Communication: employee communication linked to performance.

The sayings "talk is cheap" and "time is money" might apply in the real world, but in the financial world, they are quite the opposite. It seems that talk is definitely money, at least according to a new study by Watson Wyatt Worldwide.

The human capital and financial management consulting firm recently conducted research on U.S. and Canadian employers showing that effective employee communication is linked to a generally stronger financial performance. In fact, Watson Wyatt found that companies with the most effective communication programs:

* Returned 57 percent more to their shareholders between 2000 and 2004;

* Achieved a 91 percent total return to shareholders between 2000 and 2004;

* Are associated with a nearly 20 percent increase in market value; and

* Were 20 percent more likely to report lower turnover rates.

Not only did the study focus on how these communication programs benefited the companies, but also on nine specific communication practices that contributed to the companies' success.

Effect of Communication Practices on Market Value

Communication Practice                      Estimated Increase

Drive managers' behavior to communication    3.8%
Connect employees to the business strategy   3.7%
Follow a formal communication process        3.4%
Facilitate change                            2.8%
Create employee line of sight                2.1%
Focus on continuous improvement              1.5%
Use employee feedback                        1.3%
Integrate total rewards                      0.4%
Implementation of leverage technology        0.4%
Total                                       19.4%