Employee engagement Featured

8:00pm EDT July 26, 2007

Employees are more effective when they understand the business and how their individual performance contributes to achieving the company’s objectives. That’s the findings of a recently updated communication study conducted by Watson Wyatt Worldwide. The goal of the study was to identify which communication practices deliver the best return on investment (ROI). Among the 335 participants surveyed, 60 percent worked in global organizations. Given the trend toward globally diverse companies, executives must now communicate across a broad spectrum of culturally diverse employees to drive higher corporate returns.

“Organizations are more global than they have ever been,” says Lisa O’Driscoll, San Francisco’s communications practice leader with Watson Wyatt Worldwide. “The communication effectiveness of a global company is often dependent on the company’s ability to understand the different cultural contexts and reference points within the employee population.”

Smart Business spoke with O’Driscoll about how executives can communicate effectively across a culturally diverse staff.

How does executive communication play a role in engaging employees and driving ROI?

Despite conventional wisdom that immediate supervisors play a role in driving retention and engagement, strong senior leaders who communicate effectively and frequently are a more important factor. We’ve found that highly engaged employees receive communication from senior management far more frequently than less-engaged employees.

How can executives communicate effectively across a global organization?

No matter what their location across the globe, committed employees are proud to work for their companies and motivated to help drive success. Commitment is essential to retaining high-quality employees and delivering long-term financial success, but commitment alone is not enough. Employees also need focus and direction, something that Watson Wyatt calls ‘line of sight.’ Simply stated, creating line of sight between executives and employees means communicating in ways that allow employees to understand the organization’s business goals, the steps that must be taken to achieve those goals and how they can contribute to achieving these goals.

How can CEOs create a line-of-sight communications plan?

For U.S. companies, communication is often northern-America-centric, so executives must adjust by starting the conversation with an employee value proposition tailored to all employees globally, not just those in the home country. Senior management and mid-management should trained on effective communication techniques and managing multicultural and multi-country teams. A global communication strategy should align the firm's business objectives with the employee value proposition while providing the platform for localization that reflect different cultures and local business conditions.

In all cases, companies need to develop a sustainable communications strategy that supports their mission, aligns employees with the business strategy and allows them to understand their role.

What elements comprise an effective line-of-sight communications plan?

First, no one strategy fits all companies, so each needs to decide what type of company it wants to be and how that supports its external brand and strategy. One company may be comfortable being a U.S.-based company with offices abroad, while another organization may want to be a true global organization with country heads running different business units.

In all cases, companies need to develop a communications strategy that supports their mission, is sustainable, aligns employees with the business strategy and allows them to understand their role.

What are the best tools for effective global communication?

Global communication requires the use of several tools. For example, many companies have a large dependence on e-mail. While e-mail is effective, it’s not the same as face-to-face communication between an executive and employees. In some cases, employees are receiving thousands of messages a day, so naturally it’s easy to see why e-mail can lose its effectiveness. It’s also hard to communicate a strong sense of leadership through e-mail. To maximize time and efficiency, new technology can help executives engage their employees through more personal communication. Blogs, podcasts, webcasts and teleconferences all have their place as part of an effective communication strategy. In considering tools, companies should consider company culture, local culture and, of course, the content of the communication.

What ROI increases can a CEO expect from establishing an effective communications plan?

Companies with highly effective communications plans had a 57 percent higher return to shareholders and a 19.4 percent overall increase in market premium during the five-year study period. During that same time, companies with effective communications plans were 20 percent more likely to report lower turnover rates than their competitors without a plan. Our statistics at Watson Wyatt show that the cost of turnover is roughly 48 percent to 61 percent of the annual wages for that position. Many companies brag about employee loyalty and their low turnover rates. Our study shows that committed employees actually drive shareholder return and take employee loyalty to a whole new level.

LISA O’DRISCOLL is the San Francisco communications practice leader at Watson Wyatt Worldwide. Reach her at (415) 733-4304 or lisa.odriscoll@watsonwyatt.com.