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«13TH INTERNATIONAL PUBLIC RELATIONS RESEARCH CONFERENCE “Ethical Issues for Public Relations Practice in a Multicultural World” Holiday Inn ...»

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521 How Top Business Communicators Measure the Return on Investment (ROI) of Organization’s Internal Communication Efforts

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Organizational research in the past decade has shown that communication effectiveness has been one of the leading indicators of an organization’s financial performance. However, measurement of the positive causal relationship has not been well established in terms of how top communicators link their organization’s internal communication efforts with business performance, or how they create a solid business case to influence organizational leaders to support and participate in communication practices. Therefore, to advance knowledge in this area,, this paper addressed findings from two research projects related to how top business communicators measure the effectiveness of their organization’s internal communications. The results of an international survey of 265 experienced business communicators worldwide were reported, followed by insights gained through in-depth interviews with 13 diverse and experienced business communicators. Findings suggest that internal communications effectiveness has not been widely assessed despite its avowed importance. At the same time, some aspects of internal communication initiatives (e.g., improved job performance, changed employee behaviors, and concentrated employee engagement) have been given special attention in measurement efforts. Findings from the international survey and the in-depth interviews are discussed and implications for communication professionals are suggested.

522

Introduction

As a crucial feature to the success of organizational sustainable development and financial performance, communication effectiveness has been a promising topic in the fields of organizational behaviors, business management, and communication consulting in recent years.

Organizations and institutional communication professions have explored the return on investment (ROI) measurement of their communication initiatives. As the leader in Communication ROI study, Watson Wyatt Worldwide has consistently contributed to investigating how communication practices are effectively linked to improved financial performance at the organizational level. Such research seems especially important today, given the turmoil in global financial markets in which organizations and their communication professionals operate.





Though studies have suggested that communication effectiveness is one of the leading indicators of an organization’s business performance, how and to what extent communicators measure the relationship between communication and performance is unclear. We also know relatively little about the specific approaches or metrics that communicators use to demonstrate the ROI for their organization’s internal communication initiatives. Thus, the anticipated influence on organizational senior leaders’ support, contribution and participation in communication efforts remains unpredictable.

To better understand how top business communicators measure the ROI of their organization’s internal communications efforts, the International Association of Business Communicators (IABC) Research Foundation and the Watson Wyatt Worldwide launched several significant research projects during 2007-2008. In this paper, the researchers analyzed and reported key research findings from two studies relevant to the measurement of internal communication effectiveness.

The first study analyzed an international survey of 265 experienced communication professionals worldwide. The results indicated their perceptions about communication effectiveness and the importance of effective measurement in improving the values of internal communication initiatives. The second study involved in-depth interviews with 13 IABC Gold Quill award recipients in the field. The results revealed participants’ experiences and stories about measurement issues in internal communication practices. The interviews also captured some approaches and metrics those business communicators have used to develop awardwinning business cases and to ensure relevant communication practices have the highest ROI.

Results from the two projects were synthesized to identify and generalize themes and trends in measuring the business outcomes that internal communication practices can bring to the organization.

Background Research intended to demonstrate the relationship between an organization’s internal communication practices and its business performance has never generated just one clear solution. Some studies have indicated that effective internal communication is a leading indicator of an organization’s financial performance (e.g., Ehling, White, & Grunig, 1992) and is associated with a higher level of employee engagement, which leads to an increased market value of that specific organization (e.g., Morris, 2010).

523 The 2007/2008 Communication ROI Study conducted by Watson Wyatt Worldwide, an international business research firm, highlighted six crucial actions top business communicators need to take to ensure that superior internal communications help drive robust financial performance for the organization. Other than keeping customers centered, the six crucial actions focus more on internal communications and reveal the importance of engaging employees in organizational business and maximizing employees’ experience in internal communication programs (“Secrets of Top Performers,” 2008). These crucial actions, along with innovative ways to achieve excellence in communication, place even greater emphasis on the importance of finding the most effective business metrics to evaluate the impact of internal communication on an organization’s business performance.

