(View the infographic version of this blog here: https://www.gofluent.com/blog/avoid-the-62-million-dollar-mistake/)
Blindspot: Lack of industry-relevant language learning in corporate L&D programs
Let’s face it, operating internationally is hard. So hard, in fact, that a Harvard Business Review study found that, on average, companies that expand internationally see less than 1% of revenue growth for the first 5 years.
When expanding internationally, L&D departments tend to prioritize deploying initiatives centered on culture, leadership, and diversity first. While addressing those key issues is important, oftentimes, language learning is mistakenly overlooked. When employees have difficulty communicating due to language shortcomings, disengagement and miscommunication can easily occur. This disengagement and miscommunication can create significant corporate cost from the effects it has on employee retention, workforce productivity, and international business deals.
In fact, a study conducted by Holmes (a voice of the global PR industry) showed that, on average, employee miscommunications cost companies over $62 million a year. It is unavoidable, lacking language learning cost companies millions. In the following paragraphs, we will explore the different facets of this $62 Million dollar mistake, and how they are affected by language learning:
Employees who struggle when they are required to communicate in a non-native language are more likely to quit or be fired. With labor as the biggest cost of any large corporation, the financial impact of losing and replacing employees is something that should not be overlooked. As the anecdote below shows, even industries historically plagued with poor employee retention can benefit significantly from providing a workforce program targeting the development of language skills.
In the fast-food industry, employee retention has always been a challenge. For years, more employees were leaving the fast-food industry than entering. With an average industry turnover of 150%, it was apparent that something needed to be done. In 2007, McDonald’s began its English Under the Arches (EUA) language program. This program sought to empower McDonald’s employees by providing them with English language training.
After implementing the program, McDonald’s reported 88% of EUA participants are still working at McDonald’s one year after completing classes, and 75% remain with the company after two or three years. These stats are staggering when compared to the average industry turnover of 150%.
When you look at the industry cost per employee turnover of $5,864, we can calculate McDonald’s saved roughly $49 million with this initiative alone.
Workforce Productivity And Confidence
When employees lack confidence in their language skills, they tend to avoid common situations—email, presentation, conference calls—where language proficiency is necessary. This avoidance can significantly impact employee productivity, which in the end affects the bottom line.
A first-hand employee testimonial from a study in the Journal of International Business sheds light on the language struggles that employees in MNC (multinational companies) face.
The employee stated, “A German who doesn’t speak English has such a hard time. He doesn’t feel well, has no self-confidence and doesn’t open his mouth. We have some cases here, in which the colleagues don’t even pick up the phone when they see that an English colleague is calling. The demand is that you speak good English, otherwise you are an idiot.”
International Business Deals
The saying, “Time is money,” stands true. The speed at which organizations execute on their core competencies can significantly affect corporate spending. This is especially true in multinational organizations, where cross-border initiatives tend to require additional procedures.
When operating across borders, important business deals can often be held up or even lost due to miscommunication. As a result, much-needed revenue from these deals is often delayed or lost. In fact, according to the Economist Intelligence Unit, about half of senior executives surveyed admitted that communication lost in translation wasted time by standing “in the way of major international business deals.”
Solution: Make language learning the “Fifth Pillar” of your L&D program
With potential savings in the tens of millions, language learning just makes sense. Whether it be developing out an in-house business-critical language solution or partnering with an organization with experience in implementing it, a strategic language initiative is critical. If you are a learning leader with a global line of sight, language learning could be just the key to your strategic workforce training plan.