poor or inappropriate communications, lost money, market share, reputations and, in some instances, went bust.

The best example of a company that went bust is Ratners the Jewellers. One inappropriate comment made in a speech by Gerald Ratner at a major business event and he, along with his company, went under.

Talking of inappropriate comments, a more recent example is that of Tony Hayward, the ex CEO of BP. He talked of wanting to ‘get his life back’ after eleven men had been killed in the Deepwater Horizon drilling rig disaster and hundreds of thousands of families were affected by the aftermath. That unintentional comment, along with the subsequent dreadful crisis communications campaign cost BP billions and a deeply damaged reputation. It also cost Hayward his job.

Even more recently we saw how the failure to communicate quickly and effectively led to substantial criticism of RIM and the Blackberry brand. In their case it was a failure to react in ‘real time’, as they would call it, and to communicate enough quality information. You can expect to see Blackberry’s decline continue on the back of this three day crisis.

Of course it is easy to talk of business failing in crisis situations, but most of us do not find this very relevant in our mundane everyday existences.

In our everyday lives the failure to communicate effectively can still cost money. Here are a couple of examples where restructuring, change and redundancies were involved.

In one organisation the management simply didn’t see the need to communicate the reason why they were making around fifty people redundant. They did panic when they discovered that those people who were made redundant were communicating, in public and very loudly, their opinion of the company and its products. Reputation matters, and if your reputation is damaged, it will result in reduced sales.

In another organisation, the introduction of Enterprise Resource Planning (ERP) which draws together all the software that runs finance, logistics, production, sales, HR etc was being introduced. ERP can have a major impact on work practices, job descriptions, organisational structures and therefore work performance and morale. The senior executives understood this and decided to instigate a communications training programme for their managers.

If ERP is not properly embedded into an organisation it can cost heavily in subsequent disruption in a number of areas. By training the managers in how to communicate at every stage of the process, the company avoided considerable cost. The managers were won over and they were given the information and skills needed to communicate effectively and enthusiastically with their teams. The system is up and running, albeit behind the original schedule. The process might have been smoother if the intranet had been used more effectively for internal communications, but nevertheless the company was saved substantial amounts of money through some simple and effective communications techniques.

Another example comes from a company which was producing a new marketing brochure. The graphic designer had been asked to design the brochure and write the copy. The proof looked great but there was something wrong. The graphic designer was not a copywriter. The copy did not match up to the message the company wanted to communicate. If the brochure had gone out as it was then it would have been a costly failure.

After asking some pertinent questions about purpose, audiences, products and priorities we were able to re-write the text to fit the artwork. The subsequent product was not only well received but it resulted in new business.

There are many similar stories to tell of product and service launches as well as promotions which cost huge amounts of money but failed. In almost every case the senior executives did not see the value in spending money on bringing in a communications specialist. The message hadn’t been clearly defined, the audience wasn’t properly identified and the right communications methodologies weren’t researched.

Sometimes a failure in communication can be just as disastrous. Poor instructions are often one reason. Badly phrased instructions can leave employees confused, which may lead to them doing the wrong thing. One employee was told to ‘give them a hand’ when two team members were struggling with scanning in historical legal data. He did give them a hand, by reorganising the way that they had been doing the work.

He was subsequently reprimanded for managing the process and was told that was not his job. Everyone concerned was left confused, angry and demoralised, leading to poor work and subsequently the employee concerned left the company, costing them a lot of money in recruitment costs.

The failure to communicate or to stop communicating can be just as costly. Take a long hard look at a lot of websites, especially those with blogs and then ask yourself what impression they leave. One website had introduced a blog with a fanfare and burst of activity. Two years later the last entry on the blog was nearly eighteen months old. Organisations running events are often guilty of failing to clean up the site after the event, leaving the reader with an impression of inefficiency.

There is a ring of irony to that story. Over the summer months and as a result of an exceptionally heavy workload the blog on this site was neglected. Sometime later, a check on Google Analytics showed that traffic to the site had dropped off by 56% during that period.

In this short discussion the failure to communicate has been demonstrated in the most diverse organisations, where a crisis occurs all the way through to poor management communications. In each case the miscommunication or downright neglect cost the organisation money.

Have you got a tale to tell of where poor communications or a failure to communicate cost your company money? We would like to hear your story.

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or email john.earl@cynosura.com