The ROI of internal communications has also been an issue of importance in the public relations and communication management literature since the 1980s (e.g., Broom & Dozier, 1983, 1990; Dozier, 1984, 1990; Dozier & Ehling, 1992; Grunig & Hunt, 1984). Although there is considerable uncertainty about what metrics to use to gauge the effectiveness of internal communication programs, the research suggests that mixed research approaches (informal and/or scientific) and diverse perspectives (quantitative and/or qualitative) have often been used to facilitate the success of the two-way symmetrical communication model (see Dozier, 1990) and to maximize the success of such communication programs and the long-term development of the organization.

According to Moorman et al. (1994), communication effectiveness refers to the formal as well as informal sharing of meaningful and timely information between a client and the advisor in an empathetic manner. The effectiveness of communication efforts at all levels is critical because it has been “a major cause of investor complaints resolution unit” (Bland, 1997, p. 1).

To better educate and keep clients informed about their investments in a language that they can understand, Morgan and Hunt (1994) suggested that an easy flow of communication is an important characteristic of a strong relationship. In addition, effective communication skills are instrumentally important in generating client trust. Moorman et al. (1994) emphasized that timely communication fosters trust by helping resolve disputes and aligning perceptions and expectations. It assists clients and key publics to appreciate the latest developments in the organization or the market and helps resolve problems and misconceptions.

The linkage between communication effectiveness and relationship commitment is likely to be even stronger for organizational financial performance than other contexts because of the recurring interaction between the strategic communication team and key publics, the risks and uncertainties involved, and the complex nature of the services or business environment.

Furthermore, due to the high involvement nature of internal communication initiatives, the strategic communication team has to be effective in communicating with all levels of audiences to instill confidence and engagement while reducing risk perceptions. In Berger & Reber’s (2006) survey of the most important issues facing public relations practitioners, measuring the value of public relations was ranked as the second most important issue in gaining influence in the organization.

Importantly, the dynamic nature of the communication profession has created a competitive incentive among many organizations to consolidate and reconcile their communication programs or assets as a means of creating value that is sustainable over time.

Tto achieve competitive sustainability, many organizations are launching extensive internal communication initiatives. Recent industry research indicated that organizations with the most 524 effective employee communication programs provided a 91% total return to shareholders, compared to companies that communicated least effectively (“Secrets of Top Performers,” 2008).

However, organizations may not be equally predisposed for successfully launching and maintaining communication management initiatives. Therefore, a key to understand the success and failure of communication effectiveness within organizations is the identification and assessment of the business metrics or evaluation approaches. The major goal of this article is to identify how and to what extent top business communicators try to measure the ROI of their internal communications initiatives.

Research Questions To help understand the importance and process of measuring internal communication

effectiveness, the following research questions were developed:

1. Do top business communicators demonstrate a causal relationship between effective internal communications and an organization’s business performance?

2. If so, which measurement procedures/approaches do they use to demonstrate the connection?

3. Are there any major aspects in internal communication initiatives that have been measured on a regular basis?

4. If so, what are they?

Research Methods To answer these research questions, two related studies were designed and carried out.

The first study involved the execution and analysis of an international online survey. The second study used in-depth interviews as a supplementary method.

Study 1: The International Survey The international survey was designed and administered by the International Association of Business Communicators Research Foundation and Watson Wyatt Worldwide during 2007Since 2003, Watson Wyatt has carried out a global research project examining the trends and actions in organization’s employee communication practices and its business performance.

Over 740 companies representing more than 12 million employees worldwide have been surveyed during the past six years. As a continuous investigation, the international survey reported in this study was part of the Communication ROI Study designed by Watson Wyatt.

The specific purposes of the international survey were to: 1) identify different aspects of internal communication programs that organizations have measured on a regular basis to assess the effectiveness, 2) determine which internal communication efforts are deemed most important by communication practitioners and organization leaders, and 3) demonstrate a causal relationship and/or correlation between effective internal communication and organization’s business results.



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