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10 Problems a Business Glossary Can Solve

From high stress and turnover to low productivity, there are many reasons why businesses need to come up with solutions to communication-related barriers at the workplace.

Poor communication is probably more expensive than you’d ever guess. According to the Society for Human Resources Management (SHRM) and other sources, estimated annual losses associated with inadequate communication range from over $400,000 for smaller companies, all the way up to an average of $62.4 million for large enterprises. Despite the consequences, it's common for people in the same organization to lack shared context. From high stress and turnover to low productivity, there are many reasons why businesses need to come up with solutions to communication-related barriers at the workplace.

Communication tools can improve employee relationships and productivity. One simple, yet effective tool is a business glossary, which contains definitions of commonly used vocabulary within an organization.

With a company glossary, businesses can avert costly errors, such as having too much stock of an item that has multiple terminologies associated with it. A glossary can also build shared understanding to reduce personal conflicts brought about by miscommunication between employees.

What Is a Business Glossary?

A business glossary defines a company's internal lexicon for all employees to reference. It promotes alignment on specialized phrases, unique acronyms, and common words used across an organization.

For example, a business glossary may include definitions for terms such as "OTC," ("over-the-counter") names of software that are commonly used within and across teams, and industry-specific terms or jargon like "change agent."

What Problems Can a Company Glossary Solve?

A business glossary is an essential tool for any data-driven organization to avoid an array of issues. Here are some of them.

Problem 1: Misunderstandings in the team

When team members lack common context, it leads to misunderstandings. This can create conflict and stall productivity. For instance, even given shared context a CEO and marketing team may have different ideas of what an acronym like "CPA" means.

A CEO might think of the more holistic cost per acquisition, while a member of the marketing team might think of the more granular cost per action.

A company glossary provides everyone with a common language they can use to communicate more accurately and effectively. Because the glossary contains clear definitions of terms and provides a source of reference when discrepancies arise, it helps to prevent misunderstandings from arising in the first place.

Problem 2: Incorrect entries in data systems

Incorrect entries in data systems based on false assumptions can lead to poor decision making. A company glossary provides clear definitions of data fields and criteria that guide employees on how to enter accurate information into their systems. This helps to ensure that data is consistent and correct.

Let's consider a company that uses a Customer Relationship Management (CRM) system to manage its customer data. The CRM system likely has fields for various customer information, but different departments may use different terms to refer to these fields. For example, the development team may refer to the "name" field as "user name," while the sales department may refer to it as "client name."

If the company does not have a glossary that standardizes these terms, employees may enter data using their own department's terminology. This could lead to confusion, errors, and overlap or missing information when employees from different departments need to access the data.

Problem 3: Ineffective onboarding

New hires must learn organizational and industry-specific terminology to integrate effectively. A glossary provides a quick reference they can refer to when they have questions about a term or concept. This helps them get up to speed quickly and effectively.

It can also be helpful to include the names of all departments, teams, and roles within the organization, along with a brief description of what they do. This can help new employees quickly familiarize themselves with the organization's structure.

Ultimately, a company glossary can help streamline the onboarding process by equipping new hires with the knowledge and tools they need to succeed in their roles.

Problem 4: Lost productivity

Without a single source of truth, team members may be confused or misaligned on their responsibilities and objectives. This can lead to delays and lost productivity, which can impact the company’s bottom line. An Economist survey revealed that 44% of employees say that communication issues are the cause of delays in their work.

For example, let's say a team is working on a project that involves multiple stakeholders from different departments. Stakeholders may use different terms to refer to the same features or requirements or be unfamiliar with other departments' vocabulary. Without a glossary, team members may waste time trying to clarify terminology or decipher confusing language.

However, if the company provides a glossary, team members can refer to it quickly to understand the terminology and communicate effectively with each other.

Problem 5: Inconsistent customer experience

Many companies also fail to communicate effectively with customers. This can cause customers to have a bad experience with your brand and leads to lost sales. In fact, according to a PwC survey, one in three customers will abandon a company after just one miscommunication, and over 90% will leave after two or three bad interactions.

A company glossary helps to ensure that messaging is consistent across all channels. By having a central repository for terms, everyone in the company can use the same language without relying on their own interpretations. With standardized and strategized messaging, a company is likely to ensure greater customer satisfaction and loyalty.

For example, a company that sells eco-friendly cleaning products might use various terms like "environmentally friendly," "green," "sustainable," and "natural" interchangeably in their messaging. However, each of these terms can have slightly different meanings and connotations. Customers may become confused about the company's commitment to sustainability if they see different terminologies.

By using a glossary, the company can identify and define brand-appropriate terms and ensure that everyone in the company uses them consistently in all marketing materials, website content, and customer service interactions.

Problem 7: Compliance challenges

Compliance is a significant challenge for many organizations, particularly those in heavily regulated industries such as healthcare, finance, and pharmaceuticals. Compliance requires companies to adhere to a complex set of regulations and standards — and this requires precise language.

For example, a healthcare provider must use specific terminology to describe medications and treatments. This ensures that they are providing accurate information to patients and adhering to medical regulations. Similarly, a financial institution must use specific terms and definitions when discussing transactions to comply with Anti-Money Laundering (AML) regulations.

