5 communication mistakes killing company profits in your...

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5 Communication Mistakes That Kill Company Profits

In Your Small Business !

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Communication: The “Soft” Skill that Comes With “Hard” Costs

Communication is labeled a “soft skill” in the training and development world. For this reason, it’s typically given short shrift when considering budgets for training and development of personnel in both large and small companies. In large companies, despite the real costs that you will be able to calculate attributable to poor and ineffective communication by the end of this report, it still gets lost in the management hierarchy and poor performance management practices. But, in small companies the costs of poor and ineffective communication can have immediate bottom line impact. Two independent industry research reports published in 2009-2010 confirmed that employees waste a minimum of 40-minutes per day trying to overcome the impact on their jobs of poor communication. Some of the issues that came to the top from that research include some things you also may be experiencing in your work environment:

• Waiting on information – such as decisions from the business owner in a small business or upper management in a large company

• Unwanted and unnecessary communication – too much email, plowing through “reply all” email threads, long winded voice mails

• Inefficient scheduling and coordination – attending meetings that start late and/or extend

beyond scheduled ending, going to meetings that are cancelled with no notification or at the last minute, etc.

• Barriers to collaboration – low trust work environments that prevent people from

embracing teamwork

• Customer complaints – trying to appease customers and working through the company’s hierarchy to get answers for service back to the customer.

• Planning to plan – indecision and procrastination that stifles creativity and the ability to

take action in a timely manner. Notice any familiar issues?





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Those and other issues come with real “hard” costs. Imagine if each of your employees wasted 40-minutes or more each day due to ineffective communication at your company, what would be the total accumulated dollars and cents cost. It’s not hard to calculate, is it?

5 Key Communication Mistakes That Kill Company Profits Human nature being what it is you will never be able to completely eliminate ineffective communication in your workplace, but you can and should invest time, energy and even financial resources to reduce it as much as possible. That investment will provide an ROI. If you have 10 employees (including yourself) earning an average of $50,000 per year, and your firm is generating one million dollars in revenue, lost productivity due to poor communication is costing you approximately $50,000 a year. That’s 5% of your budget coming directly from company profits and staying out of your pocket or away from company reinvestment. And, that doesn’t count lost sales revenue due to poor communication in the sales process, lost customers due to poor customer service responsiveness, and other payroll expenses such as employee benefits and payroll taxes. To begin turning this profit-sapping scenario around small business owners must become aware of five specific ways ineffective communication is costing the company real dollars and cents, and sense. Below are the 5 Critical Communication Mistakes that Kill Company Profits

1) Defining “communication” as the problem, but not defining the “Communication Problem”

2) Communicating with a “Lack of Specificity.”

3) Engaging in “communication procrastination.”

4) Communicating with a “Lack of Directness and Candor.”

5) Communicating with a “lack of transparency.”





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Each of the five critical communication mistakes above add to the costs of doing business because they permit problems to perpetuate, cause uncertainty and fear in the minds of employees that lead to distraction and dis-engagement, and less than optimal, desired performance. Let’s look at each of the five critical communication mistakes in a little more detail.

Small Business Leadership Communication Mistake #1:

Defining “Communication” As the Problem, But Not Defining the “Communication Problem”

In order to fix problems, issues and concerns in any company you have to identify the cause, otherwise you’re just putting a band-aid on the symptoms. There are always levels of causes with any situation. It’s the severity and impact of those causes will determine how much time, energy, and resources are put towards going deep into finding the root cause. But, it is easy to blame communication as the cause of virtually almost every problem, even though it usually is. The challenge is, though, that that is where the investigation into the root causes stops. Virtually every problem, issue or concern at a company can be directly or indirectly related to some type of communication breakdown, or communication fundamental breakdown. But rarely does the investigation go beyond that. The issue gets thrown under the umbrella of communication while everyone in the room nods their head in agreement that communication was the culprit. Then, everyone moves on to the next issue. That, too, most likely will be dragged under the communication umbrella. And, again, that’s where it stops. It never goes deeper because the specific communication issue is never identified and the problems persist.





