Watson Wyatt's 2005/2006 Communication ROI Study found that between 2000 and 2004, companies with the most effective communication programs returned 57 percent more to their shareholders than companies with the least effective communication programs. According to the survey, companies with the most effective communication programs achieved a 91 percent total return to shareholders (TRS) between 2000 and 2004, while companies with the least effective communication programs earned a 58 percent TRS.
"The results of our study confirm that communication is a critical element in creating successful business results," says Kathryn Yates, global director of communication consulting at Watson Wyatt. "The more effectively a company communicates with its employees, the better off its shareholders will be."
The study also found that a significant improvement in communication effectiveness is associated with a nearly 20 percent increase in a company's market value. Specifically, the study identified nine communication practices that are directly linked to an increase in market value. The three practices associated with the largest increase in shareholder value are driving managers' behavior to communicate effectively, which has a 3.8 percent increased on market value, connecting employees to the company's business strategy (3.7 percent), and following a formal communication process (3.4 percent).
The study also identified several best practices that differentiate companies with the most effective communication programs from those with the least effective. For example, companies that communicate effectively are much more likely to give workers the opportunity to provide input into how the business is run. High-performing companies also consistently measure the communication function's contribution to their strategic business goals.
"Having a powerful and successful employee communication program takes more than just having the right tools and vehicles in place," said Yates. "It requires building a strong foundation to ensure that employees understand their role in the organization and have a way to voice their opinions. It also requires that companies view communication as critical to their overall success and key to changing employee behavior."
Other key findings from the survey include:
• Companies with high levels of communication effectiveness were 20 percent more likely to report lower turnover rates than their competitors.
• The number of companies using "formal" communication measures increased 11 percent, from 73 percent in 2003 to 81 percent in 2005, primarily due to an increase in the use of focus groups and surveys.
• Three-quarters of all respondents increased their use of electronic communication over the previous 24 months, while 30 percent decreased the use of print communication.
• Additionally, 7 percent of the high-effectiveness companies used "blogs" and "wikis" to help get their message across.
Copies of the Watson Wyatt 2005/2006 Communication ROI Survey are available at http://www.watsonwyatt.com.
