1999 COMMUNICATIONS STUDY LINKING COMMUNICATIONS WITH STRATEGY TO ACHIEVE BUSINESS GOALS

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1 W A T S O N W Y A T T 1999 COMMUNICATIONS STUDY LINKING COMMUNICATIONS WITH STRATEGY TO ACHIEVE BUSINESS GOALS

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3 A CLOSE TIE between business and communications strategies will align the workforce with the direction and changes of the organization. INTRODUCTION At work, we are bombarded with hundreds of messages and bits of information every day some of it useful, but much of it not relevant to us. The volume of these communications only seems to increase. Amidst all of this noise, how can organizations communicate effectively with employees? How can professional communicators ensure that employees receive and act on the truly important information they need to perform successfully? And, how can organizations more effectively listen to their employees? In today s ever-changing business environment, communicators face the complex challenges of developing techniques and processes to manage information and distribute it in ways that enhance the intellectual capital of their organizations. To meet these challenges, communicators and senior management must work to establish proactive, well-defined communications strategies that engage the workforce and align closely with the organization s business goals. A close tie between business and communications strategies will help the workforce understand and support the direction of the organization. This study offers evidence that an organization s communications planning and programming are critical factors contributing to the success of its business strategy. Study results identify a definite correlation between high-performing organizations and strong communication practices. Respondents agree that comprehensive communications programs help motivate and align employees with the goals of their organization. The study also establishes basic guidelines to help organizations create a successful communications program based on the practices of high-performing companies. 1

4 ABOUT THE STUDY, in cooperation with the International Association of Business Communicators (IABC) and the IABC Research Foundation, examined the current state of employee communications in a variety of organizations. This study is the latest in a series of five communications studies conducted by Watson Wyatt since PARTICIPANTS by organization size 5,000 or More Employees 47% Under 1,000 Employees 26% A total of 913 organizations participated in the study, representing a variety of industries and positions within those organizations. The largest industry segment represented was manufacturing. Communications professionals constituted the largest functional segment responding to the study. Almost half the participants represented organizations with 5,000 or more employees. 1,000 to 4,999 Employees 27% PARTICIPANTS by industry segment Manufacturing 22% Banking/Insurance/Finance 20% 2 Health Care 10% Information Technology/Electronic Communications/Health Sciences 7% Utilities 7% Services 5% Retail/Wholesale 4% Transportation 4% Other 21%

5 STUDY HIGHLIGHTS Fifty-one percent of high-performing organizations have well-defined communications strategies that allow employees to better understand their organization s business goals. Fifty-two percent of senior managers recognize and support the importance of strong corporate communications programming in achieving their business strategies. Seventy-one percent of senior managers actively integrate communications into their overall business strategy. Long-range communications planning and measurement are still lacking at many organizations despite a 50 percent increase over the past four years in the number of organizations with formal employee communications strategies. The communications function is transitioning from HR and individual operating units (22 percent) to corporate communications departments (46 percent). Participants cite as the most frequently used communications tool (90 percent), but not the most effective (55 percent). 3

6 THINK STRATEGICALLY As with any business function, a welldefined strategy can be the difference between success and failure. Employee communications is no different. A communications strategy is critical in business environments with a constant stream of new product introductions, shortened production cycles and continuous organizational change. A focused communications strategy both facilitates upward communication and helps employees receive and understand the proper information at the right time. We asked study participants about the use of communication strategies within their organizations. FIGURE 1: Do you have a formal employee communications strategy? Yes 43% No 57% FIGURE 2: Does senior management base communications on a well-defined strategy? Agree Disagree 33% 40% Neutral 27% FIGURE 3: In what manner are your communications programs developed? Proactive 58% Reactive 42% 4 FIGURE 4: What does your communications strategy include? Explaining New Programs in the Organization 68% Helping Employees Understand Business Goals 67% Education About Organization Values and Culture 56% Informing Employees of Organization Performance Issues 38% Providing Information and Feedback to Motivate and Improve Job Performance 31%