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Whenever I go into a company and facilitate focus groups to have these discussions employees tell me “we talk about this same stuff in meetings all the time, we identify the problem as “communication” but nothing ever gets done about it after we leave the session.” That’s because there is no clear definition of the communication issue and there is no accountability to anyone for next steps in addressing it, therefore it perpetuates. For example, for one of my first client projects I facilitated a companywide retreat with about 25 employees, including senior leadership, we divided participants into three different groups. Not surprisingly, each group identified “communication” as a problem at the company that needed to be addressed. When I asked each group to define what they meant by “communication,” we learned each had defined it distinctly different. One group expressed concern because they were often late learning about company initiatives and on numerous occasions had been caught off guard when customers asked them about products, services or specials of which the employees were not aware. Another group expressed concern that employees upon being hired were not being on-boarded effectively and were not provided proper organizational and job orientation. And, yet a third group expressed concerns that there were “communication” and personality issues within their department between individual team members and their department leader. We learned of the distinctions because I asked the next question, which was simply, “How specifically is communication a problem for you?” You have to dig deeper and define specifically how communication is a problem and assign accountability to individuals to identify solutions, then have them report back in an agreeable time frame. Sound familiar? If you don’t define the “communication” problem it can’t be rectified, it will persist and impact employee productivity and your company’s profits. The next three communication mistakes relate directly to managing individual employee performance. If expectations for employee performance are not adequately provided early in the relationship (upon hire), it is very difficult to hold employees accountable to their performance, as you will read about over the next three communication mistakes.





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Small Business Leadership Communication Mistake #2: Communicating With a Lack of Specificity

This is an epidemic in society. So that means it is also an epidemic in small businesses. It manifests in a variety of ways and impacts just as many. For purposes of this report you will learn about one specific context where a lack of specificity impacts productivity, performance and profits very directly, and leads to the next two communication mistakes on this list, making for a triad of trouble in organizations. (For a broader overview of a “Lack of Specificity” go to www.HowToImproveLeadershipCommunication.com and download the free report “The 7 Deadliest Sins of Leadership & Workplace Communication.”) In two recent client projects I was surprised to find that employees complained that they felt uncertain as to what was expected of them on the job. They felt their performance expectations were not clear. This is despite the fact that the company for which they worked had a performance management system in place and they did go through an annual performance review each year. Strange, isn’t it? Business leaders think they’re doing the right thing in their performance management process and yet, the communication is still unclear. The blame for the lack of clarity should be placed on both parties, as the individual who is unclear about expectations for their performance is also at fault for not asking for more specificity. A large part of the reason for this phenomenon is because small business leaders do not understand that a “job description” is not enough to manage performance against. Most job descriptions provide a vague list of tasks and responsibilities making it challenging to define satisfactory, unsatisfactory, or exceptional performance, and thus a very subjective process. This “lack of specificity” around job performance expectations leads to the next communication mistake because it causes small business leaders and managers to procrastinate on giving people feedback on their performance. There is a three-step process for managing performance that my clients incorporate into the work culture that allows them to create specific, easily measurable performance results. It is called The





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Performance Management Playbook and it alleviates the lack of specificity around performance expectations, while helping overcome the next two communication mistakes, as well.

Small Business Leadership Communication Mistake #3: Engaging in Communication Procrastination

This occurs in many contexts in a business so this report will focus on the context of providing feedback about an individual team members’ performance, because procrastinating on performance feedback is one sure way to kill workplace productivity and company profits. (For a broader overview and examples of a “Lack of Immediacy & Promptness” go to www.HowToImproveLeadershipCommunication.com and download the free report “The 7 Deadliest Sins of Leadership & Workplace Communication.”) While facilitating a workshop recently with a group of 10 small business leaders, three of them admitted during the session they often put off giving people feedback on their job performance. The primary reason, each agreed, was because they felt uncertain that they had adequately articulated their performance expectations at the beginning of the employment relationship. In many companies I hear the complaint from employees that their performance review is past due, often by months not days. Of course feedback on performance, behaviors and habits in the workplace doesn’t have to, and shouldn’t wait, for that annual performance review conversation which should be taking place “at the first most appropriate time.” Yet, because the conversation can be viewed as “difficult,” business leaders engage in communication procrastination when it comes to giving people feedback on performance and behaviors, perpetuating poor performance. This is especially true if the manager is uncertain in their own mind that they’ve provided clear expectations on the front end of the relationship or for a particular performance period. See diagram below:





