The Hidden Costs of Broken Processes: A Deep Dive (Part 1 of 2)
What are broken processes? Why do processes in your organization break down in break down in the first place?
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Before we get into it, this is a 2-part article. In this part, we talk about what broken processes are, why processes break down in the first place, and the human cost of these inefficiencies. In part 2, we talk about how you can identify broken processes within your own organization, an actionable plan you can follow to being fixing them right away, and of course, how to ensure these changes last. You can find part 2 here.
Now for Part 1…
Picture this: It’s 9:15am. Sarah, your best project manager, is trying to get a simple approval for a client project. But instead of working on the actual project, she’s:
Digging through multiple spreadsheets to find the right information
Waiting for sign-offs from people who might be on vacation
Manually copying data between systems that should talk to each other
Chasing people down on Slack because no one knows who’s responsible
Sound familiar already?
By 10:30am, Sarah hasn’t even started on her real work. She’s just been fighting with broken processes. And the scary part? This isn’t just about one frustrated employee or one wasted morning. It’s also costing companies more than they realize  — inefficient processes are a silent drain on any organization.
While the immediate effects might be apparent; such as delays, frustration, and increased customer dissatisfaction (maybe churn), the true cost of broken processes often lurks beneath the surface. Usually, these hidden costs can significantly impact a company's financial performance, employee morale, overall customer satisfaction, and long-term strategic goals.
The Price of Inefficiency: Time and Money Wasted
One of the most significant hidden costs of broken processes is the sheer amount of time wasted on unproductive tasks. Studies have shown that process inefficiencies can consume a substantial portion of an employee's workday. For example, 89% of employees waste at least 30 minutes daily on unproductive tasks, with some losing up to several hours each day1. One study found that employees waste an average of 26% of their day on avoidable administrative tasks, unnecessary work conversations, and outdated technology2. Another study revealed that inefficient processes and duplicated efforts are the primary causes of wasted time, with 44% of business leaders identifying them as the biggest time wasters3. This lost time translates directly into lost productivity and, ultimately, lost revenue.
What’s even more troubling is that companies lose up to $1.3M annually due to inefficient processes4, and can lose 20-30% of their annual revenue due to said inefficiencies5. To put this into perspective, think of it this way. If you’re a:
Small business making $1 million → You're losing $200,000-300,000
Mid-sized company making $10 million → You're losing $2-3 million
Large company making $100 million → You're losing $20-30 million
And this is just money we can count.
Remember Sarah? She’s great at her job. But after months of fighting with broken processes, she’s now:
Staying late to catch up on work she couldn’t do while chasing approvals
Growing frustrated with systems that make her job more difficult
Starting to look at job postings from other companies
But the good news from this is that you can fix it. And in this article, we’ll dive deeper into often-overlooked consequences of inefficient processes, and provide insights into how you can identify and address these issues.
Why Processes Break Down
In our experience, we’ve found that processes break down for several reasons:
Lack of clear goals: Objectives and metrics for the processes aren’t clearly defined, and ultimately become misaligned with overall business strategy
Poor communication: Ineffective communication between teams and key stakeholders can lead to conflicting interpretations of a process, creating bottlenecks and hindering progress6
Outdated technology
Lack of measurement and monitoring: Not tracking key performance indicators (KPIs) and monitoring process performance can make it difficult to identify and address inefficiencies6, causing you to be unaware of bottlenecks and any areas of improvement
Resistance to change: It’s one thing to identify a problem, but it’s another to act on it. And to do so well. A reluctance to adapt and improve processes can lead to stagnation and a continuation of inefficiencies4
The Human Cost: Employee and Customer Impact
Beyond the direct financial implications, broken processes take a toll on both employee morale (like Sarah) and customer satisfaction.
Employee Morale and Turnover
When employees constantly navigate inefficient workflows, unclear instructions, and outdated systems, it leads to frustration, stress, and decreased job satisfaction. This can lead to disengagement, demotivation, and eventually, increased employee turnover7.
The cost of replacing employees is high. Research indicates that the typical cost of turnover can range from 5.8% to a staggering 213% of an employee's annual salary, with a median cost of 21%8. This wide range highlights the variability in replacement costs depending on the specific role and the employee's skills and experience. For a mid-level employee earning $75,000 per year, the median replacement cost would be over $15,000.
High turnover rates also disrupt team dynamics, organizational continuity, and can damage a company's reputation, making it harder to attract and retain top talent8.
Customer Dissatisfaction and Churn
Unsurprisingly, inefficient processes can also negatively impact customer satisfaction. Inconsistent or unreliable processes lead to delays, errors, and miscommunication, resulting in frustrated customers who may lose trust in your company. Poorly managed customer onboarding, support, or product delivery processes can lead to negative reviews, lost sales, and damage to your company’s reputation, all of which are not good to have on your roster.
As cliche as it may be to say, in today's competitive landscape, customer experience is paramount.
Stop Employee-Wasted Time in the Workplace - Time is Ltd. https://www.timeisltd.com/post/daniel-climans-at-stickeryou-how-to-improve-employee-productivity-and-reduce-wasted-time
How inefficient processes waste nearly a third of employees' time - The CFO https://the-cfo.io/2019/06/19/how-inefficient-processes-waste-nearly-a-third-of-employees-time/
Businesses Drained by Wasted Time - Press Releases - Planview https://newsroom.planview.com/122433-businesses-drained-by-wasted-time/
Businesses can lose up to $1.3M a year on inefficient processes, report says | CIO Dive https://www.ciodive.com/news/inefficient-processes-cost-money/633460/
The business cost of manual processes may be 25% of your revenue - Spa Executive https://spaexecutive.com/2023/10/06/the-business-cost-of-manual-processes-may-be-25-of-your-revenue/
Reasons for Broken Business Processes | Errol Allen Consulting https://errolallenconsulting.com/top-4-reasons-for-broken-business-processes/
6 Consequences of Broken Processes - Unveiling the Fallout https://errolallenconsulting.com/consequences-of-broken-processes/
There Are Significant Business Costs to Replacing Employees - Center for American Progress https://www.americanprogress.org/article/there-are-significant-business-costs-to-replacing-employees/