Internal Communications Earns its Stripes
Welcome to Dialogue—a place for our team to share our thoughts, theories and insights from our internal communications practice.
For some time now, corporate leaders have accepted that investing in their external marketing messages, as well as the professional management of their corporate reputation, has a direct impact on their companies’ top line financial performance. This is especially true in consumer-centric sectors such as packaged goods, retail, foodservice and hospitality. This awareness has led to the development of specific standards, guidelines and disciplines that determine the way messages are developed, the analysis of audience demographics, and rigorous measurement practices that look to connect the results of marketing efforts with the success of the organization to establish the ROI required to further these programs.
Over the last few years, the measurement of employee engagement has started to develop its own profile as a key indicator of employee morale, employee retention and employee satisfaction.
Studies and articles published in the journals that target the C-Suite of Fortune 500 companies are acknowledging the business value of an increased level of engagement in an organization’s employees. A 2005 study by Hewitt Associates, for example, draws a direct correlation between employee engagement levels and a company’s total return to shareholders (or TRS, defined as the total financial return including capital appreciation and dividends.)
The researchers found that companies with an employee engagement level higher than 60% deliver an average TRS of 20.2%. While companies with a measured engagement level of less than 40% deliver an average TRS of -3.4%. What has received less attention is the central role of internal communications in employee engagement.
Most recently however, strategic internal communication is earning a place of its own in boardrooms around the world. Not only is it a critical driver of engagement, it has been recognized as having a significant impact on an organization’s top and bottom line financial performance. In a study released in 2008 by Watson Wyatt also noted that effective employee communication is a leading indicator of corporate financial performance.
The study looked at data collected from 264 companies representing 6.2 million employees around the world. One of the key findings of the study is that companies with the most effective employee communication programs provided a 91 % TRS from 2002 to 2006, compared with 62 % for firms that communicated least effectively (p2). That represents a 50% increase in TRS!
Of course, for those of us that have been practicing strategic internal communications for some time now, this comes as validation rather than surprise. The dots are fairly easy to connect: a company can only perform if its people have a clear understanding of its strategy, and their role in enabling that strategy. This is the only way that innovative products and processes are developed, quality standards are met, intuitive sales practices are executed, increases in efficiency are uncovered, on-brand customer experiences are provided… I really could go on and on with this list.
Corporate leaders are transitioning from an awareness that their employees are their most important asset to an understanding that their employees are their greatest competitive advantage. This delivers a true return on people that can only be attained if an intelligent, creative and strategic integrated communications plan is developed, executed and sustained. One that establishes a dialogue between the leaders of the organization and their employees, while recognizing that the organization is a group of communities, and that each community has different actions required to enable the company’s business strategy.