Mar

24

Effective Communication: A Leading Indicator of Financial Performance

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The 2003/2004 Watson Wyatt Communication ROI Study™ demonstrated the correlation between communication effectiveness, organizational turnover and financial performance. The 2005/2006 study confirms our earlier study findings and goes a step further, by showing that effective communication is a leading indicator of an organization’s financial performance. Some of the key findings include:

  • Companies that communicate effectively have a 19.4 percent higher market premium than companies that do not.
  • Shareholder returns for organizations with the most effective communication were over 57 percent higher over the last five years (2000-2004) than were returns for firms with less effective communication.
  • The 2005/2006 study found evidence that communication effectiveness is a leading indicator of financial performance.
  • Firms that communicate effectively are 4.5 times more likely to report high levels of employee engagement versus firms that communicate less effectively.
  • Companies that are highly effective communicators are 20 percent more likely to report lower turnover rates than their peers.

An interesting finding from the research is that “two-thirds of the firms with high levels of communication effectiveness are asking their managers to take on a greater share of the communication responsibility, but few are giving them the tools and training to be successful.”

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