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Businesses have long been obsessed with getting communications right with their customers. However, internal communication occurs within the organization and needs more care and time to get right.

Only then can a business thrive and succeed under all circumstances. Finally, your employees are your first and foremost customers. If you communicate well with your employees, you can communicate well with your customers.

It is easy for businesses to completely ignore internal communications because they might be too busy only doing external stakeholder communication. While your customers are crucial to business success, no business should overlook the importance of internal communications.

Why is Internal Communication Important

Miscommunications in the workplace can have horrific consequences. One misstep can rapidly spiral into a disaster. To the extent that a business can lose billions of dollars, products can fail, reputation takes a toll, and employees can lose their jobs (or even face legalities).

The importance of internal communication in an organization has been stressed enough for a long time. Yet we come across media reports of popular brands failing to implement effective workplace communication practices. Don’t believe us? Then let’s learn some communication lessons from the mistakes that brands made in the past.

The greates problem with communication is the illusion that it has been accomplished.

Communication failure examples: Learn from others’ mistakes

Here are two real-life disaster stories that tell us how even the world’s renowned brands misjudged their internal and external communications and ended up in dreadful blunders.

Example 1: Walmart’s ‘Fat Girl Costume’ controversy

What actually happened: In 2014, Walmart was in the limelight for all the wrong reasons. Halloween was around the corner, and Walmart created a communication horror story by adding a section to their website that said—“Fat Girl Costumes.”

This not-politically-correct and insensitive phrase began an avalanche of the unpleasant press: it soon reached multiple online media platforms, and the brand’s reputation took a profound toll. The company saw a rampage of complaints on its social channels and even made it on the top#10 Twitter trends. Later, Walmart apologized for advertising their Halloween costumes under the “fat girls costumes” category. (Source: Inc)

They said:

“This never should have been on our site. It’s unacceptable and we apologize. As soon as we were notified about it this morning, our teams began immediately to remove it from our site and also to ensure it never happens again.” —

How the situation could have been prevented

Whether intentional or not, Walmart’s marketing team certainly needs a proper system of internal accountability. If only they had a comprehensive people platform that enabled them to share constant reminders with their teams about the web publishing policies or the dos and don’ts, the situation would have never arisen. It could have saved them from all the negative publicity and damage.

Example 2: The Enron scandal

What actually happened: The fall of this Wall Street darling is well known to the whole world. The company’s collapse not only affected thousands of employees but also shook the stock market to its core.

Enron, one of the biggest energy companies in the U.S., went bankrupt due to off-the-books accounting, fraud, and fake holdings. The leaders at Enron were dishonest with their own workforce and failed to address one of the most critical issues—transparent communication between the workforce and the management team. They did not listen to their employees, ignored problems, and hid the truth. (Source: Investopedia)

How the situation could have been prevented

Enron is a clear example of how a situation can go from bad to worse to disaster. Though years have passed by, the scandal still stays fresh in people's minds, setting an example of what a workplace shouldn’t be like.

Although the communication department of Enron did raise major red flags, the leaders paid no heed despite that. Firstly, for the management and employees to be effective, transparent, two-way communication is essential. Having the right platforms that offer anonymity to let employees raise concerns or speak up about workplace issues without any fear of retribution prevents horrific problems from happening.

If those real-life examples weren’t enough, let the numbers do the talking:

  • Businesses with a solid internal communications strategy are 3.5 times more likely to leave competitors behind and forge ahead.
  • A Gallup study found that a dismal 13% of employees agree that their business leaders effectively communicate with them, which means 87% of employees don’t think effective internal communications are taking place in their organization.
  • While internal communications are vital, businesses are either putting them on the back burner or not realizing their potential. 60% of businesses haven’t thought of building a long-term internal communications strategy.

The Cost of Poor Communication is Exceptionally High

The shift to remote/hybrid work and the emerging metaverse has cemented the digital reality, but the workforce faces new challenges. Poor communication is a serious issue, and still, many leaders don’t realize its cost impact.

According to a combined research report by The Harris Poll and Grammarly, poor workplace communication is a prevalent problem that continues to burden employees and businesses.

The findings of this study can’t be ignored. While the cost is staggering, the facts illuminate the wide-ranging impacts of poor communication today and the serious need to rethink engagement and productivity in the workplace.

cost of poor communication

This survey's findings also reveal the connection between poor communication and employee turnover and morale. The report says that 86% of the employees experience communication problems at work. In addition, employees experiencing miscommunications many times throughout the day are more likely to be stressed.

A breakdown in the communication process frustrates employees, creating a domino effect on:

  • Employee engagement
  • Employee productivity
  • Customer experience

As the workforce continues to evolve, improving your communications with great clarity and nurturing confidence in employees is imperative.

7 Benefits of Effective Internal Communication in the Workplace

Building a good internal culture is like building a house. If the foundation isn’t strong, it will collapse eventually. Effective team communication makes your cultural foundation healthier and stronger. The benefits are incredible when you have the right internal communication strategy in place. We are highlighting a few here:

1. Boosts employee engagement

Employee engagement is the holy grail for businesses because it is the lifeline of a business. If employees are not engaged, they are less productive, and their stress can seep into their overall well-being. They will be more frustrated and won’t be able to give their 100% at work, which can dampen the spirit of the business.

According to a McKinsey report, a boost in employee engagement can increase productivity levels by 25%, which can impact the entire business. However, just 3 % of employees feel engaged at work.

