How Information Silos are Hurting Your Business

Are the departments across your company talking to each other? Does each of them know what the other is up to? They should.

What are information silos?

Today’s employees are more specialized than ever. Specialization is one of the ways modern businesses remain competitive. But if employees are too focused on only their direct initiatives, the resulting tunnel vision can cause big problems for your business.

What’s commonly known as the “silo effect” or “information silos” occur when departments within an organization don’t communicate effectively. Perhaps the most notable example of a silo in business is when two departments are working on nearly identical projects, but neither team is aware of what the other is doing. This kind of counterproductivity is enough to make any self-respecting CEO’s head spin.

Do you know what’s happening inside your company?

Even though employees are more interconnected than ever through technology, the silo effect still rears its ugly head in offices of all types. In one mind-boggling statistic, 86% of executives and employees polled attributed team problems and failures to bad communication or lack of collaboration.

In siloed environments, information may flow up and down, but not laterally between departments. Here are just a few of the ways organizational silos affect your bottom line:

Creates internal inefficiencies

If knowledge sharing is stunted in your organization, employees may have no idea what’s going on just on the other side of the cubicle wall. Multiple departments may be working on the same initiative. Poor or nonexistent communication causes inefficiencies across all departments, which means double work for your employees and a waste of company resources.

Imagine if one department initiates a customer satisfaction experience research project to meet an internal requirement, or “check a box.” In reality, the effects of such an effort stretch across multiple departments. Ideally, these departments would collaborate so that everyone could benefit, as well as provide their input in designing the survey.

In another version of the silo problem, another department initiates a project that is helpful for multiple areas, but they fail to look beyond their own cubicle walls at other potential benefactors or stakeholders. Not only is this a wasted opportunity, it’s a waste of valuable time. Withholding knowledge leads to more mistakes, employee frustration, missed deadlines, and gridlock in the approvals department. It makes collaboration in general much more difficult.

The customer experience suffers

From a customer experience perspective, information silos can be the death-knell for root cause analysis. To make processes more efficient and improve customer experience, you first have to understand the big picture. Finding root causes is critical for recovering service issues across all aspects of the organization. But silos can make this impossible.

When department-specific objectives fail to tie into the bigger company picture, the customer suffers. If your customer gets a different response each time they contact your service department, it could be the silo effect at work. Or worse, the customer calls for help and ends up getting sold to.

For example, let’s say two departments both implement surveys to measure customer experience or satisfaction. The customer may be contacted twice, which is annoying. Plus, the company looks disorganized. The result is customer frustration, lower participation in the feedback process, and damage to your brand reputation.

Internally-focused thinking and behavior is both a result and a symptom of information silos in your organization. The disconnect between departments makes it hard for customers to get help, which causes frustration and distrust. And that is never good for business.

Slows business growth

It’s a lot harder to grow quickly if your business isn’t running efficiently.

If you’re busy retraining employees to provide better customer service, there is less time to focus on growing your business. Do you spend weeks onboarding new hires due to disorganized training procedures?  That time could be spent focusing on growing your business. Do your employees spend meetings discussing processes and documents instead of big-picture goals and initiatives? If so, you’re losing precious momentum as they “sweat the small stuff”.

Simply put, the silo effect slows everything in your business down, often without you even realizing it.

Employee morale takes a dive

Company culture deflates quickly if your employees don’t feel “in the loop” on important initiatives. Re-doing work is as frustrating for your team as it is for stakeholders. When employees have a clear picture of how their daily work ties into the big picture, they are more engaged, motivated, and collaborative.

There are plenty of ways to fight information silos in your business. Consider, for starters, cross-departmental check-ins, company meetings, employee surveys, and a clear company mission statement.

In many cases, research with employees (and potentially with customers) can provide invaluable clues about the presence – and implications – of information silos in your organization. And, as with many problems, just recognizing it is half the battle.