They're Not Getting It: Employees Don't Understand Their Jobs September 26, 2008
By Margery Weinstein
Turns out there's a reason for that vague, confused look many of your employees are sporting. Many of them don't know what's going on. U.S. and UK employees cost businesses $37 billion every year because they don't really understand their jobs, according to a new IDC white paper commissioned by employee assessment specialist Cognisco.
The white paper featuring the findings, "$37 Billion: Counting the Cost of Employee Misunderstanding," defines employee misunderstandings as actions taken by employees who have misunderstood or misinterpreted (or were misinformed about or lack confidence in their understanding of) company policies, business processes, job function, or a combination of the three. The research shows that while organizations often are aware of the costs of misunderstanding, only one in three claims to have taken any action to close the gap.
Approximately two-thirds of the total cost of misunderstanding reported by organizations was attributed to loss of business due to unplanned downtime (32 percent); poor procurement practice (17 percent); and settlements for industrial tribunals (16 percent). Other costs incurred include regulatory, tax, or revenue penalties.
Even worse news: The findings highlight that the real cost of employee misunderstanding may be even higher when costs such as impact on brand, reputation, and customer satisfaction are taken into account. All 400 companies asked reported that employee misunderstanding has placed their company at risk of injuries to employees or the public, while 99 percent cited risk from loss of sales and reduced customer satisfaction in the last 12 months.
Other eye-openers:
• On average, businesses with 100,000 employees are each losing $62 million per year at an average of $624 per employee.
• The banking industry has the highest cost of misunderstanding due to the high risk associated with handling funds, with the transport industry reporting the lowest cost.
• 81 percent of banks report exposure to impaired brand image and reputation in the last 12 months.
• 36 percent of transport organizations report exposure to the risk of fatalities within the workforce or public in the last 12 months.
• 52 percent of petrochemical organizations report a risk to health and safety compliance in the last 12 months.
• 89 percent of pharmaceutical companies report exposure to the risk of reduced productivity in the last 12 months.
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