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Budgets
- Communication Budgets as a Percentage of Business Revenue

Business Outcomes Affected by Communication
- The Sears Study

Communication Effectiveness Audits
- Elements of a Communication Audit
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Conducting a Needs Analysis
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When (Not) to Survey and the Role of Third Parties
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Measuring Messages
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Published Research on Employee Communication
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Tracking Information Flow
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Measuring Real Knowledge

 

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Communication Budgets as a Percentage of Business Revenue

Q: I am communications manager for a global chemical company and am putting the final touches on communications budgets for each of the businesses I support. I am also championing an overall communications budget for the enterprise. Is there a general rule of thumb I can use with executive management that speaks to how much percentage communications monies (budget) should be put forth in relation to annual revenue?

Thank you.
Eric Anderson

A: Dear Eric:

You might want to check out the website  . They recently conducted a study of how much various companies spend on different aspects of communication. They even were able to show that the companies with the best reputations spent more per capita than other companies.

Another source to check would be the Public Affairs Council in Washington, DC. They do annual benchmarking studies that include budget issues.

My own advice is that the amount of money that should be spent needs to make sense relative to the nature of the business. For example:

  • Public corporations will need to spend more than privately held ones.
  • Consumer-focused companies will need to spend more on external communication than wholesalers.
  • Service companies should spend more on employee communication than manufacturers because so many more employees have unsupervised direct contact with customers and prospects; they need to be far better informed on a wider variety of issues.
  • Decentralized companies need to spend more than centralized ones in the same industries.
  • Companies with more locations need to spend more than those consolidated within a few places.
  • Companies in industries prone to crisis communication, such as yours, need to invest more heavily because of the operational costs if communication in crises isn't well planned or executed.

So, while you should gather the benchmarking data in the places I suggested, temper your recommendation with this type of analysis of your own organization.

Good luck,

Angela D. Sinickas

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The Sears Study

Q: I was wondering whether you could help me find some research. Specifically, I am looking for information on Sears. I read bits and pieces here and there about how they used communication to turn themselves around. Apparently, Sears has documented a correlation between improved communication and improved performance. Do you know where I can find out more about this? Would also be interested in any other similar research involving other retail companies

Thanks,

Heather

 

A: Dear Heather,

The most complete write-up I've seen of the Sears research was in an article in the Harvard Business Review about three years ago. In essence, they found that if they could improve the scores on certain employee satisfaction questions (some related to communication) by 5%, it would improve the scores on customer satisfaction by 1.3%, which would bring in 0.5% more on the bottom line. They were able to prove the connection because they could measure all three factors in every store location, which allowed them to do some very solid statistical correlations.

About 10 years ago, Brad Whitworth at Hewlett-Packard found a statistical correlation between employees' satisfaction with face-to-face communication with their supervisors and those employees' productivity and intention to stay with the company, both of which are measurable bottom-line issues. You can read more about that in an article Brad wrote in IABC's Communication World in December 1990.

Professor Daniel Denison at the University of Michigan did a study described in his book Corporate Culture and Organizational Effectiveness (published by Wiley-Interscience in 1985) that found a correlation between companies' information-sharing practices and their return on investment and return on sales.

Finally, I just heard a presentation by Jack Bergen, president of the Council of Public Relations Firms, showing research correlating how much companies spent on various aspects of communication with other measures of organization success. His data show that employee communication makes a huge difference. I believe some of the data are available for viewing online at www.prfirms.org.

Angela D. Sinickas

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Elements of a Communication Audit

 

Q: I have an opportunity to design and implement a thorough audit of employee communications for the quality department at a major pharmaceutical corporation. I've never done one of these. Can you help me get started?

Thanks.

Clark Miller

 

A: Dear Clark:

An internal communication audit can include several or all of the following steps:

  • Review of previous research on communication
  • Executive interviews to determine what they consider ideal communication and how they evaluate the current communications
  • Employee focus groups to obtain answers to open-ended questions about ideal and current communications
  • A survey to quantify many of the issues identified from executives and employees, such as levels of interest and understanding about key messages, current and preferred sources for each message, access to various communication channels, overall value of each channel, ideal frequency of each channel, effectiveness of communication skills for supervisors/managers and executives, and a host of other more broad questions about credibility, accuracy, timeliness, etc., as well as more focused "readership" type questions about a key channel or two.
  • In-depth research about specific key channels. For example, a content analysis comparing the actual coverage of topics in a publication or a website against the ideal topics it should be covering, reading grade levels of the writing, Starch Tests of aided and unaided recall, objective assessment by outsiders of content/format, usability testing of intranets, etc.

