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Executive Summary: Internal Communication

Date: December 18 2006

Recognizing that internal communication is more important than ever, organizations have invested in new information technologies and raised the profile of their communication professionals. Despite these efforts, however, an array of factors continues to hinder effective communication in many companies.

One important factor is that there seems to be a significant difference between the effectiveness of the messages employers believe they are delivering and what employees hear. Senior-level managers often assume that their communications are well received and, more importantly, understood by workers. Results of a 2003 survey conducted by survey firm RoperASW show, however, that while 55% of surveyed managers said they believe they communicate well with workers, only 35% of those workers concurred.

Part of the manager-employee communication gap may be related to credibility. A recent Towers Perrin study found that only about half of surveyed employees actually believe what their organizations tell them. And of particular concern is that the study found that workers with longer tenures are less likely than newer employees to view their organization's communications as credible.

Another factor presenting a communication challenge is diversity, including the multigenerational nature of today's workforce. A 20-something worker, for example, may hear a message differently than his or her 50-something colleague due to different values, experience and expectations. Employers need to be mindful of such differences when sending out new messages and meeting with employee groups.

A fourth factor is that today's wonderful new communication technologies are a double-edged sword. The introduction of electronic mail to the workplace has increased speed and overall communication and indeed has become the most preferred method of workplace communication. But reliance on electronic communication may dehumanize a workplace by cutting down on the "face time" workers have with their colleagues and supervisors and increasing periods of isolation for workers.

Advances in communication technology have also contributed to the creation of the "instant" workplace culture that ratchets up pressure to respond rapidly, reducing the time needed for creative reflection. The continual bombardment from telephones, faxes, intranets and e-mail may create a frenetic pace. Many workers complain of information overload, saying that sifting through the mass of daily communications that accumulates on their desks sometimes overtakes their primary work and, ironically, hinders quality communication.

Failing to address such communication problems can seriously affect the bottom line. A recent study of 267 U.S. companies conducted by Watson Wyatt indicates that companies with especially effective communications programs "provided a 26% total return to shareholders (TRS) from 1998 to 2002 compared to a -15% TRS experienced by firms that communicate least effectively." Further, the Watson Wyatt data indicates that making significant strides in improving communications can enable companies to realize a "nearly 30% increase in market value." Noted Kathryn Yates, one of the co-authors of the Watson Wyatt study, "The bottom line is that employee communications is no longer a 'soft' function but rather a business function that drives performance and contributes to a company's financial success."

One reason for communication's impact on the bottom line is its effect on commitment and retention. Based on results of a recent study, Mercer Human Resource Consulting asserts that employees place such a premium on effective workplace communications that it is often the deciding factor on whether they stay in a job - more so than even pay rates. "Clearly, employees value effective communication with their employers. It affects their overall commitment and satisfaction, and it is a factor in their decisions to stay with or leave an employer," said David Slavney, a senior communication consultant with Mercer.

Recognizing communication's importance, many companies have expanded their role of communications executives. Many such execs report that their jobs are becoming "increasingly complex" (86%) and "at least somewhat more difficult" (82%), according to a 2003 survey conducted by KRC Research for Weber Shandwick. The survey also shows that respondents are more directly involved in management and governance issues than they have ever been before.

To have full access to this report, become a member of i4cp today at

The Institute for Corporate Productivity (i4cp, inc.) improves corporate productivity through a combination of research, community, tools and technology focused on the management of human capital. With more than 100 leading organizations as members, including many of the best-known companies in the world, i4cp draws upon one of the industry’s largest and most-experienced research teams and Executives-in-Residence to produce more than 10,000 pages annually of rapid, reliable and respected research and analysis surrounding all facets of the management of people in organizations. Additionally, i4cp identifies and analyzes the upcoming major issues and future trends that are expected to influence workforce productivity and provides member clients with tools and technology to execute leading-edge strategies and "next" practices on these issues and trends. i4cp is a for-profit company with offices in St. Petersburg, Florida.


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