Topic: Organizational Communication and Financial Performance
Author(s), Title and Publication
Watson Wyatt. (2004). Connecting Organizational Communication to Financial Performance—2003/2004 Communication ROI Study. Watson Wyatt: Worldwide Research Report.
With data collected from 267 leading U.S. organizations, this report investigated the impact of communication on financial performance. It found that better communications resulted in a higher return on investment (ROI), and organizations that communicated effectively, especially internally, dramatically outpaced organizations that did not. The study concluded that a significant improvement in communication effectiveness is associated with a 29.5% increase in market value. Companies with the highest levels of effective communication experienced a 26% total return to shareholders from 1998 to 2002, compared to a –15% return for companies that communicated least effectively. In addition, the organizations that communicated effectively were more likely to report employee turnover rates below or significantly below those of their industry peers.
The main reason that effective communication can be a key driver of superior performance was connections, or favorable organization-employee relationships. Effective communication helps employees to feel connected to the business and company culture, and to understand how their actions can support it. Via communication, organizations can more quickly connect employees to changing business challenges and facilitate faster adjustments to market conditions. Management effectively connects with employees through strong leadership during organizational change. The study concludes that employee communication drives business performance and is a key contributor organizational success.
Implications for Practice
For communicators, the study points to several key factors for effective communication: a clear line of sight between employees and customers, a strong communication structure based on employee feedback and technologies, a candid approach to dealing with strategic change, and leaders and front-line managers who model the way regarding desired changes and behaviors.
Location of Article
The article is available online at:
http://www.watsonwyatt.com/render.asp?catid=1&id=12092 (Key findings)
or http://www.workinfo.com/free/downloads/204.htm (Key findings)