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You don't have to be a savvy entrepreneur to realise that no company in any business sector can hope to be successful if it lacks competent and confident employees. A strong, reliable workforce is the base on which profitable corporations are built, and employee training and monitoring is of the utmost importance to ensure that workers perform to the best of their ability.

Yet, according to recent research by analyst IDC, one in four employees misunderstands at least one critical aspect of their job. This knowledge gap equates to a staggering $37bn (£25bn) in annual losses for UK and US businesses.

This research, summarised in the white paper ‘$37 Billion: Counting the Cost of Employee Misunderstanding', represents the first formal calculation of what simple employee misunderstanding is costing British and American companies. These losses are generated in a number of ways, such as business downtime, poor procurement, personal injury claims and tribunal settlements.

The IDC definition of misunderstanding is to have "understood incorrectly while thinking to have understood correctly", so the calculated costs in this study exclude those incurred due to accidents related to human error or blatant disregard for the rules, neither of which can be effectively measured. Part of IDC's research was designed to explore how employers can get a clear understanding of their employees' skills, competencies and confidence levels, as well as how they're affected by everyday business pressures, such as regulations, compliance and security demands.

IDC's primary research was conducted through a series of interviews with senior HR, finance and operations executives in 400 companies across the UK and US. While the study was focused on the pharmaceutical, petrochemical, financial, and transportation sectors, it ultimately revealed that employee misunderstanding is a pressing issue that affects all industries and could be costing large businesses tens of millions of pounds annually.

Most of the 400 UK and US businesses interviewed admitted that within the last 12 months alone they had been exposed to either employee or public injuries and loss in sales due to employee misunderstanding. Addressing these issues should be a top priority for executives and business owners concerned about the future of their enterprises.

One area in which employee misunderstanding could wreak havoc across business sectors is the IT department. Misunderstanding company processes and procedures could result in the corruption of critical data, the release of confidential information, and myriad other threatening circumstances. For example, one UK bank reported trading losses as a result of IT downtime initially caused by employee misunderstanding.