A world of difference: a new study by Watson Wyatt Worldwide finds that successful companies recognize the value of global internal communication and develop policies to make it happen.

We used to say that mailing isn't communicating. Mailing out a newsletter or an announcement is no guarantee your message will be heard. With the advent of the Internet and the shift to online communication, we have learned that posting isn't communicating either. Just because information is available online doesn't mean employees will find it, read it and do the right thing because of it.

As enterprises have expanded their global presence, we've realized that this same principle holds true for global communication--namely, translating isn't communicating. Effective communications are those that are customized for the country, culture, business unit and audience. To be successful you need to craft your corporate message for a global audience, not just translate it into 10 different languages. And you need to help in-country managers interpret and deliver the message.

Many multinationals, however, are struggling with these challenges. And, by their own admission, they are not doing a very good job in the area of global internal communication.

Reality and opportunity

The Watson Wyatt 2005/2006 Communication ROI Study substantiates what internal communicators have advocated for years: Organizations that excel in the area of internal communication also excel in financial performance. The study found that companies with highly effective communication practices have a 19 percent higher market premium, 57 percent higher shareholder returns over five years, and a level of employee engagement that is 4.5 times higher than that of the competition.

However, the study also found that most companies that compete in the global marketplace--even those that demonstrate a high degree of communication effectiveness overall--report that they are falling short when it comes to global communication. About 60 percent of the 335 North American companies that participated in the study have global operations. As the chart at left shows, only three out of 10 of the participants with global operations designate communication resources in other countries.

"Based on what we're seeing, the reality is that the majority of the global companies in the study still don't have a documented internal communication strategy at all, though many are working to put one in place," says Kathryn Yates, global practice director for communication consulting at Watson Wyatt. "They understand that global communication is vital, but often don't have the resources or experience to address global concerns, which include multiple languages, diverse cultural norms, and compliance and legislative differences."

According to Kathy Kibbe, a Watson Wyatt communication divisional practice leader, today's global enterprises are at a crossroads. "There's an incredible need for speed in communicating corporate messages, and we have the technology to distribute information instantly on a global scale," she says. "But this ability to communicate quickly could become a business risk unless we deliver messages in a way that resonates with the global workforce. Companies that do it right have the potential to clearly differentiate themselves from their competitors."

But what is the "right" way? Communication professionals recognize that effective global communication drives employee engagement and, as a result, enhances overall financial performance. Many communicators are already taking steps to incorporate the global perspective and ensure that communication programs address the needs of diverse geographies and business areas. Some are in the early stages of this effort; others have implemented sophisticated strategies not only to communicate globally but also to measure performance. Whatever stage your organization is in, you can learn from the experience of communicators who are leading the charge toward effective global communication.

Global input, global buy-in

Leading pharmaceutical manufacturer Astra-Zeneca has invested time and money in developing a dear, concise global communication strategy that includes rigorous processes to measure communication effectiveness. "One of the biggest challenges we faced is that, being a global enterprise, we had to meet the needs of very separate business areas," says Katharina Auer, head of global internal communications in AstraZeneca's corporate affairs department. "We had to create an internal communication strategy that all business areas could buy into and that they could leverage and adapt to build local communication strategies."

To accomplish this task, AstraZeneca established a dearly defined internal communication function that comprises a core team to manage global strategy and provide tactical communication delivery at corporate headquarters; an internal communication leadership team (ICLT), which is responsible for global strategy development and functional/local delivery; and a worldwide network of representatives who are responsible for internal communication in their respective sites or countries. ICLT members worked closely to develop the global strategy, meeting in person to examine the business strategy and map out what it meant in terms of communication. The result was a set of communication objectives that was acceptable to all business units.

Multinationals are quickly learning that a one-size-fits-all approach to communication doesn't work in the global marketplace. Effective communication is tailored to individual locations and business units. Yet the study found that less than 22 percent of high-effective-communication companies and less than 10 percent of low-effective-communication companies customize the corporate message for the global workforce. Too many companies develop messaging with the home country in mind and hope that it works on the global stage. Instead they need to solicit input from people around the world and develop messages that will be easy to interpret and adapt to cultural norms.

According to Adrian Cropley, chief executive officer of Cropley Communications Pty Ltd. in Melbourne, Australia, incorporating global input into corporate messaging is vital to overcoming resistance to change. Cropley headed up employee communication for a leading European-based provider of telecommunications products and services in the Australia/New Zealand/Pacific Islands market. "One of the things this company did right from the very beginning was to invest in bringing people together from around the world and giving them an opportunity to exchange ideas and develop personal relationships," he says. "Through that process, communicators at headquarters and around the world became aware of the issues within each market, and the strategy we developed met the needs of all markets. Everyone felt they had a role in the process, so resistance to change was minimized."

Elizabeth Cabell, global director of internal communication at Jabil Circuit Inc., a leader in the electronic manufacturing services industry, says that her No. 1 rule for effective communication is to solicit input and feedback. "You need to do a lot of up-front work to find out what the needs and issues are," she says. "We even do polling of employees to find out what kinds of news they want to see on our internal web site. This helps us ensure that the information we're providing is relevant."

Tools and training

The majority of multinationals don't have dedicated internal communicators around the world to deliver messages. Many rely on local managers to interpret and deliver messages. Yet they provide little if any training and support for these people. Moreover, they typically do not have processes in place to ensure that messages are actually delivered and understood.

