Organisations in the UK are missing out on valuable ideas, reducing their profitability and increasing employee turnover simply because they don't talk to and listen to their staff enough.
New research by Crystal Interactive suggests that inadequate internal communications are endemic to many organisations and that the rot starts at the top.
While company boards are usually adept at dealing with the City and commercial partners, over half (55 per cent) struggle to get their staff communication right and 47 per cent are poor or very poor at communicating with their most junior employees.
What's more, almost all of the 103 senior internal communications managers and directors interviewed for the research said that ideas and opinions from employees are not always valued or appreciated by those higher up.
But poor communication can have a real commercial impact. Organisations that are better at internal communications are far more likely to get new ideas from staff. Indeed, some 90 per cent of the best communicators' ideas come from staff compared with the corporate average of just 20 per cent.
Good internal communications also reduces staff churn, the report argues. Feeling part of a team, a by-product of good internal communications, comes ahead of pay, bonuses and flexible working in terms of its impact on employee morale.
"Organisations spent £17 billion on R&D in 2005. Who's to say that money was focused on the best ideas, if over half of companies offered no formal opportunity for new ideas to be fed through?" asked Chris Elmitt, Director of Crystal Interactive.
"It's madness that companies worry about huge churn costs, go to enormous lengths looking for even modest improvements in margin, and spend time debating flexible working – yet some boards still haven't mastered how to simply interact with staff."
Underlining this communications gap, the study fund that eight out of 10 senior teams make important announcements to staff via email and two thirds also rely on managers to disseminate news.
Events are used as a way to break important news by six out of10 companies, yet despite these being an opportunity for direct interaction they typically allow for only 20 minutes of Q&A time.
"While using a mix of methods is important, and cascading information through managers is no doubt the right approach for large companies, our research shows that these managers, who are relied on as the board's mouthpiece, are not being communicated with effectively either!" Chris Elmitt said.
"If you haven't got your message across to your managers, what hope is there that they will share your views and vision with the teams below as you intended?"
Exacerbating this, complex organisational structures with multiple layers of management between the board and junior employees, coupled with a lack of understanding of the bottom line benefits, have made improved communication a low priority.
"It's easy to see why corporate leaders have become more focused on their external communications," Chris Elmitt said.
"An unconvincing presentation to analysts may have an immediate, negative impact on the share price, but the market will be less sensitive to the way leaders interact with staff.
"There is also perhaps a perception that 'people skills' are a talent you either have or don't have, not something you can manufacture – but our research shows there are some very practical steps companies can take to build better communications into their organisations."
Good staff interaction, he argued, can no longer been seen as something that is a nice to have – it is the sign of a good employer.
"It's the mark of a clever company, and can add millions to the bottom line," he insisted.
"By talking to and listening to staff, being open about the strategy and welcoming input, organisations increase their profitability, keep people onside during tough times, and identify the very ideas that will give them a competitive edge."