I hope this provides an overview for you. Good luck and have fun!

Angela D. Sinickas

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Conducting a Needs Analysis

 

Q: Assessing the value of internal communications is one thing, but assessing needs is quite another. I'm charged with assessing needs, as it turns out, and am looking for a solid approach. My obstacles? I'm not a trained survey designer and I can't hire a consultant. Assets? I can make use of a trained survey designer - but only when I'm ready. This is another "how to get started" question and, if you're able, I'd be grateful for a few starting points or questions to ask. Thanks very much in advance.

Kristin Espeland, Manager, Internal Communications

 

A: Dear Kristin:

A needs analysis isn't terribly different from a communication audit. The first time you conduct a communication audit, while you are developing a baseline measurement of what is working, you are also identifying what audience needs are not being met. You might want to take a look at the other responses in the communication audit section for more specific information on the types of questions to ask.

You could ask these questions of executives and employees in an open-ended discussion for a needs analysis. Of course, if you don't have very many communication channels right now, rather than asking about how useful the channels ARE, you would instead ask how useful something like that MIGHT BE, how long it should be, how frequent, etc. You can also ask what the negative business impact has been due to a lack of communication. This can help you quantify the financial cost of not spending money on communication, which will help you justify a larger budget for the communications recommended as a result of the needs analysis. Let me know if you have more questions on any specific aspects of this.

Angela D. Sinickas

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When (Not) to Survey and the Role of Third Parties

 

Q: I am a survivor of a merger of four regional airlines in Canada. As the sole body in charge of employee communications for an organization with 6,000 employees based in dozens of communities from coast to coast, I'm feeling just a tad overwhelmed. I have been tasked with a number of challenges, not the least of which is conducting an internal communications audit.

My question is this... is there ever a wrong time to conduct a communications audit? I mean the organization structure is yet to be finalized and employees are leaving the company or moving into new areas on a daily basis. Results are bound to be skewed by a significant number of people who will not be around in two months. As well, the prevailing gloom and doom brought on by months of uncertainty and stress is likely to abate somewhat as the dust begins to settle.

Another big question... by nature, should not an audit be performed by an impartial third party instead of the very people (person) who produce(s) internal communications? Any advice or hints on how to begin, where to look for these answers, and audit resources would be much appreciated.

Flying without a copilot

 

A: Dear Flying,

First, let me say I really empathize with you. I've been in similar situations, and it's rarely very satisfying, but it does provide for lots of good experiences to trade on later! Yes, many parts of a communication audit should be done by an outsider for maximum objectivity and candor, such as executive interviews, employee focus groups etc. Sometimes the third party also brings expertise in things like developing questionnaires and interpreting survey results where the issue isn't so much objectivity as it is experience in knowing what to ask and how to analyze what's meaningful and what is just so much noise.

On the other hand, there are a lot of measures that you CAN conduct yourself (assuming you have the spare time!) because the measures are objective by definition. For example, you could conduct a content analysis to see what types of information you have been covering in a publication or your intranet site and how well that compares with your organization's objectives, geographies, business units, etc. You could also install software on a web site that measures many aspects of user usage.

As far as the right time to measure, it depends on what you're measuring. If you want to find out how satisfied employees are overall with communication, they're probably at a low point now. That means it's the perfect time to measure if you want to establish a low baseline now to show how much improvement you make in the future. It's the wrong time if you want to show why you should get a big pay increase right now.

However, most communication audits identify not just satisfaction, but actual patterns of current and preferred communication. That information could be invaluable right now to make sure everyone is getting what they need, the way they need it, as soon as possible to help the company get profitable again quickly. Also, I don't know about Canadian tax laws, but in the US, many types of research related to a merger are tax deductible under very favorable conditions if they are conducted within a short time of the merger.

For more information on where to start, you might want to look at some of the other Qs & As in this section on communication audits. Best of luck, and may you have a strong tail wind!

Angela D. Sinickas

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Measuring Messages

 

Q: I am researching best practices in communications measurement to identifying when employees are receiving key messages and when they are not. Kind of a "stealth bomber" approach to the usual measurement and metrics. My organization is rolling out a new organization design and we are looking for new ways to help determine if employees are receiving critical messages.

Thank you in advance for your help.

