Using Employee Communication as a Business Process to Improve Financial Results

1

Using Employee Communication

as a Business Process to Improve

Financial Results

Angela D. Sinickas, ABC

[email protected]

ISM University:

19 May 2014

Vilnius

22365 El Toro Road, Ste. 139, Lake Forest, CA 92630TEL: 714/277-4130 FAX: 714/242-7049

2

Evidence Communication

Improves Business Results

3© 2014, Sinickas Communications, Inc.

Five-year study found link between

internal communication and ROS / ROI

• Prof. Daniel Denison (University of Michigan)

followed 34 companies over five years:– Attitude survey results

– Return on sales (ROS)

– Return on investment (ROI)

• Companies with higher survey scores on

information-sharing practices did better on ROS

and ROI; the difference grew larger over five years

• High-information companies also rated higher on

ROS and ROI within their industries


HP and GE identified supervisor communication

link with productivity and turnover

• Regression analysis of attitude survey results at Hewlett-

Packard and at General Electric found strong statistical

correlation between communication and bottom-line

cost items based on employee survey results

• Employees who are more satisfied with their supervisor’s

communication interactions are:

– More likely to be as productive as they can be

– Less likely to be looking for a new job

5

At a B2B company, as information

levels on vision/goals improved…

5

6

…customer satisfaction also

improved

© 2014 Sinickas Communications, Inc.

RBIS meets or exceeds my expectations for…

7

Correlation between knowledge of strategy and

profitability in one company’s 13 geographic retail areas

informed on

strategy

74%

informed on

strategy

55%64%

Average

1 4

36

7

2

8 9 1011 12

5

13

Also is the most

profitable retail

geographic area

Also are among the

least profitable retail

geographic areas

© 2014, Sinickas Communications, Inc.

8

Towers Watson bi-annual study of employee

communication and financial success

“Companies that are highly effective at

employee communication are 1.7 times

as likely to be high-performing than

companies that are not highly effective

at communication.”

© 2012 Towers Watson. Source: Towers Watson

9

Focusing Communication on

Measurable Behavior Change

10© 2012 Sinickas Communications, Inc.

Typical communication messaging

• Organizational goals and performance

results

– What leadership is trying to achieve

• Communication tactics

– Key messages about goals and results


More effective communication messaging

based on research…

• Organizational goals and performance results

– What leadership is trying to achieve

• Audience actions

– What should different stakeholders do more of or less of, or do

differently in order to achieve the goals?

• Audience perceptions (knowledge and attitudes)

– What do stakeholders need to know in order to do the right things?

– What do stakeholders need to believe in order to do the right

things?

• Communication tactics

– Key messages about goals and results leading to behaviour

change

12

Timing of communication manager’s

involvement in change processes

© 2012 Towers Watson.

13

Employee information levels are much higher for

companies with full-time internal communicators

40%

31%27%

35%

22%28%

14%

27%22%

59%

47% 46% 45% 43% 41% 40% 40%36%

0%

10%

20%

30%

40%

50%

60%

70%F

ac

ilit

y/s

ite

pla

ns

HR

/Po

lic

ies

Co

mp

an

y f

ina

nc

ials

Ho

w I

co

ntr

ibu

te t

oc

o.

go

als

Cu

sto

me

rs

ati

sfa

cti

on

Co

mp

an

y p

lan

s

Em

plo

yee

rec

og

nit

ion

Lo

ca

l n

ew

s

Care

er

dev

elo

pm

en

t

Without Internal Communicator With Internal Communicator

How well informed employees are about:

14

Information levels improve once companies

create a full-time employee communication role

17%

44%37%

63%

25%

45%48%

33%

0%

10%

20%

30%

40%

50%

60%

70%

2003 2005 2006

Company-wide news How I help meet company goals

Company plans Company financials

How well informed employees are about:

15

Using Research to Maximize the

Impact of Communication

Messages

and

Channels

16

Hierarchy of messages employees need to

hear before they can become enaged

Source: Roger D’Aprix

17

Informal “interviews” to identify possible concerns of

employees relocating to a new production site

TTooppiiccss HHoouurrllyy

EEmmppllooyyeeeess

MMoovviinngg

OOffffiiccee

EEmmppllooyyeeeess

MMoovviinngg

EEmmppllooyyeeeess

NNoott

MMoovviinngg

TTrraannssppoorrttaattiioonn

WWhhoo mmoovveess

FFoooodd

SShhoowweerrss

LLoocckkeerrss

SSeeccuurriittyy

Legend: = mentioned by 1/4 to 1/2 in this category.

= mentioned by less than 1/4 in this category

= mentioned, but only by a few people

= not mentioned at all


Change

Made?Suggested Change Negative Outcome if Not Changed

Reverse two parts of e-mail

subject line so impact on current

employees shows up before that

on future employees.

Many current employees would not open the

e-mail since only the first portion would show

up on their in-box screens; they would

automatically delete it since it didn’t seem

relevant.