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Small Business Leadership Communication Mistake #4:

Communicating With a Lack of Direct & Candid Performance Feedback As mentioned in Communication Mistake #2 above when there is a lack of specificity on the front end of the employee relationship with regard to performance and behavior expectations it is difficult for small business leaders and managers to provide direct and candid feedback at the end of a performance period or at the end of a project. This is the main reason Communication Mistake #3 persists. The additional problem caused by this dynamic as you can see from the above diagram is that without direct and candid performance conversations, the poor performance and behaviors perpetuate creating the downward spiral of individual and organizational performance. Avoiding the direct/candid performance conversation is one negative outcome of these communication mistakes. A second, and maybe even more, damaging outcome is the non-direct/candid performance conversation.





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This is where the leader or manager provides vague and ambiguous feedback that causes confusion or uncertainty in the individual team member. An example of this may be going through a performance appraisal form that has a check box ranking for various items in a job description. The manager has checked off a ranking selecting one of five possible scores, such as a 1-5 scale, or an unsatisfactory to exceeded expectations scale, but the form has no comments next to the score explaining the reasoning behind the ranking selected. This is exacerbated by the one-on-one conversation where there is little direct/candid feedback offering anecdotal examples for why the ranking was selected. With this type of non-direct/candid performance conversation there is little the employee can latch on to, to understand their behavior and performance issues that need to be improved, so it perpetuates until the manager can no longer be tolerate it. With this dynamic, ultimately employees will go into survival mode operating from a CYA (Cover Your A#%*!) mindset because there is no certainty around the performance expectations. This, then, brings us back to the top of the model where a “lack of specificity” started this workplace communication pattern. You break this cycle and begin creating a Championship Caliber Company Culture by engaging your employees in a conversation around realistic performance expectations that includes specific, measurable performance goals at the beginning of the performance period. With this approach it’s best to apply The Clean Slate Strategy and give everyone the benefit of the doubt for past performance and behaviors, starting fresh with new expectations moving forward that the team (or the individual team member) has had a hand in creating.

Small Business Leadership Communication Mistake #5: Communicating with a Lack of Transparency

For small business owners transparency is a scary concept. Dictionary.com offers five different definitions of transparency. A few speak to the physical context of light passing through an object.





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There are two, though, that speak to transparent communication in the workplace:

1) Easily seen through, recognized, or detected 2) Open; frank; candid (note: notice anything similar to above?)

There are a number of contexts where transparency is vitally important for creating highly engaged employees who feel closely connected to the company beyond the “job.” Two areas are company strategy and the company financials. It’s important for employees to understand the company strategy so they can see how their role contributes to a company’s success. One of the fears of small business operators with being transparent about their strategy is that often there isn’t one. So, it’s difficult to share with transparency, which is unclear in the mind of the boss (see Communication Mistake #2, “A Lack of Specificity,” this is another context, but fits into the performance expectations discussion, just on a higher level). If the performance expectations aren’t clear for the company overall, how can it be expected they filter down to the employees, right? So, first get clear on your company’s strategy, then share it with employees and engage them in conversations about how to make it better. The more transparent you are with the strategy and allowing input from employees the greater buy-in and commitment they will show. The second context transparency is more important than most small business leaders understand is in the financial performance of the company. I could write volumes on this subject and here are two specific examples, one very personal and one from a client. During my baseball career I served as CEO for five different professional baseball franchises. At my last team 40% of my total compensation was based on our company’s year-end profit. As CEO I knew exactly what the financials were and worked closely with our comptroller to maximize the bottom line as the year-end neared. During my eight years with my final team there were only three of our 12 staff members who knew the actual numbers. The rest of the employees, whom also received substantial bonuses of .5% to 1% of net profits equaling 15% of their annual salaries, knew nothing of the numbers.





