Communication equals profits

Companies with excellent communication programs earned 57 per cent more than those with poor communication programs, study shows

Companies that communicate effectively with their workers financially out-perform those that do not, a recent study found.

Watson Wyatt’s 2005/2006 Communication ROI Study of American and Canadian employers found that from the year 2000 to 2004, companies with the most effective communication programs returned 57 per cent more to their shareholders than companies with the least effective communication programs.

“The results of our study confirm that communication is a critical element in creating successful business results,” said 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.”

Companies with the most effective communication programs achieved a 91 per cent total return to shareholders between 2000 and 2004, while companies with the least effective communication programs were at 58 per cent.

The study also found that good communication results in a nearly 20 per cent increase in a company’s market value. The study identified nine communication practices that are directly linked to an increase in market value.

The top three communication practices are: driving managers’ behaviour to communicate effectively, connecting employees to the company’s business strategy and following a formal communication process. The associated increased market value is 3.8 percent, 3.7 per cent and 3.4 per cent respectively.

Other key findings from the survey include:
• Companies with high levels of communication effectiveness were 20 per cent more likely to report lower turnover rates than competitors.
• The number of companies using formal communication measures increased 11 per cent, from 73 per cent in 2003 to 81 per cent in 2005.
• Three-quarters of all respondents increased their use of electronic communication over the last year, while 30 per cent decreased the use of print communication.
• Seven per cent of the high-effectiveness companies used blogs and wikis to help get their message across.

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