When businesses get their internal communications right, they improve employee engagement. This quickly shows in a business’ success as organizations with higher employee engagement earn 22% more profits.

While some employees are proactive in getting information and talking regularly, not all employees are the same. It is the responsibility of the managers and top-level management to put effort into regular communication. Internal communications can help employees feel valued and important.

2. Ensures organization-wide transparency

Internal communications ensure transparency in an organization, and transparency ensures trust. Employees don’t want to learn about a big announcement through a third person or external sources. They want to learn through their company leaders or top-level management.

According to a study by Slack, 80% of employees are interested to know how decisions are made in their organization. 

This means they want increased transparency to understand how their organization works and how the management makes decisions. Transparency enables employees to trust their leaders, and this fosters accountability.

The same Slack study also reveals that as many as 55% of organizations felt they were transparent, and only 18% of employees thought the same. Internal c communications can help bridge the gap in transparency and enable employees to trust and work towards the common company values and mission.

Internal communications enable swift delivery of information, whether it is from top-level managers or between employees. This flow of information enables transparency, so every employee is on the same page as others. This can help build a strong workplace culture.

3. Keeps employees informed and updated

Internal communications aim to keep employees up-to-date about any information they need to know. A Bambu report said 80% of employees are interested to know what is currently taking place in their business.

In the same report, 77% of these people explicitly specified it can help them work better, while 66% said it could enhance their relationship with their colleagues. This shows how eager employees are to know news about their organization.

An effective internal communications strategy can enable employees to be kept in the loop about company news. For instance, any change in the company policy, work culture, or the way the business is performing must be communicated to the employees.

4. Helps in the time of crisis

Internal communications can help in crisis management. In an ideal world, organizations don't experience any problems. But the reality is far from it. Mergers, acquisitions, any macro-economic crisis, pandemics, political situations, etc., keep taking place. An organic action might need to lay off a few or many employees or take any unpleasant decisions in times of crisis.

In some cases, teams have to restructure and so on. A crisis can affect a business of any size, and the people in it require precise information about what is happening in the company. Internal communications can help manage and ensure there is no misinformation.

Rumors can spread quickly, and this can cause toxicity in the workplace. Additionally, people might lose trust and become less engaged due to poor internal communications. However, organizations with a proper internal communications strategy can flourish even in tough times.

Internal communication can make it easier for difficult conversations to take place so employees can understand the complete picture and why something unpleasant such as layoffs, is taking place. This can help employees respect the organization they work in, creating an open environment for discussions.

5. Helps with external communication

Internal and external communications are often seen as separate entities in the business world, but they are not. According to a Bambu report, 63% of employees said proper internal communication could help them become brand advocates and spread the word about their company.

Think about it. Employees are acting as company insiders as they work in it. When employees say anything about the company, whether good or bad, it will hold more weight because they are part of the organization. This can have positive or negative effects depending on what the employee says about the company.

When internal communication is done right, employees know what is going on and feel like a part of the team. When employees have these positive feelings, it drives employees to say good things about the organization. Whether on social media or with family and friends, these employees will have encouraging words regarding the organization.

In this way, employees can be credible ambassadors when they are satisfied with how they are being treated. Note that employees who have direct contact with customers will also benefit from internal communications. How they feel about the company will be reflected in how they speak to customers.

6. Fosters company culture and values

Strong workplace culture can enable businesses to retain and attract the best talent, which can undoubtedly positively affect business outcomes. According to a Gallup study, work culture is quite vital for a business's success, and top employees are interested in working at a place that has an exceptional work culture.

Internal communications can help foster a positive work culture and profoundly impact the bottom line. Company culture and values weaved into internal communications can enable employees to feel good about working there and boost a healthy work environment.

A thriving workplace culture helps align employees with organizational goals. According to a study, just 40% of employees understand how they contribute to an organization. Internal communication enables employees to clearly understand how they are essential in the bigger picture, encouraging employees to work together as a team.

Internal communications can help people effectively and efficiently work together. Without it, the workplace environment can turn toxic, pushing good employees to leave the organization. Internal communications have the power to foster work culture and can help in the overall workflow.

7. Enables feedback and innovation

Effective collaboration is required to run smoothly and reach the necessary business goals. Internal communications facilitate that and help create a place of openness whereby employees can discuss and pitch their ideas.

Employees can put their views forward so the top-level management can understand their employees better. This type of two-way communication can enhance relationships between all the stakeholders in the organization and ensure a culture of innovation.

Feedback enables employees to put forward what they think. It is about a particular flow of things at work or how they are expected to work. When employees feel like their opinions matter, they are more likely to be connected to the company.

This can help increase engagement and boost productivity. Employees appreciate feedback, and a solid internal communications strategy ensures feedback and discussions are a routine part of the business.


Internal communications need as much attention, if not more, than external communication. It all starts from within the business. If employees are engaged, they perform better, and the business grows. In the all-new every day and hybrid work world, businesses need to re-focus on internal communications and put effort into their strategies.

As the economic climate changes, employee expectations have evolved, and newer technologies make their way into the organization, internal communication is the key connecting factor. It helps build a healthy and trustworthy relationship between employees and ensures that the company works together as a unit even in the face of change.

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Mary Madhavi Reddy

Mary Madhavi Reddy LinkedIn

Mary is a content marketer with 20 years of experience. Her career spans GE Money, Google, and some growth-stage startups. At Empuls, she handles product messaging and positioning.