Communication effectiveness: measuring the bottom line

Effective communication can make or break initiatives, ventures, reputations and relationships, and the way an organisation interacts with its people can have a direct and significant impact on financial performance.

Yet most organisations do not measure their communication and engagement efforts with the same rigour that they apply to other parts of the business.

Employee engagement is one of the biggest issues facing todays’ CEOs.

By engagement, we mean the extent to which individuals are emotionally and intellectually committed to the organisation they work for. An engaged employee understands the business strategy and goes the extra mile to deliver it for their own benefit and that of the organisation they work for. In turn, the organisation must strive to develop and nurture engagement through an active relationship with its employees.

Proving the link between engagement and performance is something of a holy grail. In Corporate Culture and the Bottom Line, Eric Flamholtz found: “…approximately 46 per cent of Earnings Before Interest and Tax is explained by the variable of cultural buy-in.” PwC’s own work on behalf of a large, global bank identified, among other things, a productivity gap of 17% between highly and disengaged populations.

But, if engagement really is a key driver of business performance and competitive advantage, then whose job is it to drive?

Well, clearly it has to start with a genuine commitment from the top. As John Smythe puts it in his new book, The CEO: Chief Engagement Officer, “Leaders are learning to engage their people to drive sustainable performance and change.”

Building on this basis, as ably demonstrated by GE and Hewlett-Packard, engagement has to be transacted daily in line managers’ relationships with their people. HR is responsible for developing the people policies and practice that underpin engagement, but the tie that fundamentally binds each of these elements is good communication.

Being able to assess the effectiveness of your communication function in fulfilling an engagement purpose is a key step to understanding the return you get for your investment in your people …and where your spend is best directed in the future.

Measuring communication function effectiveness

Traditionally (where organisations have measured communication at all) organisations have tended to view corporate communications as simply providing a broadcast function, not as delivering a strategic role. Consequently, most tests for effectiveness languish around the level of channel audits and staff suggestion forums.

But, if we accept the premise that corporate communications has a strategic imperative to advance and promote employee engagement, then the proof of concept lies in the function’s ability to first measure, and then demonstrate the successful outcomes of that role.

PwC’s own methodology starts with that intent in mind – the communication function is effective only when supporting delivery of the business agenda. We apply an evidence-based approach to review the purpose, activities, style and effectiveness of corporate communications, making recommendations based on a number of diagnostics.

We work to:

• Baseline existing service delivery and performance;
• Measure the impact of communications on the business;
• Make sure functional objectives support business strategy and are being met;
• Gain the maximum value from spend;
• Make sure the communication effort is focused on the right things;
• Identify the potential to reduce costs, increase effectiveness and improve service levels;
• Where possible, benchmark performance against other organisations;
• Clearly identify both short and long term priorities and a plan to deliver them.

Start as you mean to go on

Of course, reviewing the Corporate Communications function is only a one-time line in the sand. The ultimate goal of any such activity should be to make regular information gathering – based on a comprehensive understanding of the range of stakeholders and their needs – an essential part of the function’s activity. Better yet, to make end users co-creators of the communication approach itself.

Best practice organisations develop a communications monitoring toolkit to help better understand the organisational impact of communication, provide data for regular changes and improvements to the communication strategy and to enrich the advice and information that the function provides to the board.

To find out more, please contact andy.holliday@uk.pwc.com or telephone +44 (0) 207 804 1999 to speak to a member of the communications team.