Ambiguity Carries a High Cost

Since that large tech firm’s “staggering $75 million loss attributed to misaligned goals and unclear expectations” that I’ve referenced twice now could be a bit more than you or I will experience in our own roles, let’s make it a bit more personal and consider what our numbers could be… First though, let’s look at the issue from a global perspective - just to remove any possibility of thinking this could never apply to us. Here’s how an article I found called “Why Ambiguity Leads to Lower Work Performance” opened:

Fear of the unknown is a natural emotion that is part of being human. However, when ambiguity is encountered in the context of work, the effects can be damaging to performance.

According to recent research, “Uncertainty about a possible future threat disrupts our ability to avoid it or to mitigate its negative impact, and thus results in anxiety.” Unfortunately, anxiety is a very common problem, affecting most, if not all of us, from time to time.

Taking steps to reduce anxiety in the workplace is not just a nice gesture, but one that protects an organization’s bottom line. According to the World Health Organization, anxiety can have a detrimental effect, costing nearly $1 trillion in lost productivity worldwide.

My entire goal in writing Leading With A Clear Purpose was to emphasize how much having a definite understanding of exactly why we do what we do each day; as leaders, throughout our entire organizations, and even as individual contributors on a team. That clear purpose should provide us with a big-picture view to work toward, but our values serve as the foundation for how we go about achieving that purpose on any given day. When there’s ambiguity around that how, we shouldn’t be surprised to learn that “anxiety is a very common problem” for the team members counting on us for clarity.

Now let’s think about the specific impact this has on our organizations when we leave room for ambiguity, specifically around the values that should be guiding our team’s behavior. The same article that detailed the $75 million loss and that 70% of the executives they surveyed admitting to ambiguity in their strategic plans also shared that “This phenomenon can affect everything from employee morale to overall productivity, with companies facing up to a 25% drop in performance when key stakeholders are uncertain about the direction of their initiatives.”

Many of the smaller businesses that Cindy and I work with operate largely on billable hours. For the first six or seven years of our business, that’s what kept our lights on too. In many of the other companies we support, contracts are based on completing large projects or providing a set amount of a specific product for an agreed upon figure. Regardless of how the terms are negotiated or how payment is made, some form of labor is involved in each. Let’s put ourselves in an imaginary world where the work each of our team members do during all forty hours they’re on the job each week is directly tied to what our customer pays for. How would our organization’s output change if those billable hours (or whatever they’re called in your specific situation) dropped by 25%, leaving you with just 30 hours contributing to what your customer’s paying for. We’d certainly see a large dip in the amount of anything we’re delivering, but we’d also see a massive hit in profit margin - because we’re still paying them for all forty hours and all of our other fixed costs are the same. 

I realize this analogy leaves you filling in many of the blanks, but I hope it paints a picture for just how quickly ambiguity can indeed hit the bottom line in any business. We all hope for top level performance from our teams, but far too often even the slightest bit of ambiguity can leave those team members wondering what that top level performance looks like and what they need to do to achieve it. Our responsibility as leaders lies in removing that ambiguity and providing clear expectations - and we’ll pick up there soon!