Measuring Internal Communications


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Financial impacts of effective internal communications.

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  • One of today’s more visible case histories is what is currently occurring with the transformation of JCPenney as led by former Target and Apple executive – Ron Johnson, the individual credited with the creation of the Apple Store experience. From a recent article in the online business publication, the Business Insider, the story of what appears to be an internal communication shut-down is occurring, which the numbers seem to support. The question is: With an employee culture that has coined the phrase, ‘JCPenney, where communication goes to die,” can the retailer stay afloat if the front line is fueled by rumor? Lives in fear of the next round of layoffs? Hasn’t a means by which to contribute ideas? “There are no memos or written directives anymore. The last one I saw was eight months ago. Everything gets communicated verbally and without too much detail.”The current pulse check: Widespread fear, anxiety and distrust of the new management team.
  • Measuring Internal Communications

    1. 1. MEASURING INTERNALCOMMUNICATIONSBetter Companies through Better Communication.
    2. 2. Institute for Public RelationsReport Excerpts• Employee/Organizational Communications – By Bruce K. Berger, Ph.D. University of Alabama – November 17, 2008 » communications/
    3. 3. Measurable BenefitsValue 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. 4. Measurable BenefitsDriver of Business Performance• Some even argue that internal communication is the most “fundamental driver of business performance” » (Gay, Mahoney & Graves, 2005, p. 11).
    5. 5. Measurable BenefitsEmployees Thrive• Effective internal communications help – Increase employee job satisfaction – Morale – Productivity – Commitment – Trust and learning – Enhance quality, revenues and earnings
    6. 6. Specific ExamplesDriver 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. 7. Measurable BenefitsImproved 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. 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. 9. Measurable BenefitsMost 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. 10. Measurable BenefitsLinks 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. 11. Measurable BenefitsRetain 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. 12. Measurable BenefitsRetain 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. 13. Measurable BenefitsSustained 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. 14. Measurable BenefitsIndustries 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)
    15. 15. Measurable BenefitsIndustries 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.
    16. 16. Measurable BenefitsIncreased Market Values• A significant improvement in communication effectiveness in organizations was linked to a 29.5 percent rise in market value. » (Watson Wyatt, 2004)
    17. 17. Measurable BenefitsBuild Community and Trust• Effective communication facilitates engagement and builds trust.• Both critical ingredients in strong, viable organizations » (Grates, 2008)
    18. 18. Measurable BenefitsBetter 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)