What Employees Don't Know, Employers Pay For

The Metrolink crash earlier this month has already highlighted the high cost of employee error. Via ManageSmarter, I see that an IDC report from June actually put a dollar amount on the risk that companies face from unprepared or uneducated employees.

The report suggests that on an overall basis, U.S. and U.K. workers are costing their employers $37 billion a year because they don’t understand their jobs. And the toll in the transportation industry is particularly dramatic.

Thirty-six percent of transportation companies reported possibly dangerous and even fatal situations for their workers or the public in the last year because of employee misunderstandings. Cognisco, a company focused on employee assessment and education, sponsored the IDC study. (What a surprise an employee education firm would sponsor this, huh?)

IDC used information from human resources, finance and operations senior staff from companies with more than 5,000 across the United States and Great Britain.

According to the IDC study, employee misunderstanding was defined 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 study says only one in three companies does something to address the misunderstandings – hire an employee assessment and education firm starting with the letter C, perhaps? — and most were because of “loss of business to due to unplanned downtime (32 percent); poor procurement practice (17 percent); and settlements for industrial tribunals (16 percent).”

All companies surveyed said their company was placed as risk of injuries to employee or the public by simple misunderstanding. And although the report goes on to say that costs can’t be tallied for impacts on reputation or customer service, 99 percent of companies said they risked “loss of sales and reduced customer satisfaction” in the last year.

Although I’m not a big supporter of new employee orientations, this report does make a valid point. Sometimes people who don’t know are too embarrassed to tell their supervisors, like the one worker who didn’t know the difference between the sewer and a storm drain (and thus subsequently polluted it with toxic chemicals).