Catherine Tornero

 

A: Dear Catherine:

I can suggest a number of different ways to see if your employees are getting the key messages you are sending them:

1. Are they physically getting it? I find that all too often the average employee doesn't have access to the channels of communication that are carrying the messages. Before checking anything else, you might want to check your distribution channels. What percentage of employees don't have access to staff meetings? They'll never have a chance to hear the key messages traveling through the so-called "management cascade" of information. What percentage has access to email or the intranet...and what percentage actually checks those two sources? I think you get the idea.

2. Take small groups of people who have seen/heard a particular channel that is carrying the key messages heavily. Ask them all the messages that they recall from the latest publication, meeting, video, etc. This is "unaided recall." Then ask them to go through a list of messages, articles, etc. while referring to the original communication vehicle and have them identify which messages they now recall. You can then ask them what made the difference in the way information was presented that helped them recall some key messages but not others. This is known as "aided recall."

3. On a survey, ask people how interested they are in each key message and how well informed they feel. The differences between these two will be the size of your information gaps. This also will help you identify topics where two messages might have the same size gap, but the interest level in one might be lower than the other. To improve people's information level in this case, you might first have to increase their interest level to get them to pay attention to the messages in the first place.

4. You can also create a knowledge test, either True-False or multiple choice, about the key messages. This tells you more than the responses to #3 above. People sometimes feel well informed, or think that they understand something very well, but they may not really know the facts. Seeing if knowledge levels improve after particular communication campaigns will tell you how well the messages really got through. You can administer the knowledge test on an ongoing basis by phone, or email or paper. One company turned a knowledge test into a contest. Everyone who knew the right answers received a prize. Of course, publicizing this contest gave more people an incentive to learn about the key messages, which is the whole point anyway!

I hope this gives you a few ideas to get started on. Let me know how it goes.

Angela D. Sinickas

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Published Research on Employee Communication

 

Q: I have the 1999 Communication study from IABC/Watson Wyatt, but would like to consult other research results.

Do you know of any which would give us insight on some of the following topics: satisfaction level of exchanges between top management and employees; perceived consistency between messages sent by management and their actions; percentage of employees who know and understand their companies' strategic directions, annual objectives; percentage of employees who understand how their work contributes to reaching their company's business objectives.

Also, I remember seeing some 10 years ago a study on preferred information sources of large company employees (i.e. top executives, immediate supervisor, union representatives). Have you ever heard of it or of a similar more recent one?

Thanks for taking the time to help!

Lise St-Arnaud

 

A: Dear Lise,

The study from 10 years ago you are referring to is probably a survey sponsored jointly by the International Association of Business Communicators (IABC) and Towers Perrin over a period of time starting in the 1980s. The overall findings were that employees said they currently receive most of their information through the grapevine, but would prefer to receive it from their supervisors. HOWEVER, these are the answers provided for overall communication when respondents were allowed only one response for each question. (You might want to see an old IABC Communication World article I wrote in November 1992 that explains the problem with this question in more detail.)

In practical reality, employees currently rely on different sources for different topics, and prefer to rely on different sources by topic as well. The results vary quite a bit from company to company, and even at a single company over time as some channels become more or less effective for employees.

Beyond the IABC/Watson Wyatt survey you mentioned, another published survey report that might be helpful is one done a couple of years ago by IABC/William M. Mercer, Incorporated, about communication of change at different companies.

However, the specific type of comparisons you're looking for tend to be proprietary to firms that conduct communication surveys for clients. For example, my own database has normative data on all but one of the questions you're asking about. To the extent that the questions you asked on your survey (and the response scales you used) are close enough, you could compare your results against other organizations in one of these databases. However, because the data are proprietary, you would need to pay for the comparative information you're looking for from survey firms.

Let me know if you need more information,

Angela D. Sinickas

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Tracking Information Flow

 

Q: The tradition to measure communication effectiveness is not very strong at least here in Finland. We measure many details but are not able to see how different parts depend on each other. My idea is that we can think also communication as a process where we have inputs, channels and outputs. We have to measure inputs and compare them with outputs to find out our effectiveness. Inputs could be money and resources BUT above all:

  • How strong is the agreement inside the organization when we talk about the goals of our communication (and that means agreement in different organizational levels) and
  • How our team (division etc.) is really working for that goal: do people have access to the knowledge they need, are there points (=persons) where information changes or stops etc. (Channels are, of course, the media and other ways to communicate and output is the change of action or awareness). Now I'm trying to work out some model to really measure (not only to describe) the information flow inside the organization: how our system works. Of course, I can describe who tells whom and what and that way try to find out the gaps in the information flow. But I think that it is not enough. I need some tools to do it differently. Any ideas?