7 FIGURE 5: Are your communications objectives directly linked to your business objectives? Agree 71% LINK COMMUNICATIONS AND BUSINESS STRATEGY In recent years, business trends have demonstrated to organizations that a focused business strategy is one of the key elements to create sustainable competitive advantage. And to make any business strategy work, you need a workforce that is aligned with the goals and direction of its organization. While various combinations of compensation, training and incentive programs have been proven to help engage and align the workforce, they cannot be effective without a communications program that explains their value and solicits employee buy-in. Disagree 29% FIGURE 6: Does senior management recognize communications as a key element to business success? Agree 26% Disagree 44% Neutral 30% FIGURE 7: Does senior management tie communication initiatives to corporate business objectives? Agree Disagree Neutral 21% 26% 53% 5

8 LOCATION, LOCATION, LOCATION Can relocating the communications function help improve the effectiveness of organizational communication? In our 1994 study, human resources was the most common area to house the internal communications function (33 percent), and a corporate communications department ran a close second (29 percent). This year s study showed a significant swing in the location of the communications function. Results show there has been a movement of the employee communications function out of human resources and operating units and into a corporate communications department. This probably reflects the need to ensure both consistent messages and quality along with the centralization of functions to best utilize the organization s resources. But more importantly, this movement recognizes the strategic nature of communications. CUTTING THROUGH THE CLUTTER 6 What could be more appealing than instant communication at the click of a button? The popularity of in recent years has dramatically affected both personal and business communications. Our study participants cited as the most frequently used medium for employee communications. Although s popularity jumped 37 percent since our last study in 1994, its relatively low effectiveness rating (55 percent) shows that it is not a magic communications pill for organizations. Employees can receive a significant number of s each day, both business and personal. With all of the clutter, an organization cannot be sure that its employees are really taking the time to process and understand their electronic messages. FIGURE 8: Communications media popularity vs. effectiveness Electronic Mail Ongoing Publications for All Employees Group Meetings Most Frequently Used Media Most Effective Media According to People Management Resources Best Practices Guide for Employee Communications, best practice organizations report a high rate of success in getting the right messages to their employees by using a focused strategy that combines a thoughtful mix of these communication methods and tools. This mix includes in-person meetings, printed newsletters, Intranets, open-door policies and . So while the lure of and mass communication can be attractive, it can also be deceiving. Organizations should evaluate what communications methods, or combination of methods, is the most effective in reaching their employee population. 55% 60% 70% 90% 89% 89%

9 With the growing centralization of the communications function, the strategic role of the communicator can be expected to increase. We asked study participants about their organizations views on the role of professional communicators. When asked more specifically about the senior communications professional s role in the organization s major initiatives, 44 percent of participants indicated that their organizations involved communications and communicated to employees after decisions are made. More than one-third (38 percent) reported that the senior communications professional gives advice and counsel on communications aspects of major organization initiatives before decisions are finalized, and 18 percent noted that the senior communicator has an ongoing role in communications strategy development. FIGURE 9: Area of responsibility for communications function Corporate Communications 46% Human Resources 22% Marketing/Public Relations 18% Operating Units 5% Other 9% FIGURE 10: How does senior management within your organization view the role of communications professionals? Implementers 61% Strategic Planners 39% FIGURE 11: How do study participants view the role of communications professionals? Implementers 54% Strategic Planners 46% 7

10 ORGANIZATIONS THAT STAND OUT Participants in the Watson Wyatt/IABC Communications Study were asked to rate their organization s financial performance for 1996, 1997 and Participants who rated their organization s financial performance as excellent for all three years were identified as coming from high-performing organizations. These participants represented 27 percent of our total survey sample. Responses from participants in high-performing organizations FIGURE 12: High-performing organizations have formal communications strategies more often than other organizations. High-Performing Organizations All Other Organizations 40% 51% FIGURE 13: High-performing organizations measure the effectiveness of their communications programs more often than other organizations. High-Performing Organizations All Other Organizations 17% 29% were compared to responses from all other participants to identify the key differences in communications. Communications professionals in highperforming organizations play a strategic role. Senior executives in high-performing organizations view their communications professionals more as strategic business planners than as implementers. Senior communications professionals in highperforming organizations are more likely to provide advice and counsel on communication issues before decisions on major initiatives are made than in other organizations (see Figure 14). High-performing organizations do a better job of explaining change. Half the respondents from high-performing organizations were satisfied or very satisfied with the effectiveness of their downward communications programs in explaining and promoting major changes compared to 39 percent of respondents from all other organizations. FIGURE 14: Strategic role of communications professionals in the organization High-Performing Organizations All Other Organizations Senior Management Views Communications Professionals as Strategic Business Planners 43% 37% Senior Communications Professionals Give Advice and Counsel Before Major Decisions Are Made 43% 37% 8

