Misunderstandings can rake up huge costs

Global - Firms could lose US$37 billion (S$50.7b) every year due to employee misunderstanding, a recent IDC white paper found.

Two-thirds of the total costs from misunderstanding come from unplanned downtime (32%), poor procurement practice (17%) and settlements for industrial tribunal (16%). The paper defines employee misunderstanding as wrong actions taken by employees who have misunderstood or misinterpreted company policies, business processes or job functions.

However, the paper found that few organisations are taking action or are even aware of the risks. By ignoring the problem, compliance, public safety and legal problems may follow suit.

"The potential impact and repercussions from this misunderstanding should be addressed by all organisations and at the highest level -- the CEO," says Lisa Rowan, programme director for HR and talent management services at IDC.

The survey was conducted among senior HR, finance and operations staff at 400 companies across the UK and US.