If you think illiteracy is the least of your problems, think again. According to the Business Council for Effective Literacy, more than 27 million U.S. adults are functionally illiterate. You may be employing some of them, and they may be draining your business in ways you don't suspect.

"Most people who have reading problems are very clever about concealing them," says William Pugh Jr., president of Vimasco Corp., a small manufacturer of coatings and adhesives based in Nitro, W. Va. Nevertheless, he knew his company was losing money -- about $25,000 per year, he estimates -- because some of his 27 employees, unable to read instructions, were doing things like installing and operating equipment incorrectly. Given the technological changes in his industry, moreover, he worried that employee illiteracy would take an even higher toll in the future.

So Pugh made a policy that everyone at Vimasco had to read at least at the eighth-grade level. When nearly half the employees couldn't meet the test, the company assisted them in finding adult-education classes and volunteer tutors. Pugh also paid employees for half their class time and offered an extra week of paid vacation to anyone who earned a high-school equivalency diploma. "I can't measure the productivity increase," he says, "but from a business standpoint, it was the right thing to do."