By defining each term and ensuring that everyone in the organization is using the same terminology, a company glossary can help to minimize the risk of non-compliance and legal issues.

It can also help organizations stay up-to-date. Regulations and standards are constantly evolving, and it can be challenging for companies to stay on top of all the changes. By updating the glossary with the latest definitions and terminology, organizations can quickly adapt to the changing environment and maintain compliance.

Problem 8: Ordering the wrong items

Inventory errors due to miscommunications across teams and with suppliers are common, especially among companies that work with multiple vendors and suppliers. Different terms for the same items can lead to over-ordering, and inconsistent vocabulary between the supplier and company can mean receiving the wrong items. These issues can lead to delays in production, unhappy customers, and a costly waste of resources.

A company glossary can help to prevent these types of mistakes by defining terms and providing clear, concise descriptions of products and services for those within and outside of the organization. Thus, the glossary ensures that everyone is using the same language when ordering from suppliers.

Problem 9: Personal conflict

When employees and teams are confused about or disagree on terminology in the workplace, this can lead to stress and personal conflicts. These types of uncomfortable situations and disputes can be disruptive and detrimental to team morale.

A business glossary can help resolve personal conflicts by providing clarity in communication to prevent misunderstandings.

Problem 10: Lack of product knowledge

Product knowledge refers to the understanding of a company's products, services, and processes. Without thorough product knowledge, employees may be ineffective in their job duties or unable to provide customers with accurate information. This can negatively impact sales, productivity, and branding.

A company glossary can help to prevent these issues by providing employees with clear definitions of what the company offers. This can help them develop a better understanding of the products they are working with.

How to Prepare and Maintain a Great Business Glossary

A business glossary can help to increase efficiency and understanding in the workplace, but preparing and maintaining one can be a challenge. Here are some tips to guide you.

Gather terms

The first step in creating a comprehensive, up-to-date business glossary is to gather the terms you feel need explaining. These may include technical, industry-specific words as well as internal jargon and abbreviations.

Consult the experts in your organization to find terms that your company uses on a daily basis. You'll also want to speak to managers or take a survey to identify any variations in terminology.

Define terms clearly

A clear and concise definition for each term is necessary if you want your glossary to serve its purpose. Make sure that each definition is easy to understand and accurately reflects the meaning of the term.

To ensure accuracy, research accepted definitions from credible sources like government agencies or professional organizations. If the definitions your organization uses differ from those generally accepted definitions, make sure that difference is called out and clearly defined in the glossary.

Organize the terms

Once you have compiled all of the necessary data, it's time to expand terms according to your business glossary's main components. These components commonly include:

  • Business term: The standard word or phrase that will identify each concept
  • Definition: The meaning of the business term
  • Synonyms: Other words or phrases that can be used interchangeably with the business term
  • Related terms: Terms that are related to the business term and may be confused with it
  • Attributes: Additional information about the business term, such as its data type or format
  • Examples: Instances of how the term is used in practice

Then, organize each entry into categories of the organization's activities. For example, finance-related terms can be grouped together under one category, while marketing-related terms can be grouped under another category. The idea is to make the business glossary easily navigable and understandable for those who will use it.

Involve stakeholders

The glossary preparation process should be a collaborative effort involving stakeholders throughout the organization. Thus, you'll want to coordinate with managers of teams — or all employees, if your company is small enough — to verify terms and their definitions.

Additionally, decision makers such as executives or board members may need to sign off on the definitions before they can be implemented.

Proofread and review

Proofreading and reviewing a business glossary ensures quality and accuracy. Proofreading involves carefully reading through the document to identify any errors in spelling, grammar, punctuation, or syntax. This step will also ensure that all terms are correctly defined and that there are no inconsistencies between different entries.

Reviewing a business glossary also involves assessing whether the content is accurate, up-to-date, and relevant. This includes verifying sources where applicable, ensuring that all definitions are clear and concise, and checking that all terms are properly categorized and organized.

Make it accessible

Once your business glossary is ready, the next step is to make it easily accessible to everyone who needs it. This typically involves publishing the document online in a centralized location and making it available through a company intranet or other network. Additionally, you may want to consider creating an app or printable version that employees can access at any time.

Update regularly

To ensure that a business glossary remains useful and relevant, update it regularly. This includes adding new terms as they become more common in your organization or updating existing ones with more accurate information. Check the terms periodically for any changes in industry standards or regulations to make sure all entries are up-to-date.

You should also keep reviewing the business glossary to identify any obsolete terms that should be removed or replaced.

Bridge communication gaps with a business glossary

Creating and maintaining a business glossary can be time-consuming, but it’s worth the effort. It can help solve some of the biggest headaches that companies face, from ineffective onboarding processes to poor customer messaging.

By creating a centralized source of knowledge, companies can ensure compliance, consistent customer experiences, and greater efficiency in the workplace. That's why many forward-thinking organizations have made business glossaries a standard part of their operations.

First Published
March 16, 2023
Employee Experience

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