Jabil Circuit collaborates closely with its local human resources managers to ensure effective delivery of corporate messaging. Approximately 70 percent of this St. Petersburg, Florida-based company's 65,000 employees are outside of the U.S., which increases the complexity of global communications. The company ensures that employees at all levels--from managers down to individuals on the manufacturing line--understand key messages by investing time and effort up front to bring local managers up to speed.

"We start with communication templates and detailed information on what the message is," Cabell says. "We make it an iterative process. It is key that they understand the concept and intention of the messaging or it will be impossible for us to achieve consistency. For example, we just had a telephone conference with local managers in China to discuss a global recruitment campaign we are preparing to launch. We asked many questions to help us gauge their level of understanding of the messaging. We also asked for feedback and asked questions about any cultural issues that might come into play."

Measurement

All the actions described previously--documenting a strategy, putting a communication network in place, tailoring messages, providing training and tools--will enhance your global communication effectiveness. But how do you prove to yourself and to your senior management that the effort was worth the investment? The answer is measurement. The study found that high-effective-communication companies are 26 times more likely to make extensive use of metrics to verify communication's contribution to business goals.

Auer, Cropley and Cabell are all strong proponents of measurement. "We measured at every opportunity, using mini-surveys after every forum or workshop, phone calls to local people to ensure we were reaching them, and detailed annual surveys of all employees," Cropley says.

"When we launched our global employee survey, our CEO wanted to reach as many people as possible," Cabell says. "We created a personal e-mail invitation to all employees asking them to participate. That investment paid off. We had a remarkable 83 percent response rate." In addition to this comprehensive annual survey, Jabil Circuit polls a sampling of employees quarterly to help determine if people are receiving, understanding and embracing messages.

AstraZeneca conducts quarterly surveys, tracks online user statistics and occasionally conducts telephone interviews of individual employees to gauge effectiveness. From these quarterly surveys and telephone follow-up efforts, Auer develops a scorecard that feeds into the overall business performance report that goes to senior management and the board. One of Auer's major goals is to leverage this survey to track employee engagement against performance. "In the not-too-distant future, we hope to create an overall engagement index and use relevant internal performance data to measure engagement within individual business units and determine its impact on the unit's performance," she says. "We also measure ROI on individual projects and tactical efforts whenever possible so that we can eliminate programs that don't add value."

Operating in the global economy is complex, and some multinationals now have more employees outside than inside the borders of their home countries. The decentralized nature of most multinational companies hampers communication efforts. Savvy companies, however, are finding innovative ways to overcome these challenges. Their efforts are motivated by the recognition that improving global communication improves financial performance. The investments they make toward improving communication effectiveness will offer significant rewards in the future, enabling them to increase market premium and shareholder returns as well as strengthen employee engagement.

About the study

Watson Wyatt Worldwide conducted the groundbreaking 200312004 Watson Wyatt Communication ROI Study to identify the communication practices that deliver the highest return. The study showed a strong correlation between communication effectiveness, organizational turnover and financial performance. The 2005/2006 study confirms the findings of the initial study and goes on to show that effective communication is a leading indicator of an organization's financial performance.

As a starting point, researchers identified eight goals of communication effectiveness:

* Helping employees understand the business.

* Providing employees with financial information and objectives.

* Exhibiting strong management leadership during organizational change.

* Aligning employee actions with customer needs.

* Educating employees about organizational culture and values.

* Explaining and promoting new programs and policies.

* Integrating new employees into the organization.

* Providing employees with information on the value of their total rewards programs.

Researchers then developed questions around each goal and assigned an effectiveness score to each participant based on responses. The top one-third of participating companies were designated as organizations with highly effective communication practices; the middle and bottom thirds were categorized as medium and low effectiveness, respectively.

The 2005/2006 study included U.S. and Canadian companies and incorporated questions related to global communication. Of the 335 participants, 75 are in Canada. Roughly 60 percent of participants work for global organizations. In terms of the overall results, the Canadian responses tend to be more similar to than different from the U.S. results, and no difference was found between the U.S. and Canada in correlating a company's communication effectiveness with increased market premium.

Results

The 2005/2006 study reveals a strong connection between effective internal communication and financial performance:

* Increased shareholder value. Companies in the high-communication-effectiveness category experienced a 57 percent higher total return to shareholders during the five-year period from 2000 to 2004 compared with companies ranked as having low communication effectiveness.

* Higher market premium. Market premium, which measures the extent to which the market value of a company exceeds the cost of its assets, represents the market's assessment of an organization's ability to generate future profits from brand equity, human capital and other intangible assets. The study found that a significant increase in communication effectiveness (one standard deviation change) is associated with a 19.4 percent overall increase in market premium.

* Lower turnover. Companies with high communication effectiveness are 20 percent more likely to report lower turnover rates than their peers. As a result, they spend less time and money on recruiting and training, and they benefit from a skilled, motivated workforce that understands the business and keeps things operating smoothly.

John Finney is a senior communicator in Watson Wyatt's Detroit, Michigan, office and research champion for the firm's global communication practice. Finney co-authored the 2003/ 2004 and 200512006 editions of Watson Wyatt's Communication ROI Study, and he has more than 20 years of experience in consulting and corporate communication. He is a past IABC chairman and a frequent speaker on the topic of business communication.

Communicating with global employees/operations

COMMUNICATION BEST PRACTICE                   PERCENTAGE OF EMPLOYERS

Requires business unit or local manager to
customize corporate messages                                      31%

Designates communication resources in other countries             30%

Shares best practices with global communication colleagues        21%

Maintains global communication committee/advisory group           20%

Establishes documented global communication strategy              18%

SOURCE: WATSON WYATT 2005/2006 COMMUNICATION ROI STUDY