Capitalizing on Effective Communication RAPORT.pdf

Capitalizing on Effective Communication

How Courage, Innovation and Discipline Drive

Business Results in Challenging Times

2009/2010

Communication ROI Study Report

Originally published by Watson Wyatt Worldwide.

2009/2010

Communication ROI Study Report

Table of Contents

Executive Summary

Key Findings

Introduction

About the Participants

Have courage.

Innovate.

Be disciplined.

Conclusion

Featured Figures

Figure 5. Few companies are taking the opportunity

to revise their employee value proposition

Figure 9. Highly effective communicators

help managers address employee needs

and concerns

At a Glance

Figure 17. Highly effective communicators are

using social media more often to reach all

employee audiences

Communicating with employees helps boost engagement during

tough times.

Figure 21. Phase at which communication function

became involved in the change process

Figure 22. High-effectiveness companies are

more likely to have a documented strategy

Many companies aren’t explaining to workers how the employment deal

has changed in response to challenging economic times.

To best position themselves to succeed in an uncertain future,

employers need internal communication programs that are courageous,

innovative and disciplined.

Executive Summary

Companies that communicate with courage, innovation and discipline, especially during times of

economic challenge and change, are more effective at engaging employees and achieving desired

business results. Our research has consistently found the irms that communicate effectively

with employees are also the best inancial performers.

When it comes to communication, successful companies pay close attention to articulating their

employee value proposition. In times of change, they use social media and other, time-tested

tools to communicate with an increasingly diverse and dispersed audience. These companies

treat their managers as a special audience — offering additional communication and training

to help them manage. They focus on the customer and use communication programs to drive

productivity, quality and safety.

This report summarizes the indings of our 2009/2010 multiregional study. It identiies what the

companies with highly effective communication practices are doing to inform and engage their

employees in challenging economic times, and shows how these practices vary around the world.

Key Findings

Effective employee communication is a leading

indicator of inancial performance and a driver of

employee engagement. Companies that are highly

effective communicators had 47 percent higher

total returns to shareholders over the last ive years

compared with irms that are the least effective

communicators.

Despite the increased use of social media,

companies are still struggling to measure the return

on their investment in these tools. Highly effective

communicators are more likely than the least

effective communicators to report their social media

tools are cost-effective (37 percent vs. 14 percent).

Measurement is critical. Companies that are

less-effective communicators are three times as

likely as highly effective communicators to report

having no formal measurements of communication

effectiveness.

Despite all of the organizational and beneit

changes employers have been making in response

to challenging economic conditions, only 14 percent

of the survey participants are explaining the terms

of the new employee value proposition (EVP) to their

employees.

The best invest in helping leaders and managers

communicate with employees. While only three out

of 10 organizations are training managers to deal

openly with resistance to change, highly effective

communicators are more than three times as likely

to do this as the least effective communicators.

2 2009/2010 Communication ROI Study Report | Towers Watson

Introduction

Communication Effectiveness

Courage, innovation and discipline help drive

company performance, especially during tough

economic times. Employers that keep the lines of

communication open are in the best position to

keep employees engaged in the business, retain

key talent, provide consistent value to customers

and deliver superior inancial performance to

shareholders.

Highly effective communicators represent

the top 25 percent of study participants

that have the highest overall communication

effectiveness scores based on their responses

to the survey. Less effective communicators

represent the bottom 25 percent of participants

that have the lowest overall communication

effectiveness scores based on their responses

to the survey.

Companies that are highly effective communicators

have the courage to talk about what employees

want to hear, and they redeine the employment deal

in light of signiicant take-aways. Our study found

that highly effective communicators explain the

rationale behind dificult business decisions, provide

leadership training and actively address the impact

on employees. All of these actions can help keep

employees engaged.

Communication and Financial Performance

Effective communication can help your

organization reach the next level and emerge

from economic challenges ahead of the rest.

The study found the companies with highly

effective communication had 47 percent higher

total returns to shareholders over the ive-year

period (mid-2004 to mid-2009) compared with

companies with less effective communication

practices.

High-performing companies are innovative. By

delivering messages on customer feedback and

increasing productivity, they make sure employees

see how they affect the business. They make greater

use of social media to reach a diverse workforce

in real time than do other organizations. They

understand that failing to focus on these objectives

now will compromise their ability to move ahead

quickly when the business environment improves.

If you invested $100 in 2004 in the companies

that have less effective communication programs

(bottom 25 percent), your investment would be

worth $83 today. If you had invested that same

$100 in the companies with moderately effective

internal communication (middle 50 percent), it

would be worth $116 now. However, if you had

invested $100 in the companies with highly

effective communication, the value of your

investment would have risen to $130.

High-performing companies are disciplined. They

take the time to document their communication

plans and develop metrics to assess their success

and identify areas for improvement. The best tie

their measures to the organization’s strategic

business goals and have a communication

advisory group.

towerswatson.com 3

Reading This Report

Deining the employment deal: The term

“employee value proposition (EVP)” or “employ-

ment deal” broadly refers to what employees can

expect from the company and what the company

expects from employees. From the employee

perspective, the employment deal includes pay

and beneit programs, professional development

opportunities and work environment.

scale (agree, strongly agree) or, if it was a yes-

or-no question, said they have that practice.

Assessing effectiveness and performance:

Watson Wyatt’s Research and Innovation Center

measured communication effectiveness for the

participating companies and then divided them

into three groups based on their scores. The

top quartile had high effectiveness; the middle

two quartiles, moderate effectiveness; and the

bottom quartile, low effectiveness. Working

from these effectiveness scores, Watson Wyatt

gathered inancial data (where available) and

measured the correlation between effective

communication and inancial performance.

Comparing high-effectiveness and low-

effectiveness companies: The percentages

shown in the igures in this report are the

percentages of high-effectiveness and low-

effectiveness companies that answered each

question with a 4 or a 5 on the 5-point Likert

Figure 1. Study participants by industry

About the Participants

Industry

Percentage

Aerospace & defense

1.8%

The 2009/2010 Communication ROI Study looks at data collected in April

and May 2009, from 328 organizations that collectively represent 5 million

employees in various regions around the world.

Automobile & transportation equipment

3.0%

Charities & nonproit

0.3%

Communication

2.4%

Figure 2. Study participants by number of employees

Education

3.3%

Energy

8.7%

Insurance

8.7%

■ 35.2% Fewer than 1,000

■ 10.7% 1,000 to 2,499

■ 10.7% 2,500 to 4,999

■ 13.7% 5,000 to 9,999

■ 14.0% 10,000 to 24,999

■ 15.6% 25,000 or more

Financial services, excluding insurance

6.9%

Food and beverage

2.4%

Government

2.7%

Pharmaceuticals

5.4%

Health care, excluding pharmaceuticals

7.8%

High technology

4.2%

Manufacturing

11.1%

Figure 3. Study participants by region

Natural resources

1.2%

Professional and business services

2.1%

Property and construction

1.2%

■ 6% Australia*

■ 12% Canada

■ 20% Europe

■ 19% Middle East

■ 43% United States

Retail

6.0%

Tourism and leisure

0.6%

Transportation

2.4%

Utilities

2.1%

Wholesale

1.2%

Other

14.2%

* Includes three participants from other countries in the Asia-Paciic region

4 2009/2010 Communication ROI Study Report | Towers Watson

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