Financial impacts of effective internal communications.

1. MEASURING INTERNAL
COMMUNICATIONS
Better Companies through Better Communication.

2. Institute for Public Relations
Report Excerpts
• Employee/Organizational
Communications
– By Bruce K. Berger, Ph.D.
University of Alabama
– November 17, 2008
» http://www.instituteforpr.org/topics/employee-organizational-
communications/

3. Measurable Benefits
Value of Internal Communications
• Many would agree with Harris and
Nelson’s (2008) assertion that
internal communication is:
– An essential aspect of
organizational change
– “The key variable in almost all
change efforts, diversity initiatives
and motivation.”
» (Harris and Nelson, p. 95)

4. Measurable Benefits
Driver of Business Performance
• Some even argue that internal
communication is the most
“fundamental driver of business
performance”
» (Gay, Mahoney & Graves,
2005, p. 11).

5. Measurable Benefits
Employees Thrive
• Effective internal communications help
– Increase employee job satisfaction
– Morale
– Productivity
– Commitment
– Trust and learning
– Enhance quality, revenues and earnings

6. Specific Examples
Driver of Business Performance
• Employees who are disloyal to their
organizations, or lack commitment to helping
organizations achieve their goals, may cost
business $50 billion per year in:
– Quality defects
– Rework and repair costs
– Absenteeism
– Reduced productivity,
– Alvie Smith, former director of corporate communications at General Motors
(cited in Cutlip, Center & Broom, 2006).

7. Measurable Benefits
Improved Performance
• Improving the quality, adequacy and timeliness
of information that employees receive about
– customers,
– the organization or
– their own work
• Can improve their individual performance by
as much as 20-50 percent
» (Boyett & Boyett, 1998)

8. Internal Communications’
Big Impact
• More than 80 percent of
employees polled in the US and
UK said that employee
communication influences their
desire to stay with or leave an
organization.
• Nearly a third said communication
was a “big influence” on their
decision.
» (Burton, 2006)

9. Measurable Benefits
Most Admired vs. Least Admired
• The 200 “most admired” companies spent more
than three times as much on employee
communications as the 200 “least admired”
companies.
» (Seitel, 2004)

10. Measurable Benefits
Links to Productivity
• Employees’ satisfaction with
communication in their
organizations is linked to
– Organizational commitment
– Productivity
– Job performance and satisfaction
– Other significant outcomes
» (Gray & Laidlaw, 2004)

11. Measurable Benefits
Retain Employees
• Organizations with engaged and
committed employees
– were 50 percent more productive
– than those organizations where employees
weren’t engaged.
• In addition, employee retention rates
were 44 percent higher in organizations
with engaged and committed
employees.
» (Izzo & Withers, 2000)

12. Measurable Benefits
Retain Employees
• The cost of replacing an “average”
employee is nearly 50% of annual
salary.
• Losing a highly-skilled or experienced
employees ups the ante to 150%.
» Paulson Training
12

13. Measurable Benefits
Sustained Success
• Positive communication climate and
effective employee communication
– strengthen employees’ identification with
their organizations,
– contributes to an organization’s financial
performance and sustained success.
» (Smidts, Pruyn & van Riel, 2001)

14. Measurable Benefits
Industries Thrive or Die
• Decades ago, Sears Roebuck found that creating a more
compelling place to work for employees led to
– a significant increase in employee attitude scores
– customer satisfaction scores and
– revenues
» (Rucci, Kim & Quinn, 1998)

16. Measurable Benefits
Industries Thrive or Die
• Starbucks, Limited
Brands, Best Buy track
engagement.
– Best Buy knows the value of a
0.1% increase in engagement
at particular store
– That value equates to more
than $100K in store’s annual
operating income.

17. Measurable Benefits
Increased Market Values
• A significant improvement in
communication effectiveness in
organizations was linked to a
29.5 percent rise in market
value.
» (Watson Wyatt, 2004)

18. Measurable Benefits
Build Community and Trust
• Effective communication facilitates
engagement and builds trust.
• Both critical ingredients in strong, viable
organizations
» (Grates, 2008)

19. Measurable Benefits
Better Companies through Better Communication
• Companies with highly effective
internal communications
experienced 47% higher returns to
shareholders over companies with
least effective communications.
» (Tower Watson 2009/2010
Communication ROI Study
Report)