How much is poor communication really costing organisations?
The answer? An eye-watering $37 billion across the US and UK – and that was back in 2011. That is not a typo by the way – that is billion, with a ‘B.’
Imagine what that figure looks like today. And yet, leaders still dismiss it as a ‘nice-to-have.’
Despite mounting evidence, many organisations continue to treat internal communication as an afterthought – focusing on cost-cutting in areas they perceive as non-essential, without realising that ineffective communication is already draining their bottom line.
The truth? Miscommunication is not just frustrating – it’s expensive.
Breaking down the $37 billion problem
Where does this staggering number come from? The research shows that ineffective communication leads to wasted time, lost productivity, poor decision-making, and increased employee turnover.
Consider these real-world consequences of poor communication:
- Employee confusion – unclear messages mean employees waste time trying to interpret directives instead of executing them.
- Misaligned teams – without a shared understanding of goals, departments work at cross-purposes, reducing efficiency.
- Disengagement – employees who feel uninformed and disconnected are more likely to disengage or leave.
- Reputational damage – misinformation can lead to costly PR crises and a loss of public trust.
The cost of poor communication – a hypothetical scenario
To put this into perspective, imagine an organisation with 10,000 employees rolling out a major change. Instead of a well-planned internal communication strategy, they opt for a ‘send an email and hope for the best’ approach.
The impact:
- Twenty percent of employees misunderstand the change. That’s 2,000 employees working in the wrong direction.
- Each of them spends three extra hours seeking clarification. That results in 6,000 lost hours, equivalent to 750 full workdays.
- At an average salary of $100,000 per year, those wasted workdays cost at least $300,000.
- One percent of employees quit due to confusion and frustration. That results in 100 departures, leading to millions in rehiring, lost expertise, and decreased morale.
Multiply that across multiple organisations and industries, and the cost of poor communication quickly compounds into a multi-billion-dollar problem.
Case studies of internal communication failures
These are not just theoretical risks. History is full of costly internal communication breakdowns:
When poor communication leads to catastrophe:
- Deepwater Horizon oil spill (2010): The catastrophic explosion on the Deepwater Horizon oil rig, operated by BP, resulted in the largest marine oil spill in history. Investigations revealed that internal communication failures contributed significantly to the disaster. Critical safety concerns were raised by engineers but failed to reach key decision-makers in time. This breakdown in internal communication led to poor risk assessment and delayed response efforts, exacerbating the environmental and financial impact. By the following year, the company had lost almost a quarter of its market value and had haemorrhaged over $40 billion in costs associated with cleanup and recovery.
When internal communication fails to prevent a crisis:
- General Motors ignition switch recall (2014): GM faced a crisis when faulty ignition switches in several car models led to unexpected engine shutdowns and disabled airbags. Internal investigations found that GM employees had been aware of the defect for over a decade, but the issue was not escalated effectively within the organisation. The failure to communicate internally delayed recalls, resulting in accidents, fatalities, lawsuits, and billions in financial losses.
When ignoring employee concerns costs millions:
- Horizon IT scandal (1999–2015): The UK’s Post Office implemented the Horizon IT system, which falsely indicated financial discrepancies at numerous branches. Despite many sub-postmasters reporting issues, internal communication failures meant these concerns were ignored or dismissed. The result? Hundreds of wrongful prosecutions, shattered careers, and a major legal and reputational crisis that forced the organisation to issue costly settlements and public apologies.
The political undermining of communication roles
The reality is internal communication isn’t just an internal communication team’s problem – it’s a business risk. Leaders who fail to prioritise clear, strategic communication don’t just create inefficiencies; they damage trust, productivity, and financial performance.
We need to move this conversation out of internal communication silos and into leadership discussions. CEOs, CFOs, and senior executives must start asking: What is poor communication costing us? Where are the risks? And how do we measure improvement? Because if leaders aren’t taking internal communication seriously, they’re not just underestimating its value – they’re actively enabling failure.
Despite clear evidence of its importance, communication remains under attack – sometimes even politically. Australian Opposition Leader Peter Dutton recently criticised the employment of “culture, diversity and inclusion advisers, change managers, and internal communication specialists,” dismissing these roles as unnecessary bureaucratic excess.
And let’s be honest – he’s probably not the only one who thinks that. Across politics and business, leaders everywhere question the value of internal communication – often because we’re not proving it ourselves.
This kind of rhetoric not only demonstrates a fundamental misunderstanding of modern workplace dynamics but also perpetuates the very inefficiencies that cost businesses billions. When leaders view communication as expendable, they ignore the data that proves its financial and operational value.
How to stop wasting millions on poor internal communication
Organisations that prioritise strategic internal communication see tangible benefits in efficiency, engagement, and profitability. Here is how to turn things around:
- Elevate internal communication to a strategic function – internal communication should be more than an afterthought; it must inform decision-making and shape company strategy. This means giving internal communication a seat at the leadership table, ensuring messages aren’t just cascaded down but actively influence direction, culture, and engagement. When internal communication is embedded at a strategic level, it prevents costly misalignment, improves transparency, and strengthens organisational trust.
- Hire internal communication experts, not just content creators – effective internal communication is about navigating complexity, driving engagement, and connecting employees to strategy. That requires expertise. Organisations should invest in experienced, qualified, and certified professionals who understand how to influence culture, facilitate change, and ensure employees are aligned with business goals. Communication is a profession – treat it like one.
- Measure internal communication effectiveness – if an organisation can track sales, customer engagement, or operational efficiency, it can – and should – measure internal communication. Understanding how well employees receive, understand, and act on key messages is critical to improving alignment and business performance. The same applies in non-profit and government sectors: if they can measure public outreach success, policy adoption, or community engagement, they can just as easily track the impact of internal messaging. What gets measured gets improved – internal communication is no exception.
A turning point for internal communication
The good news? Internal communication professionals have an unparalleled opportunity to redefine their role and prove their value. But doing so requires stepping up, thinking strategically, and speaking the language of leadership.
That’s exactly why I’m hosting a no-bullshit conversation with Gallagher’s Sharn Kleiss on 1 April – where we’ll unpack the latest findings from the 2025 State of the Sector report, compare notes with our own research, and challenge internal communication professionals to stop making excuses and start making an impact.
If you’re tired of fighting for a seat at the table and want practical insights on how to break through, this is the session you can’t afford to miss. Join us – register now.
The choice is simple: Invest in communication or keep paying for its failure.
Click here to register.