11 High-performing organizations focus on communicating with and educating their employees. Communications programs in high-performing organizations place a greater emphasis on helping employees understand their business, its values and culture, its progress toward goals and how employees can improve performance (see Figure 15). These organizations provide their employees with comprehensive information, from broad organizational data to specific and personalized messages. High-performing organizations provide channels for upward communication and listen to what employees say. More respondents from high-performing organizations than from all others rated their channels of upward communication as effective and reported that employee input was used in decision making (see Figure 16). Employees in high-performing organizations have a better understanding of organizational goals and their part in achieving them. This understanding FIGURE 15: Emphasis in communications programs Very strong or strong emphasis on... High-Performing Organizations All Other Organizations Helping Employees Understand the Business 77% 64% Educating Employees About the Organization s Values and Culture 65% 54% Informing Employees About the Organization s Progress Toward Business Objectives 65% 59% Providing Feedback to Employees to Motivate and Help Them Improve Job Performance 33% 30% includes how employees work contributes to goals, what skill sets they need to be productive and how their performance is measured (see Figure 17). These findings correlate with Watson Wyatt s 1997 WorkUSA research a survey of more than 9,144 working Americans opinions where employees in growing companies reported a better understanding of their organization s goals, the steps needed to reach those goals, the skills they need to be successful and an understanding of how their performance was evaluated. FIGURE 16: Upward communications in organizations High-Performing Organizations All Other Organizations Channels for Upward Communication Are Excellent or Good 38% 25% Information Gained From Upward Communication Is Used as Input Before Major Decisions Are Made 33% 26% FIGURE 17: Employees understanding of organization goals and their role in achieving goals Employees have a good understanding of... High-Performing Organizations All Other Organizations Overall Organization Goals 72% 57% How Their Work Contributes to Achieving Organization Goals 51% 41% The Skill Sets Needed to Be Productive 55% 48% The Means Used to Evaluate Their Performance 51% 48% 9

12 THE TEN CHARACTERISTICS of Effective Communications One goal of this study was to identify the special traits possessed by organizations that have successful communication programs. We identified these traits using a comparative index of successful communications policies, programs and behaviors from various organizations. The following is a list of characteristics for any organization to examine and consider. 1. Senior management must recognize the importance of communications in achieving business objectives. 2. Senior management should base all communication efforts on a clear, well-defined communications strategy. 3. Senior managers must tie communications initiatives to corporate business objectives. 4. The organization should provide information to employees about how the firm is doing in meeting its goals. 5. Communications programs must be developed proactively rather than reactively. 6. Employee communications programs must place a strong emphasis on helping employees understand the business. 7. The organization should have a well-defined, two-way communications philosophy. 8. A comprehensive communications program should be an essential part of the organization s business strategy. 9. Managers at all levels should be rewarded for communicating effectively. 10. Employee communications programs must place a strong emphasis on providing information and feedback to motivate and improve job performance. 10 What is striking about these characteristics and instructive for professional communicators is the integration of communications into overall business strategy by and with senior management. In organizations with successful communications programs, senior management clearly has taken the time to plan, identify and support communications strategies and philosophies that grow from the organization s business objectives.