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To them, the bonuses were arbitrary and had no substance. They didn’t understand what made it go up or down from one year to the next, typically the movement at their level was minimal, which didn’t help motivate them, either. Because they didn’t understand the foundation of their bonus and what it was based on they didn’t see any connection to how they could affect in the next year. My boss, the principal owner of the team, would not permit me to share the source of the employees’ bonuses, forcing me to only connect it nebulously to their annual performance evaluation. It was at best neutral with regard to motivating the employees and did become an entitlement that was hard to explain if the value of their year-end bonus was less than the year before. I committed that I would work towards helping my clients become more transparent with their employees regarding the financial aspects of the company when I began my consulting practice. One of my clients, whose company by his own admission was “treading water,” through the recession, had significant issues with employee motivation and morale. During the recession he ended the annual year-end “thank you” bonus he was providing the week it was due to be paid, which amounted to a couple of thousand dollars per employee each year. It had become an entitlement. When I encouraged him to be more open about the financials he was afraid employees would see an unstable company with an uncertain future causing them to be inclined to look for other work. Instead, I convinced him that his long-term employees would step up once he opened the books and allowed them to understand the basis of how the business made money, and what was necessary to allow him to reinstate the bonuses, create a 401K retirement program and grow the company. After 12-months, because of the commitment of employees who began to understand how the business actually made money, and what their individual role was in making that happen, some long-term employees with poor attitudes turned around to begin contributing at higher levels than ever. One even told me at the holiday party, “since you’ve been working with us I’ve come to understand that if I want a larger role in this company I have to help build framework for it.” Transparency around the company financials is a delicate subject and how much transparency to be shared is a personal decision for the company principals, and should be seriously considered.





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Non-transparency breeds speculation, rumor and a lack of trust in regards to both strategy and financials. Therefore, if you want to bring the best out of employees, giving them more information is the way to go. Many business owners tell me they want employees to think, feel and act more like an owner, yet few give them reasons to do so. If you want employees to think, feel and act like owners, and be concerned about company performance they must understand what that means. You must train them to understand what impacts the bottom line performance of the company if you want them to seek ways to contribute to making it better. If you’re concerned about people seeing “real” numbers, you can always keep everything to percentages, especially when it comes to individual’s compensation, and all compensation numbers should be shared as a composite in total for the company, not broken out individually. Additionally, the tradeoff is that you also will need to create a reasonable and fair compensation system that allows employees to participate in the rewards they helped create. You can’t have it both ways. You can’t keep employees in the dark about company finances if you expect them to think, feel and act like owners. Begin communicating with transparency in the right way and your company’s results will sky rocket.

Where Can You Go From Here? Commit to Championship Caliber Communication at Your Company

You can now see how these five most common communication mistakes are killing your company’s profits. All five are directly related to employee productivity and performance, which is the number one issue small business leaders ask me to help them with. The typical question I hear is, “how can I improve the (pick one or more of the following: attitude, the work ethic, the initiative and the performance) of my employees?” “Communication” is at the core of all those items. Even if you are reluctant to become more transparent with your communication around strategy and financials by changing number five, if you were to invest time and energy engaging your staff to gain clarity around Communication Mistake #1 by actually creating accountabilities towards specific solutions, the motivation, morale and work ethic of your staff will improve dramatically.





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After that you can begin practicing turning around the Poor Performance Perpetuation Spiral through implementing The Performance Management Playbook.

Next Steps To explore specific ways you can begin incorporating Championship Caliber Communication into your company so you can stop killing company profits, as a reader of this report you have an opportunity to schedule a complimentary, no-cost private, one-on-one Championship Caliber Company Strategy Session with me. During this strategy session we will discuss your specific situation, the communication challenges and employee performance issues you feel are most impacting your company’s bottom line and you will leave the strategy session with at least one specific next step to implement to begin creating Your Championship Caliber Company. Click this link (www.meetme.so/ChampionshipStrategySession) to complete the brief request form that will do three things:

1) Help you focus on what you’d like to achieve in our strategy session that would be of most value.

2) Help me prepare to help you best. 3) Allow me to see if your situation is a good fit for the value I offer (if you’ve read this far,

I’m confident you’ll pass this test). I’m looking forward to speaking with you soon.

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