Mention that there is an option for

current employees in first

paragraph, not just a plan for

future employees.

Current employees would stop reading the e-

mail and delete it since it doesn’t seem to

apply to them.

Refer to the option being a one-

time-only choice more often.

Because the one-time nature was referred to

only once in the e-mail, people might not

have realized the importance of the choice.

Say whether the Webcast will

include additional information

or not (mentioned in two places in

the e-mail).

People would have changed their busy

schedules on short notice and then

discovered that no new details were being

provided. Their productive time would have

been lost.

Focus groups were used to pretest and change

an e-mail announcing a benefit change before

brochures and webcast were available


Surveys can track interest and

information levels on key topics


You can measure an increase in actual

knowledge of correct facts

75%

74%

61%

58%

30%

12%

0% 20% 40% 60% 80% 100%

Increase no. of contracts

Increase no. of customers

Increase revenue by acquisitions

Increase revenue from time-sold

Increase no. of large projects not relying on

time-sold

I'm not sure

The right answer

How is XYZ going to double the value of the company?

21

Choosing the right channels or

mediums for communication

• Match channel to audience: Employees

prefer different sources on different topics

of information; preference varies by type

of employee as well.

• Match channel to message: Different

channels are more suitable for different

types of messages. Messages may need

to be rewritten for different channels.

Source: Wiseman and Schenk-Hamlin

22

What types of channels employees

generally want more or less of

46%

13%

19%

29%

15%

52%

59%

62%

67%

75%

3%

28%

18%

5%

11%

0% 20% 40% 60% 80% 100%

Face-to-facewith senior

leaders

Mass e-mail

Print

Face-to-facewith

supervisor

Intranet

Far/Slightly too Little Just Right Slightly/Far too Much

The amount of information I receive from each of these methods is…

23

Example: Sources for

“How I can help XYZ reach its goals”

10%

23%

25%

29%

45%

14%

23%

25%

27%

40%

0% 10% 20% 30% 40% 50%

Large meetings

Dept/site manager

Leadership

Staff meetings

My manager

Current Sources Preferred Sources

Source: One Sinickas Client

24

Example: Sources for

“Our competitors & how we compare”

4%

6%

6%

7%

12%

13%

13%

15%

17%

33%

16%

16%

11%

22%

7%

9%

7%

13%

10%

24%

0% 10% 20% 30% 40% 50%

Other employees

No source

Customers

External press

Local newsletters

E-mails

Leadership

Large meetings

Company Intranet

Company newsletter

Current Sources Preferred Sources

Source: One Sinickas Client

25

Match channels to messages

Complex or sensitive topics should use richer mediums

• Posters

• Bulk mail• Magazines• Websites

• Letters

• Email• Blogs

• TV

• YouTube• Webcast

Written Audio Video

2-way1-way

• Telephone• Discussion

boards

• Video

conference

• Face-to-face

• Radio

• Podcast• Voicemail

• Text msg

(SMS)

Leaner

mediums

Richer

mediums

Effectiveness of

communication

Source: Adam Clark

26

Consider the impact of “push” vs.

“pull” channels on outcomes

Channels where

information is

pushed

to people:

• Newsletters

• E-mail

• Digital signage

• Team meeting

• In-person all-hands

meeting

Channels where

employees choose

if/when to pull

information:

• Intranet

• Subscriptions to

newsletters or podcasts

• Social media

• Webcast of all-hands

meeting


27

We use intranets a lot, but they are not good at

getting information to all employees quickly

45%

17%

35%

3%

Part of my routineWhen email/link alerts me to something newOnly when I need specific informationOther

Reasons for

searching

intranet41%

27%

13%

10%

12%

Daily Weekly

Monthly Less than monthly

Never

Frequency of

searching

intranet


28

How effective is the face-to-face

communication “cascade”?


Three organizations where understanding of strategy is

much higher than the norm—question is why?


Face-to-face communication is not a consistent predictor

of higher scores on understanding strategy


However, a lack of face-to-face communication might be

a predictor of lower scores on understanding strategy

48% 48% 53% 38% 43%15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

Supervisor

explains company

strategy

Supervisor

explains how I

can help

contribute to

strategy

Senior

management

explains company

strategy

Well/very well

informed on

company strategy

Well/very well

informed on how I

can contribute to

strategy

Database Norm Org. X Org. Y Org. Z

32

71%

59%64%

54%

46%41%

69%

50%

36%

30% 29% 27%

0%

20%

40%

60%

80%

Sr. Execs Sr.Managers

Managers SeniorProfess-ionals

OtherProfess-ionals

Assistant

XYZ 2005 XYZ 2007

Segmenting audiences can show how

cascade drops by job level

% informed about company financial results

During 2-year

period, client

tried to use

management

“cascade” to

communicate

this topic, with

a very bad

result

Rumors begin as soon as the first

cascading meeting occurs

33

To limit the negative impact of bad

face-to-face communication, use face-

to-face for strategy communication to

provide context after information has

been broadcast through consistent

print/electronic channels…

…Preferably very

frequent ones


Two organizations relying on team briefing

cascades, no publications available

81%

63%

42%

32%

23%18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Directors Managers Production

