Employers that develop a solid employee communications strategy can improve both employee engagement and the organization's bottom line, consultants and HR managers confirm.

A study by Watson Wyatt shows that companies with the most effective employee communication programs provided a 91% total return to shareholders, compared with 62% for firms that communicated least effectively.

Data reported in "Secrets of Top Performers: How Companies With Highly Effective Employee Communication Differentiate Themselves" also confirms companies that communicate effectively are four times as likely to report high levels of employee engagement than those that do not.

Employee turnover reduced

When Kruger Products experienced significant corporate changes, it quickly became apparent that a more robust employee communications program was required.

The company, formerly known as Scott Paper, manufactures facial tissues, bathroom tissue and paper towels. Well-known brands Cottonelle and ScotTowel were acquired in 1997, and the trademark on those popular brands was due to expire in 10 years.

So in 2004, the company began a major, three-year initiative that included changing its name from Scott Paper to Kruger Products and relaunching several of its products under new brand names.

But the changes didn't happen overnight, and they certainly didn't come without a price.

Faced with massive change, employees were feeling uncertain and unsettled. In 2005, employee turnover was at an all-time high of 14.2%. Alex Teijeira, director of human resources and legal counsel for Kruger Products, decided that something had to be done to address the high turnover.

Teijeira's ultimate goal was to build a human resources strategy that was both aligned with the organization's goals and also based on employee feedback. An engagement survey - undertaken in the summer of 2006 with the assistance of Watson Wyatt - was not an easy sell.

"It was a tool they [senior executives] were not accustomed to, and they weren't sure of the benefits. Budget and cost were also a concern," he says. Ultimately, the survey showed that employee communication was a key area Kruger Products needed to improve upon.

"At a cocktail party, everybody will nod their head and agree that yes, communication is really important in the organization. But when they get back to their desk, in the meeting with the finance guys, and they're doing the budget, that's typically the place they find easiest to cut," says Jacqueline Taggart, a senior consultant in the communications practice with Watson Wyatt in Toronto.

In response to results of the engagement survey, Kruger Products decided to develop a corporate intranet in order to enhance employee communications. "It was easy to implement and has yielded strong results," says Teijeira.

"We've provided a forum for employees to communicate, receive and exchange information with both the company and senior management. In addition, we've built a very good performance management system with the incentives that come with it," he adds. "Not only did we bring down turnover, we've been able to provide the employees with a communications platform that helps them make the decisions that are right for them."

In the six months since Kruger Products launched its intranet, Teijeira says every one of the company's 2,500 employees has visited the site at least once a month to learn about the company or to download benefits forms. Even at the height of summer in July, the site had a record number of hits.

"With communications and telling them our strategic plan and listening to them, we were able to show employees the organization has a lot to offer," he continues.

The improved effectiveness of its communication efforts has also had a direct impact on Kruger's bottom line. The organization has managed to lower its employee turnover by 10% and increase employee engagement.

Flight Centre North America goes face to face

While a corporate intranet has worked wonders for improving employee communication at Kruger Products, Flight Centre North America - a travel agency with over 180 locations and 1,000 employees in Canada and the U.S. -believes that communicating with employees face to face helps differentiate them in a competitive labour market.

The company believes so strongly in the value of face-to-face communication that when new employees complete their three-month probationary period, the company flies them to the head office in Vancouver for a one-on-one meeting with one of the company's two internal financial consultants, known as "the Moneywise team."

"In our industry, the travel agents are inundated with information all the time," says Allison Eaton, communication manager with Flight Centre North America in Vancouver. "There's so much information out there that often if you send them a document like our benefits booklet, they're not going to sit down and read it. And it's a shame because 90% of the time they don't realize what's available to them."

As a result, Eaton says, "Having the Moneywise team actually sitting down with [employees] can make it more personal."

At the hour-long meeting, new recruits learn about the company's entire benefits package. And members of the Moneywise team travel to the company's various locations every six months to answer employee questions and deliver key messages.

"Whenever someone from head office goes to the shops, it's remembered. People make those comments all the time," comments Eaton. "That makes a huge impact - that they're important enough that the company's doing this. It's really easy to send an e-mail and it's really easy to be on the phone, but we try to fall back on that as a last-case scenario."

Lessons learned

Kruger Products and Flight Centre North America demonstrate that effective employee communication has a direct impact on the way employees view the company for which they work.

Taggart believes that no area of a company's operations should be immune to good suggestions.

"Let's say some employees would like to have the option to pay for pet insurance because it's expensive and it would be easier to budget for if it came out of the flexible lifestyle account," she says. "You can test that and, if your audience feels that's a valuable thing to add, why not have it?"

And with today's technology and many organizations' online capabilities, surveying employees doesn't have to be cumbersome or expensive.

"You want to keep surveys short, you want to keep the questions clear and concise, and you can hit them through an e-mail or an intranet and get your responses tabulated quite quickly," says Marina Scassa, director, communication and sales support with Buck Consultants in Toronto.

Ultimately, effective employee communications can help a company improve its bottom line. Just ask Teijeira. "We brought down the turnover. That's a direct impact on the bottom line," he says. "No. 2, we've brought up the level of engagement. As far as I'm concerned, it's all attributed to two things: listening to your employees and communicating with them."

The quest for effective employee communication

Establish a strategy: "A lot of plan sponsors see communication as just a legal or fiduciary responsibility. But that's not going to necessarily be in line with their business goals or their business strategy," says Marina Scassa, director, communication and sales support with Buck Consultants in Toronto.

So, for example, if your goal is to grow your business by 10% over the next two years, what you communicate about your benefits package is very important because if employees don't understand how good their benefits package is, they're less likely to stay, which will be counter-productive to growing your business, she suggests.

Know your demographics:When planning your strategy, consider your demographics. Some companies have a younger workforce while others skew older. An office environment might need a different type of communication than a retail or manufacturing environment.

Target your communications: Generic benefits booklets are on their way out. "Take a step back and make sure you're communicating with employees in a manner that they need to hear the information in," advises Scassa.

Measure your success: This one is easier said than done. But Scassa says there are tangible ways to measure the success of various communications pieces. "Sometimes it's a bit difficult to quantify, but you can measure improvements in morale, you can measure hits to a Web site, you can measure questions to a help line, those kinds of things."

Ask employees what they want: "They'll be very honest with what they like and don't like," says Flight Centre's Eaton. Teijeira agrees. "We didn't change the world. We just listened to them [employees]," he says. "The best way to listen to them, I believe, is through an engagement survey."

By the numbers

The 2007/2008 Watson Wyatt Communication ROI Study collected data from 264 companies globally, with 17% of participants from Canada.

Survey results reveal:

• High-effectiveness companies are 14 times as likely as low-effectiveness companies to help their managers to understand, embrace and deal openly with resistance to change.
• High-performing companies are 10 times more likely than low-performing companies to give their employees a voice.
• While electronic communication continues to be the dominant channel for reaching employees across geographies, the study shows a slight increase in face-to-face communication.

Andrea Davis is an experienced benefits journalist. Begininng with the November/December issue, she will be Managing Editor of Employee Benefit News Canada. She can be reached at mailto:andrea.davis@sourcemedia.com.