How a lack of collaboration hurts your bottom line
The most updated version of this article is available at www. upchain.com.
Summary: Poor collaboration in the workplace reduces quality, productivity, and profits. For teams to successfully collaborate, data needs to be easily accessed and shared across the value chain.
There’s been plenty of hype surrounding collaboration in the workplace.
But does it actually impact organizations as much as we think it does?
Today we’re going look at what collaboration in the workplace involves, and what’s at stake when it doesn’t happen.
Here we go!
What does collaboration even mean?
First, let’s get a few things cleared up.
Deloitte defines collaboration in the workplace as:
“Employees communicating and working together, building on each others’ ideas to produce something new or do something differently.”
And although idyllic, their definition is pretty bang on and describes a way of working that most organizations try to emulate.
With collaboration as a staple of almost every organization today, we couldn’t help but wonder if all this hullabaloo is worth the fuss.
So we decided to look into it.
And after some digging, we realized just how much not collaborating can hurt a business.
The impact of collaboration in the workplace
A lack of collaboration in the workplace hurts organizations in three big areas — productivity, quality, and profitability.
Productivity
Collaboration in the workplace has been found to increase the speed of project completion.
Working together lets teams work faster and increases the amount of work they can take on.
When collaboration doesn’t take place at work, businesses miss out on these advantages and their bottom line suffers as a result.
For instance, Deloitte found that the productivity gains made from collaboration save companies $1,660 per employee annually.
Even if you’re a small organization of 50 people, collaboration in the workplace might save you $83,000 every year.
And as your organization grows, the consequences to productivity of not working together become exponentially more expensive as processes become more complex and mistakes become proportionally larger and more costly.
But even if we only look at this linearly, growing by just 10 employees tacks on an additional $15,000 cost every year!
Companies miss out on productivity savings of tens of thousands when they don’t collaborate.
Quality
Collaboration in the workplace doesn’t just keep teams happy. It’s also been proven to improve the quality of work produced.
Cisco, for instance, found that the more teams collaborate, the better their performance.
And Deloitte, being Deloitte, quantified the impact of collaboration on work quality. They found the annual value gained from collaboration is $2,517 per employee.
Let’s use our 50 person example again.
In this case, a small organization of 50 stands to gain or miss out on $125,000 depending on their approach to collaboration.
Organizations leave over $125,000 on the table when they don’t collaborate.
Profitability
The opportunity cost of not collaborating is astounding.
It’s so great that Deloitte estimates the net value of worldwide collaboration to be $56 billion.
When we look at the productivity and quality gains collaboration leads to, it’s no surprise that companies who collaborate are twice as likely to outgrow their competitors.
Using our 50 person organization example again, we see the opportunity cost of poor collaboration in the workplace to be $208,000 a year.
A lack of collaboration in the workplace costs small businesses $208,000 every year.
And this figure only gets bigger as companies scale, since this figure is based on the per employee savings that result from collaboration in the workplace.
GM — a real-life example
The cost of not collaborating is more than just an opportunity cost for the business.
Failing to collaborate can actually cost lives.
Manufacturing giant General Motors (GM) is an example of when poor collaboration in the workplace led to fatality.
The inability of GM teams to collaborate with one another resulted in a faulty ignition switch to be used in its vehicles for almost a decade.
A review of why this error occurred came down to two things:
- A failure to share knowledge throughout the organization.
- A lack of communication between and within teams.
The consequence of this poor collaboration in the workplace — 124 lives lost.
Plus a $575 million lawsuit.
And a $900 million fine.
Poor collaboration in the workplace cost GM $1.475 billion.
The company was heavily penalized because its employees were aware of the defect for years, but failed to rectify the problem.
Had GM been a collaborative work environment, it’s possible that this error would have been corrected earlier, saving lives and money.
And although collaboration in the workplace isn’t a solution to all the factors that lead to the defect, it could have helped GM fix the faulty switch sooner and reduced the damage this error caused.
What collaboration in the workplace looks like
Collaboration in the workplace doesn’t have to be open concept offices and everyone working on Apple Macbooks.
The most significant factor in a collaborative workplace is how easy it is to share knowledge with multiple stakeholders.
In the case of GM, employees weren’t sharing information with each other or with other teams…
… Which resulted in an organization-wide communication breakdown that allowed the faulty ignition switch to be in the engines of GM vehicles for years.
One way to mitigate this and improve collaboration in the workplace is to provide teams with access to product data.
This ensures that information as critical as part defects is accessible by all players, and solutions can be generated by teams organization-wide.
But collaboration in the workplace is more than just opening the floodgates of information.
It also involves people working together.
Informal collaboration tools like Slack and instant messaging tools make it easier for people to discuss the information they have access to and mitigate the risk of recalls like GM’s from occurring.
Wrap Up
The hype surrounding collaboration in the workplace is real.
When teams don’t collaborate, quality and productivity are compromised and company profitability suffers.
At best, organizations are inefficient, leaving money on the table and exposing themselves to displacement and competitors.
At worse, as GM found out, people can die.
One way to avoid ending up like GM is to make collaboration a focus at your organization.
To make that happen, teams need to be equipped with the information to make sound decisions, and the tools that make collaboration easy.
When collaboration is a simple and easy process for employees, organizations are sure to reap the returns of collaboration when it comes to quality, productivity, and profitability.
Interested in how we help teams collaborate in the workplace? Find out more.
Image Credit: Rawpixel via Unsplash
Originally published at www.upchain.com on October 16, 2018.