Company A Company B

% informed about company plans


Impact of having timely newsletters vs. relying

on cascade for timely information: less loss in

information levels by job

55%

47%42%

34%

59%

40%

31%

22%

0%

10%

20%

30%

40%

50%

60%

70%

Directors Managers Professionals Production

Organizations with daily newsletters All other organizations

% informed about company plans

36

Print or online newsletters? Readership of one

monthly employee magazine went down 20 percentage

points when it changed from print to only online

• Only 48% read or skim at least half of each issue, which is improved over 2009’s 42%,but still down 3 points from last year and down 20 points from 2007 when it was last printed (when 68% read all or most of it).

– This current level is 11 percentage points under the database norm of 59%.

12%

28% 26%17%

23% 25%

20%

31% 32%

29%26%

27%

30%

25% 25%

29%28%

27%

38%

17% 17%25% 23% 21%

0%

25%

50%

75%

100%

2007Printed

2009Online

2010Online

2011Online

2012Online

2013Online

Read beginning to end

Read/skim about half

Read only what interests me

Don't read it

How much of an issue is read


37

More employees say they do not have access to

the online magazine than when it was printed


38

Usefulness of magazine dropped 11 percentage

points when it went only online


39

Measuring Outcomes and ROI


How reading the employee

publication affects employees’ jobs

• The green bars show

how many

respondents agreed

or strongly agreed

with each statement

about the publication

• Over half said the

publication has

helped them do their

jobs better, with 80%

saying it has helped

them talk with

customers and other

outsiders more

knowledgeably

• Numbers were even

stronger for sales

employees


On surveys, ask questions not just

about satisfaction, but outcomes

The new Portal has helped me:


How much time the new Portal saves

• For the employees

who said it helps them

save time, ask them

how much time is

saved


Productivity savings due to portal for

about 10,000 employees

58% (5,800) x average of 7.5 minutes

29% (2,900) x average of 22.5 minutes

9% (900) x average of 45 minutes

4% (400) x average of 60 minutes

725 hrs/wk

1,088 hrs/wk

675 hrs/wk

+ 400 hrs/wk

Total hours saved per week 2,888 hrs/wk

X 49 wks worked

Hours of productivity saved each year

Convert hours to weeks

Average salary per week

141,512 hrs/yr

3,538 weeks/yr

X $1,500 pay/wk

Total productivity savings from portal $5,306,700


Calculating ROI if the total cost of

replacing the intranet was $500,000

Benefit/cost ratio

$5.3 million ÷ $.5 million

=

10.6

Return on investment (ROI)

($5.3 million – $.5 million)

÷

$.5 million

= 9.6 X 100%

= 960% ROI


ROI is the financial value of changed audience

behaviors vs. cost of communication

Gain – Cost

___________

Cost


Ways to isolate communication’s

impact on behavior change for ROI

• Survey question

• Timing

• Pilot/control groups

• Different URLs, phone numbers, addresses in different

communications that lead to action steps with a financial

impact


ROI Ex. 1: Communication impact on

long-distance dialing costs

• Situation: Employees were dialing

long-distance calls directly instead of

using a string of pre-dialing

numbers that reduced the cost

• Solution: Humorous internal

communications campaign over

three-month period using e-mails

and the intranet; repeated every

few months to alert new hires and

remind back-sliders

• Outcome: Company long-distance costs reduced over

$20,000 per month with the same call volume


ROI Ex. 1: Calculating communication

ROI on long-distance cost savings

• Annual long-distance savings

(12 x $20,000) $240,000

• Annual salary and benefits for

one communicator - $ 86,000

• Net annual cost saving $154,000

• Cost of comm. salary/benefits ÷ $ 86,000

• Annual ROI = 179%


Example 2: Reducing insurance

costs at Westec Security

• Situation: Most employees

drove vehicles; insurance

costs due to accidents

were skyrocketing

• Solution: Communicator

piloted a new safety

communications in

3 of their 7 branches

• Outcome: Company

insurance premium

reduced by $1 million per

year at the three pilot

branches; no change at

other 4 branches


Example 2: Calculating communication’s

ROI at Westec

• Annual insurance cost savings $1.00 million

• Annual salary of communicator -$ .06 million

• Annual cost saving $ .94 million

• Annual salary of communicator ÷ $ .06 million

• Annual ROI = 1566%

If ROI seems too high to be believable,

add more costs to the equation

51

Conclusion

• Carefully identify your stakeholders

• Focus communication on desired behaviors

• Use research to identify communication needs

and to pretest proposed communication

• Evaluate success afterward to improve next

time



Free monthly

newsletter

with practical

measuremen

t tips

available by

emailing

angela@

sinicom.com

Date post:	13-Jan-2015
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Using Employee Communication as a Business Process to Improve Financial Results

Education