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Boost Business ROI with Active Listening in Your Workplace

Contributor: Tabitha Aliano, PHR, HR Consultant

October 27th, 2023 | 6 min. read

By Tony Calavitta

Boost Business ROI with Active Listening in Your Workplace

You turn on the radio.

Disappointment strikes harder than the realization that the new barista poured you decaf instead of your usual dark roast when nothing but static fills the cab of your car.

With the 45-minute office commute and the threat of enduring static the whole way, you decide to adjust the radio. As you turn the dials on your dashboard, you start to hear music between the static. So, you continue to fine-tune until lyrics backed by crystal-clear instrumentals pour from your speakers. And the could-have-been miserable commute actually became enjoyable.

But, what if you never fine-tuned the radio? Instead of hearing something discernable, something comprehensible, you’d be stuck hearing nothing but noise.

Similarly, in the workplace, fine-tuning your listening skills can make all the difference between hearing productively and hearing nothing applicable at all (and if your workday is like the hypothetical commute, it’s also the difference between being engaged with your job).

In today's fast-paced work environment, many of us are guilty of hearing but not truly listening. We're physically present in meetings, but our minds are dialed into static – thinking about our to-do lists, the next meeting, or even what's for lunch. This lack of active listening can lead to misunderstandings, decreased productivity, and a complete lack of engagement.

Here at Combined, we understand the nuances of workplace dynamics and the importance of effective communication. That's why, within this article, we will explore the subject of active listening and how it can be a game-changer for your business operations.

Continue reading to learn the benefits of active listening and its impact on your company's ROI.

By the end of this article, you'll understand why active listening is critical to both business productivity and customer relations. Plus, you will be equipped with actionable insights to implement it in your workplace.

What is active listening?

First defined by psychologists Dr. Carl R. Rogers and Dr. Richard E. Farson in 1957, active listening is a communication technique that goes beyond merely hearing words. It involves fully focusing on, understanding, and responding to a speaker.

It's not passive – it's an active process that requires full engagement.

When active listening is effectively applied, you don’t just acknowledge the words someone says but also the emotions and intentions behind them, even paying attention to tone, facial expressions, and body language.

How does it work? The psychology behind active listening

Neuroscience and active listening

The human brain is wired to seek connection, and active listening is a conduit for this.

Neuroscientific research shows that when we actively listen, the "mirror neurons" in our brain activate. These neurons allow us to understand another person's perspective, fostering empathy and deeper understanding.

Emotional Intelligence (EI) and active listening

Active listening is closely tied to Emotional Intelligence (EI), a skill set that includes self-awareness, self-management, social awareness, and relationship management.

When you actively listen, you're not just hearing words, you're also picking up on emotional cues. This emotional attunement enhances your ability to respond in a way that validates the speaker, thereby strengthening interpersonal relationships.

Active listening meets the workplace

In the workplace, active listening is not a luxury – it's a necessity.

When employees actively listen, they engage more deeply with their tasks and with each other. This leads to fewer misunderstandings, less conflict, and better collaboration. Research supports the tangible benefits of active listening, linking it to higher levels of employee engagement and even better business productivity.

In an era where distractions are abundant and attention spans are dwindling, the ability to actively listen has never been more critical.

It's not just about making your employees feel heard – it can enhance the efficiency and effectiveness of your entire operation.

Why does it matter? Increase your ROI with active listening in the workplace

It’s one thing to say active listening “can enhance the efficiency and effectiveness of your entire operation.”

It’s another to show it.

In this section, we will show how active listening can build up your bottom line.

Internal cost savings

Let's start with some numbers.

Poor communication can actually cost your company real money – in fact, miscommunication is attributed to a loss of between $4,000 and $6,000 per employee each year.

According to a study by the Society for Human Resource Management (SHRM), inadequate communication equated to an average of $402,000 lost per year for companies with 100 employees. SHRM also conducted this same study on companies with 100,000 employees. Any guesses on how much miscommunication costs these businesses in a single year? An average of $62.4 million!

Given these staggering costs, the solution becomes clear – investing in active listening is a financial decision.

As a soft skill, strengthening active listening within your workplace may require training. However, as a business strategy, this focus pays dividends in the form of better communication. By training employees in active listening, companies can reduce the cost of workplace miscommunication.

Improved workplace communication means:

Streamlined workflows and objectives

Over 86% of both employees and executives agree that ineffective communication and collaboration are responsible for workplace failures. Clear communication reduces the time lost to collaboration pitfalls like task clarification, leading to more efficient and productive interactions.

