(The PR Sherpa, the wise man of the mar-com mountain, has returned to lead you up the rocky ridges of the profession to reach new heights of communications efficiency. This
week, the PR Sherpa considers the link between internal communications and strong ROI, and he considers the PR implications of avian flu.)
QUESTION: Is there any
correlation between a healthy exchange of communications within a company and that company's financial performance?
ANSWER: If you are a Simon and Garfunkel fan, you'll
recall the vivid lyrics from "The Sounds of Silence," which focused on an environment of "people talking without speaking, people hearing without listening." Of course, the
dysfunctional communications of that vintage pop tune are still very much with us. But some smart companies successfully rise above this messaging miasma, with profitable
results.
Case in point: the recently released 2005/2006 Communication ROI Study from Watson Wyatt Worldwide found companies that communicate effectively with their workers
financially outperformed those that did not. The survey, conducted over a four-year span, determined that companies with "the most effective communication programs" returned 57%
more to their shareholders than companies with "the least effective communication programs." The survey also concluded the companies with "the most effective communication
programs" achieved a 91% total return to shareholders while those with "the least effective communication programs" earned a measly (in comparison) 58%.
But that begs the question: What is a "most effective" and "least effective" communications program? For starters, effectiveness is defined as establishing a two-way
communications channel - or for the theatrically-minded, creating a dialogue between management and staff rather than a monologue where management talks and staff listens without
dissent. The Watson Wyatt Worldwide study pinpointed effective communications as a corporate environment where the workers have the opportunity to offer opinions on how to run
the business (the communications venues ranged from old-fashioned person-to-person chats to Net-based blogs and wikis). This give-and-take seems to ensure operational stability:
the study reports the companies with high levels of communication effectiveness were 20 percent more likely to report lower turnover rates than their competitors.
Kathryn Yates, global director of communication consulting at Watson Wyatt, tells the PR Sherpa that companies not engaged in this level of employee interaction should get
started. "It is worth the early investment," she says. "Communications departments needs to sit down and have a formal plan for this. Just by doing that, they can begin to
improve their effectiveness."
Contact: Kathryn Yates, 312.525.2500, [email protected].
| Effect of Communication Practices on Market Value | |
|---|---|
| Communication Practice | Estimated Increase In Market Value |
| Drive managers' behavior |
3.8%
|
| Connect to the business strategy |
3.7%
|
| Follow a formal process |
3.4%
|
| Facilitate change |
2.8%
|
| Create employee line of sight |
2.1%
|
| Focus on continuous improvement |
1.5%
|
| Use employee feedback |
1.3%
|
| Integrate total rewards |
0.4%
|
| Leverage technology |
0.4%
|
| TOTAL |
19.4%
|
| Source: Watson Wyatt 2005/2006 Communication ROI Study | |