How Communication Drives Performance

"Courage, innovation and discipline help drive company performance especially in tough economic times. Effective internal communications can keep employees engaged in the business and help companies retain key talent, provide consistent value to customers, and deliver superior financial performance to shareholders."
Watson Wyatt 2009

According to Watson Wyatt's newest communication survey for 2009/2010, companies that are effective communicators "have the courage to talk about what employees want to hear," "redefine the employment deal based on changing business conditions," and have "the discipline to plan effectively and measure their progress effectively."

Does this really matter? Yes. The study shows that companies that communicate effectively had a 47% higher return to shareholders over a five-year period (mid-2004 to mid-2009).

The link between communication and these three levers of performance—courage, innovation, and discipline—is a welcome one. These are themes that I have written about, taught and coached for years. Here is how you can utilize them in the workplace.

Courage. Watson Wyatt defines it as "telling it like it is." This is especially true when it comes to delivering straight talk. Shielding employees from bad news is akin to treating them like children; it says they are not "grown up" enough to handle tough stuff. So why do companies do it? One reason is because they feel employees will lose heart and then underperform. The Watson Wyatt study shows just the opposite. Tell people what they need to know and they will reward you with solid performance.

Innovation. The status quo is not working so companies must do things differently. While Watson Wyatt sets up innovation as something that will be done in the future, that is too late. Innovation must begin now, in fact it should never have stopped. Innovation is not something reserved for product development; it is really applied creativity. Given this definition, employees should be encouraged to rethink processes, streamline job tasks, implement productivity measures, and continue to think creatively.

Discipline. Troubled times call for accountability. Companies need, as Watson Wyatt points out, to set direction and take stock of how well they are doing. All too often plans are not communicated effectively and employees are given direction without context. They know what to do but not why. The why is important if you want to stimulate engagement, that is, gain share of mind and heart. The same applies to measurements. Bad news rolls down hill, but what about good news? When things are going well, too often managers neglect to inform employees. A firm communication plan, supported by updates on intranets, wikis, and even blogs, not to mention, email, can help let employees know how the company is performing.

Effective communication is not the sole solution to troubled times, but it may be the most effective way to ensure alignment. Listening plays a critical role too. It is well and good to disseminate information, but if you fail to listen to its echo, that is, how people feel about it as well as understand it, alignment may be doomed.

Integrating courage, innovation, and discipline into your messages may help your enterprise survive tough times, and give you a step up in good times too.
- Harvard Business Online November 20, 2009