The Lingo Ledger

How Much Does a Monolingual Employee Cost You?

Business risks and challenges associated with language barriers will continue to grow as global markets become more integrated. According to the U.S. Chamber of Commerce, 95 percent of the world's consumers live outside of the United States. The need for corporate language training is on the rise. At Lingo Live, we teach employees of global companies foreign language skills personalized for their jobs. Through our work with some of the largest companies in the world, we’ve seen how managers and employees are still implementing “quick fixes” to solve the much larger problem of ineffective communication. A report from the Committee for Economic Development estimated that U.S. corporations lose $2 billion annually due to misunderstandings arising from language and communication difficulties.

Loss of Productivity

Operational missteps can kill productivity, yet management is often unaware of the root cause. If language barriers are the key issue, “quick fixes” can often do more harm than good. Renata, an account manager in the Brazil office of a renowned tech company, spends about 3-4 hours a day communicating with her clients across several regions in Latin America. Since Renata is not a native Spanish speaker, she spends an additional 30 minutes each day translating her emails using Google Translate.

At first glance, the cost of using a free tool like Google Translate to fix the problem may seem negligible, but once multiplied across an entire organization, Renata’s company could be losing upwards of $100,000 per year due to productivity loss:

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“Before I started taking Spanish lessons, I had to check all of my emails using Google Translate or ask my coworkers for help. Now I grow my relationships with clients faster and they have more confidence in me,” says Renata.

When employees start relying on other employees for help, team members have to divert their expertise to compensate another employee’s lack of language proficiency. For Huron Paper, a small Chicago-based recycling company, investing in language training for management increased productivity by 15 percent.

Inability to Grow Globally

According to a study from Ernst & Young, 70 percent of world economic growth over the next few years will come from emerging markets. The ability for a company's workforce to speak multiple languages is as imperative as ever for global expansion. Employees that can effectively communicate with their counterparts and customers, recognize opportunities that may be overlooked by those who can't speak the same language.

"By increasing my fluency in English, I am able to work on a wide range of projects. I’ve realized I have more mobility in the work that I do, and I can connect with my counterparts from other offices. My ability to establish these relationships helps me succeed at my company," says Eric, corporate language student at Lingo Live.

In a survey commissioned by the Economic Intelligence Unit (EIU), of nearly 600 executives from across the world, almost half (49 percent) admitted that communication misunderstandings have stood in the way of major international business deals and therefore resulted in significant losses for their company.

Yet many companies fail to take a proactive approach to providing language training to their employees as part of their global expansion strategy. A global company may spend a lot of time implementing logistics for their expansion in Brazil, but may easily overlook how management would interact or communicate with employees at that office. Such oversight can create a work environment full of missed opportunities, preventing the parent company from effectively reaching a new market. "I was in Brazil for a retail event with our global strategy leader. His presentation was in English while the rest were all in Portuguese. After the presentation, our global strategy leader couldn’t really engage with the Brazilians and they couldn’t engage with him," says Diane, corporate language student at Lingo Live.

Higher Employee Turnover

When employees struggle to express themselves in meetings due to language barriers, communication can become wholly unpleasant. According to the Hays Group, communication problems and lack of advancement opportunities are among the leading causes of employee turnover. In a performance study from Hackett Benchmarking and Research, global companies that spend less than $200 per employee on corporate training have more than 16 percent voluntary turnover. The total cost of replacing one employee is approximately one-third of his or her salary, with total costs associated with the impact on company turnover adding up to 200% of salary, according to a study by Cornell University.

In a Speexx Exchange Survey of more than 250 global HR directors and learning and development professionals, almost a quarter of respondents reported that they had achieved cost savings through improved communications and language skills. A significant part of cost savings for global companies is identifying and utilizing internal resources for global projects, rather than hiring expensive contractors due to language barriers.

Overseas assignments are often considered essential building blocks for the career development of high-potential managers from both U.S. offices and international locations. Employee retention is likely to improve if employees are trained appropriately to succeed in their roles. For the Marriott Hotel group, job-specific English training was one factor that helped to reduce employee turnover to four percent.

Ineffective Talent Development

A report from the European Commission, indicates that only 5.6 percent of the world population speaks English. When trying to hire the best people in a global landscape, managers may need to accept some limitations on language capabilities and be prepared to provide training to meet both global and local language needs.

Decision makers that are less prepared for hiring employees in a global context, tend to over-hire external lateral candidates with a certain degree of language skills to fill mid-level roles rather than hiring outstanding junior candidates with the capacity and motivation to learn new languages. While the latter approach may take more time, the investment on training junior hires provides better outcomes. According to a study from New York University’s Stern School of Business, this ineffective method of talent development results in only a third of employees who accomplish their work requirements the way headquarters want it done. The study also reveals the cost of an individual failure due to language barriers range from $40,000 to $250,000.

chart Figure 1: Had I known my company would offer me these lessons, I would have been strongly motivated to join the company over other offers I was considering at the time

Providing the appropriate language training can attract the best talent to fill a role. In a study conducted by Lingo Live, over 70 percent of employees in key English language learning markets like Brazil, Israel, and Japan indicated that if they had known that their company was offering language training, they would have been strongly motivated to join the company over other offers. Over 80 percent indicated that acquiring language skills were among the top five skills they wanted to develop over the course of their careers.

Best Practices for Language Training

Companies that invest in language training outperform the market by more than 45 percent, according to a study from Hackett Benchmarking and Research. Without a proper language training strategy, global companies are at a competitive disadvantage as they look to capture market share, create productive work environments, and attract and retain skilled employees necessary for success.

But it's not enough to give employees access to a self-paced program and assume they will learn on their own, rather it's important to give employees ample time and the appropriate tools to achieve the desired level of language proficiency.

We've found that students at Lingo Live are twice as likely to progress in their language learning when:

  1. One-on-one training is provided
  2. Dedicated time is set aside in their schedules each week for learning
  3. Training is personalized to their jobs
  4. Progress is tracked by the employer to provide ongoing engagement
  5. Ample opportunities are provided to use the new language daily

About Lingo Live

Lingo Live trains employees of multinational companies to gain the foreign language skills they need to do their jobs. Students progress through our globally-recognized curriculum anytime and anywhere through live, customized lessons over video conference. Lingo Live has taught thousands of students across the globe at some of the world’s largest multinational companies.

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