Better resource allocation

Clear communication about tasks and priorities helps in the optimal allocation of resources, both human and material. When employees understand their tasks and how to accomplish them, they get results more quickly and you save on labor.

Faster problem-solving

Teams that communicate well can identify and address issues more quickly, reducing downtime and increasing efficiency.

Fewer workplace disputes

Effective communication fosters mutual understanding, significantly reducing the likelihood of conflicts that can disrupt the workplace.

Enhanced employee engagement

When employees feel heard and understood, they are more likely to be engaged in their work, which correlates with higher productivity levels. In fact, fully engaged employees result in a 20-25% increase in productivity.

Reduced turnover

Did you know that company-wide communication increases employee retention by 450%? Better communication leads to a more positive work environment, which can reduce employee turnover – a significant cost for businesses.

Compliance and risk management

Clear communication channels are crucial for adhering to industry regulations and managing potential risks, thereby avoiding costly legal issues.


Here's the takeaway:

While training your team to actively listen may seem like a burden, when compared to the potential savings – ranging from thousands to millions of dollars – the ROI becomes evident.  

External cost savings

Active listening isn't just an internal asset – it's also a customer service powerhouse.

When your customer service representatives practice active listening, they're not only resolving issues but also building relationships.

Improved customer relationships mean:

Enhanced customer loyalty

When customers feel heard, they feel valued. Active listening in customer service can lead to a more personalized experience, which 75% of American consumers cite as a contributing factor to customer loyalty.

Better online reviews

In the age of social media, a positive customer review can be gold. Active listening can lead to better customer experiences, which often translate into positive online reviews. These reviews can influence new customers and improve your company's online reputation.

Increased cross-selling and up-selling opportunities

Active listening can uncover customer needs that may not be explicitly stated, providing opportunities for cross-selling or up-selling. This not only increases revenue but also enhances the customer's experience by providing additional value.

Enhanced brand image

A 2022 salesforce survey found that 94% of customers base their purchasing decisions on how they are treated. When a company is known for its excellent customer service, that reputation becomes a part of its brand image. This can be a significant differentiator in markets where products or services are similar, giving you a competitive edge.


Here's the takeaway:

By encouraging active listening, you're improving your interactions with customers. But, you're also making a strategic investment that can result in tangible financial gains. The ROI here is both in dollars in customer relationships that can last a lifetime.

Practical application – Enhance active listening in your workplace

Active listening is not just an individual skill – it's a collective habit that can be nurtured within your workplace.

As an employer, you have a pivotal role in setting the tone for effective communication.

Here are some practical tips to help you foster a culture of active listening in your workplace:

Lead by example

  • Be present – Make it a point to be fully present during meetings and conversations. Your behavior sets the standard for your team.
  • Encourage dialogue – Ask open-ended questions that require more than a 'yes' or 'no' answer.

Create a supportive environment

  • Maintain an open-door policy – Make yourself available for impromptu conversations. This encourages employees to speak openly and fosters a culture of listening.
  • Implement feedback mechanisms – Implement regular feedback sessions where active listening is both practiced and evaluated.

Training and development

  • Incorporate soft skills training – Include active listening as a part of your ongoing soft skills training.
  • Facilitate peer-to-peer coaching – Allow employees to coach each other on active listening. This not only improves skills but also builds a supportive community.

Leverage technology

  • Establish virtual meeting etiquette – In the age of remote work, it's essential to establish rules for virtual meetings, such as muting when not speaking, to facilitate better listening.
  • Utilize collaboration tools – Use tools like Microsoft Teams or Slack to create dedicated channels for meaningful discussions, and encourage team members to actively participate.

Measure and reward

  • Set communication KPIs – Establish Key Performance Indicators (KPIs) to measure the effectiveness of communication within teams.
  • Incentivize listening – Recognize and reward employees who demonstrate exceptional active listening skills. This could be as major as monthly awards or as minor as shoutouts in team meetings.

Take the next steps – Fine-tune your workplace communication with active listening

If you’re here, you want to enhance communication within your workplace.

And you should – because, as we've discussed, active listening isn't just a "nice-to-have" skill, but a real business strategy with real ROI.

From understanding the neuroscience behind active listening to recognizing its benefits, we've covered a lot of ground. But knowing the benefits active listening can provide your business is only half the battle – the next step is implementation.

Are you ready to fine-tune your team's listening skills and reap the benefits of improved communication?

The actionable tips we've provided are your starting point, but if you need more guidance, we're here to help!

Here at Combined, our HR specialists are equipped with the expertise and offer the personalized HR services you need to create a culture of active listening.

So, don't let your workplace communication stay stuck on static. Turn the dial to clarity, engagement, and profitability with active listening.

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This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.