13 ENSURING SUCCESS How do you know your employees understand your organization s messages and business goals? When you measure your communications programs, you can evaluate program effectiveness and gauge the value gained by your organization. We asked study participants about the role of measurement in their overall communications strategy. Results indicate that organizations do not measure the effectiveness of their communications programs as often as they should. FIGURE 18: How often is communication effectiveness measured? Ongoing 21% Once a Year 17% Ad Hoc 34% No Formal Measurement 28% FIGURE 19: What are the most common measurement techniques? No Formal Technique Audit 26% 31% Employee Survey 51% Management Judgment Objective Measures of Changed Behavior 15% 40% FIGURE 20: Are managers rewarded for effective communications? 11 Yes No Neutral 9% 28% 63%

14 CONCLUSION Global market challenges and the constant change facing organizations today make effective communications a critical component for long-term success. Market volatility, changing business strategies and a variety of competitive forces can create extreme disconnects between the goals of the organization and the direction of employees. To succeed in such an unforgiving environment, it is essential that organizations: Create an integrated, long-term communications program Study results show that successful organizations have well-defined communications philosophies and formal communications strategies: philosophies that include two-way communications that help to shape the decisions of the organization. Link their communications efforts to their business objectives The success of internal communications programs comes from a clear and unwavering focus on the organization s business objectives and the role employees play to help achieve those objectives. Ensure that employees understand their organization s business goals and what is needed for success The study s high-performing companies have a greater percentage of employees who clearly understand the overall goals of their organization and the skills that they need to be successful. Allow professional communicators a more strategic role in their organization While it is clear that high-performing organizations tend to view communications professionals more as strategic business planners, more than half of all study participants view them only as implementers. Measure your communication efforts to better manage them Measuring your communications program helps you understand what components work. By not measuring your program s effectiveness, you can waste time, money and, more important, the connection with your workforce. In this information age, with growing numbers of knowledge workers, it is critical to organizational success that communications inform, involve and engage the workforce. 12

15 A BOUT W ATSON W YATT W ORLDWIDE A global consulting firm, Watson Wyatt brings together two disciplines people and financial management to help clients improve business performance. We structure cost-effective compensation and benefits programs that help companies attract, retain and motivate a talented workforce. We help clients achieve competitive advantage by aligning that workforce with their business strategy. And we help them use technology to reduce costs and improve employee service. Our collaborative consulting approach starts with ClientFirst where we work with clients to define needs and expectations and then measure our performance according to these agreed standards. Building on our research-based innovation and a deep knowledge of our clients businesses, we partner with them to provide tailored solutions. Watson Wyatt has more than 5,000 associates in 36 countries. They are backed by the best and most current research on people and financial management issues. Corporate offices are in Reigate, England, and Bethesda, Md., USA. T O D ISCOVER how to align your company s communications with your business strategy, please call or visit us at

16 CONSULTING OFFICES AFRICA Harare ASIA-PACIFIC Auckland Bangkok Beijing Colombo, Sri Lanka Hong Kong Jakarta Kuala Lumpur Manila Melbourne Mumbai New Delhi Seoul Shanghai Singapore Sydney Taipei Tokyo Wellington CANADA Calgary Montréal Ottawa Toronto Vancouver EUROPE Amsterdam Barcelona Birmingham Bristol Brussels Dublin Düsseldorf Edinburgh Leeds Lisbon London Madrid Manchester Milan Munich Paris Redhill Reigate Rome Stockholm Welwyn Zürich DIVISIONS AND SUBSIDIARIES PEOPLE MANAGEMENT RESOURCES Lake Oswego, OR RESEARCH AND INFORMATION CENTERS Bethesda, MD Toronto WATSON WYATT DATA SERVICES Brussels Hong Kong Rochelle Park, NJ WATSON WYATT INVESTMENT CONSULTING Atlanta Boston Chicago San Francisco CORPORATE OFFICES Bethesda, MD, U.S.A Reigate, England LATIN AMERICA AND THE CARIBBEAN Bogotá Buenos Aires Kingston Mexico City San Juan São Paulo UNITED STATES Atlanta Boston Charlotte Chicago Cleveland Columbus Dallas Denver Detroit Grand Rapids Honolulu Houston Irvine Little Falls, NJ Los Angeles Marlborough, MA Memphis Miami Minneapolis New York Philadelphia Phoenix Portland Richmond St. Louis San Diego San Francisco Santa Clara Seattle Stamford Washington, D.C. Copyright 1999,. All rights reserved. Catalog #W-252.

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