Recently, I spoke to a group of HR managers at small to medium-sized technology companies about the importance of employee communications and how to get started in building a program. I recalled reading last week’s Welch Way article in BusinessWeek where Jack and Suzy Welch painted an ugly HR picture for the future as a result of the broad and deep affects of this recession:

“Now, you just don’t know what bad news awaits you when you arrive at work every day. The result? Many people have come to the conclusion that they don’t want to work for “the man” anymore. They want to work for themselves or someone they know and trust.”

In my talk to the HR group, I started by citing a recent study that demonstrates employees’ feelings about communication within their companies. As you can see from the slide below, most think their leaders should be talking more and over half had not heard from company leaders about the recent economy and its impact on their company or employees.

In the same article, Jack and Suzy Welch went on to say, “This recession has left a deep scar on the psyche of working people…companies can prepare now…teams will need to be smaller, organizations flatter, and the values of candor, informality, and innovation…baked in…People will need to feel that what they say matters, regardless of rank and title.”

And yet, company leaders struggle with communication. Why, you may ask? As John Baldoni, author of Great Communications Secrets of Great Leaders, says in his book, “The reason so many leaders fail at communications…[is because it] requires discipline, thought, perseverance, and the willingness to do it again and again every day.” The opportunity cost of time is measured in meetings with customers, presenting to investors, resolving issues in R&D, etc.

However, there are many examples where a direct correlation has been shown between managers’ investment in communication and the overall performance of the company. In one I shared, a professor at Cornell University and a colleague surveyed employees of a hotel chain to determine if their hypothesis that employees’ sense of management inconsistency harms profitability, (ie, “[aligning their words and actions in a way employees see, ...keeping their promises... not using “spin”]“). The findings of the study were “stunning”, as stated in the Harvard Business Review’s 2002 report:

“So strong was the link, in fact, that a one-eighth point improvement in a hotel’s score on the five-point scale could be expected to increase the hotel’s profitability by 2.5% of revenues—in this study, that translates to a profit increase of more than $250,000 per year per hotel. No other single aspect of manager behavior that we measured had as large an impact on profits.”

In another comparison, the Best Places to Work Institute in 2005 compared the stock performance of the 56 public companies on that year’s “100 Best Places to Work” list to the stock performance of the S&P 500 over multiple time periods. In every instance – 1, 3, 5, and 10 years – the “100 Best” outperformed the averages. As this performance demonstrates, if you are communicating with employees and building trust within your organization, you can build a maximum-performing work environment that delivers stellar financial returns.

So where do you start in building a long-term, effective employee communications plan? I offered 3 steps:

1. Assess what you are doing today
2. Prepare speakers
3. Get commitment and measure

First, assess how and when your leaders are communicating to employees today. Is it at regularly-scheduled quarterly intervals? Is it one speaker to a large group (ie, company meeting) or are you engaging managers to also speak in smaller groups? And how are you LISTENING to employees? As Jack and Suzy Welch said, “People will need to feel that what they say matters, regardless of rank and title,” and especially right now, in this recessionary  time of corporate mistrust, it’s more important than ever to listen and connect with employees.

Second, make sure your speakers are prepared. Leaders have to believe to be believable – if they don’t believe investing their time with employees is important, then everyone is going to know it. They will not only not be believable, they in fact can have a negative, damaging impact on management’s credibility. Leaders have to be consistent over time, and with other leaders who are also speaking throughout the company. The first wind employees get of mixed messages, distrust will build. Leaders also need to balance reality today with optimism and hope for the future – are there going to be layoffs, will my pay be reduced, will the project I’m working on be killed? – balanced with a vision of how the company is going to succeed.

Finally, you need to commit – identify gaps in your communications today, set goals and measurable objectives for moving forward, and then get started. Along the way, measure how you are doing to the plan. The Cornell Professor, Tony Simon, suggests, “…start [your] own self-examinations with frank employee surveys to see just how well [your] managers are walking the talk.” Put more resources behind areas that are working and make changes where things need to be improved.

Once you have a good plan in place, you can follow our Six Lessons in Employee Communications to effectively execute your plan. Over time, you will see that a commitment to consistently communicating with employees, including showing you are listenting, will drive results, keep morale and productivity high, and your turnover rate, and thus costs, lower.