Effective HR communications increases company value

Whenever your enrollment period occurs, communication is key. This article may help facilitate open communication for your business…
S. Donnell Masak

It’s open enrollment season, and communications is top of mind. We know that effective communications means the difference between success and failure of benefit plans, but a growing body of research from Watson Wyatt shows that effective HR-benefits communications also has a significant impact on a company’s market value.

Watson Wyatt has been conducting its “Communications ROI” study every other year since 2003 and was analyzing the 2009/2010 results at press time. John Finney, a senior communications consultant with Watson Wyatt, previewed some of the findings for EBA (EBN) in a Web seminar, “Communicating with employees about pay, benefits and the new employment deal,” on Sept. 30.

Finney’s first number — $663,168,000 — was a real attention-grabber. That’s the potential increase in company market value that would have been realized by the 50th company on the Fortune 500 list if it had implemented the best-practices communication methods identified in the study, he said. “Even if the improvement in market value was only 10% of that number, you could still build a credible case for investing in effective employee communications,” he maintained.

What differentiates companies with highly effective communications programs? Finney plucked these examples from the 2009/2010 survey:
• Highly effective firms are more than five times more likely to have a coordinated and branded approach to communicating the total value of their health- and wealth-related benefits.

• Sixty-two percent of highly effective companies have a clearly defined employee value proposition — they make sure that employees understand the value of their health care benefits, understand how pay levels are set and the company bonus program works, and appreciate the value of their pension program. In comparison, only 23% of the survey respondents whose communications programs ranked “low” have a clearly defined EVP.

• Sixty percent of firms ranked “high” based on their communications programs train managers on how to communicate the employee value proposition, compared to only 27% of firms ranked low. Fifty percent of the “high” companies train managers in communicating change, compared to 35% of the “low.”

Communication should be constant, Finney maintained, urging employers to define and discuss their employer “brand” year-round.
“Acknowledge that the employment deal is changing and help employees adjust,” he said. “Include what’s not changing in all change communications … Compare and contrast your employment deal with those of your competitors … Publish a total rewards philosophy — and walk the talk.”

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