September 10, 2013

The Cost of What's Unspoken: 3 Ways Employee Silence Is Hurting Your Company's Bottom Line

Written by Claire Lew

As a leader, what keeps you up at night?

You may be worried how your upcoming product release will be received by customers. Or perhaps you're concerned that your closest competitor gained recent traction.

While these concerns are valid, I don't think it's what you should be most worried about.

The greatest threat to your company is employee silence. The lack of feedback is the most destructive force in any company.

It's dangerous to run a company and not know what your employees think. When employees feel they can't express their opinions, it detracts from their engagement and productivity. It stops the flow of information that feeds into innovative ideas and more efficient ways to solve problems. At the end of the day, a lack of feedback directly translates into the company's outcomes and financial performance.

Here's a breakdown of 3 ways employee silence is hurting your company's bottom line:

(1) DISENGAGEMENT: Managers who give little to no feedback to employees result in 4 out of 10 workers being actively disengaged.

This finding from a 2009 Gallup study of over 1,000 US based employees reveals the impact of feedback on employee engagement. In fact, the study shows that employees who receive mainly negative feedback from their manager are over 20 times more likely to be engaged than those receiving little or no feedback. Feedback is so critical to employee engagement that even negative feedback is better than none at all.

When an employee doesn't receive feedback, the resulting disengagement has a serious financial cost. Gallup estimates that employee disengagement costs the US economy as much as $350 billion every year. For each disengaged employee, a company loses $3,400 to $10,000 in salary due to decreased productivity. These costs don't even account for other expenses that result from disengaged employees, such as absenteeism, missed deadlines, and poor sales.

(2) TURNOVER: 81% of employees feel their skills are not being put to full use, and 49% feel they don't get enough or valuable feedback on their performance.

These results from the Global Workplace Survey 2011 by Lumesse highlight how a majority of employees could be adding greater value to their company, but aren't being given the feedback to best utilize their skills.

This lack of feedback has a huge effect on employee turnover, as a 29% of employees expect to leave their jobs in next 5 years even though they like where they work. According to a survey of 20,000 "high-potential" employees by the US Corporate Executive Board, the number one reason they stay with a company is if they feel "connected to corporate strategy."

In other words, the lack of feedback and internal communication can cause the best people in your organization to leave. This turnover is costly, as experts estimate that replacing an employee costs a business upwards of twice an employee's salary.

(3) ACCIDENTS + MISTAKES: Employees directly intervene in only about 2 of 5 unsafe actions and conditions that they observe in the workplace.

According to a 2010 survey of 2,600+ employees across industries, the frequency of interventions in the workplace is incredibly low (39%). This is a huge cause for concern when considering the number of accidents and injuries in the workplace that could be reduced if a company encouraged more internal feedback.

In a similar sense, the lack of feedback is often the underlying factor for mistakes companies make. A recent Accountemps survey reported that 41% of CFOs say that the lack of communication between staff and management is the most frequent mistake a company makes in managing its teams.

These three examples are only the tip of the iceberg. Beyond financial costs, employee silence inflicts an emotional toll and mental stress on people within a company. All together, the lack of feedback is downright damaging. Of all the things that could keep you at night as a leader, it should top the list.

Ignore it at your peril.

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