PS. I'm sorry my English is not very fluent but I hope you can understand my problem (I'm not always quite sure I do.)

Leena Raukko

 

A: Dear Leena:

The topic you raise about information flow is an excellent one. Here are a couple of suggestions on how to quantify the flow in different ways.

Flow down the "cascade":

We all know that the information "cascade" down the chain of management doesn't usually work very well. One way to quantify where it is breaking down is to use a survey that quantifies the size of information gaps on different key topics (for more information, see my response to Clark Miller on communication audits elsewhere in this listing). If you are careful in developing your demographic questions, you could track where in the management chain the information flow is slowing to a trickle. For example, you might find the percentage of respondents who say they understand the company strategy well or very well is as follows:

  • 85% for senior management
  • 75% for directors
  • 65% for managers
  • 55% for supervisors
  • 45% for regular employees

This would indicate a gradual, but expected, drop through the cascade as information trickles down. However, here's what I've found for different clients:

  • In one case, only 51% of senior management felt they understood the strategy, while 30% of the employees did. This suggested that the communication group and the company's leadership needed to first communicate effectively with the senior management group on this topic. This was especially true because senior management was the single most preferred source of information on this topic for this company's employees.
  • In another case, information flowed down very well to the directors, but in focus groups directors said they clearly thought it was part of their job to filter the information they shared with their own direct reports. This was done with the best of intentions to prevent overloading their people with information they "didn't need." The people below them said they really did need much of the missing information. The directors' bosses, when asked in executive interviews, were adamant that directors did not have the option of choosing how much to pass on to their employees when senior management expected them to share something.
  • In a third company, the senior leaders had a high level of understanding, but it dropped sharply below them. In interviews, several of them said, without any prompting, that they themselves were part of the communication problem. They rarely passed on anything to anyone on their staffs after their monthly leadership team meetings. They hoped the communication department would find a way to "work around" the executives.
  • In a fourth company, middle managers at headquarters and regional offices had significantly less understanding of company goals than the plant managers. This report has just been finished. Because we haven't done any follow up focus groups, we don't yet know if this is because senior management tends to talk directly with plant managers, or if the corporate managers are so close to the leadership that they keep hearing conflicting versions of company goals, or if the plant managers are mistaken and only think they know something that they really don't!

Flow among departments:

Another very important type of flow is information sharing between pairs of departments. Typically, survey questions ask employees to rate how effective communication is between work groups and within their own work groups. Usually the results indicate that there are more problems with communication between groups than within groups. The problem is that this type of question doesn't help us fix the problem.

On some of my surveys, we have identified which specific pairs of departments have the greatest number of people reporting problems. What's interesting is that usually only one of the two departments in a pair will report a problem and the other one will not. Once you identify the biggest problem areas, you decide in which of the problem areas a block in communication could cause a loss of revenue or an increase in expenses. For those pairs, you would then conduct interviews and focus groups to identify specifically what is causing the problem and what it would take to fix it.

I hope these two ideas help. By the way, in the 1970s a group called the International Communication Association developed something they called the ICA Audit, which is now available in the public domain for use by anyone. One of the five tools in the audit measured exactly how formal and informal communication flowed from individual to individual in an organization. However, because it was so specific, it was hard for employees to complete the form correctly and hard for the company to analyze and act on the results. But it inspired me to develop the inter-departmental flow type of questions on my own surveys. And at least one of the researchers who developed that instrument was a Finn, whose name I don't recall.

Let me know if you'd like more information on any of this,

Angela D. Sinickas

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.Measuring Real Knowledge

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Q: Can you please help me figure out how to measure what employees actually know versus what they "think" they know. For example, "85% of employees understand the organization's corporate strategy, etc." How do we know whether employees "get it" or whether they think they get it? Is it acceptable to actually test their knowledge by supplying say five choices for answers, three of which are correct? From your experience, do employees have any problems with this "testing" approach?

Many thanks for your assistance.

Cathy

 

A: Dear Cathy,

People's perceptions of what they know can be much higher than how much they really know. However, the perceived knowledge is also a very useful measure.

  • You want to see which subjects people feel they know more about than others. If they think they understand a topic very well, that might indicate that they are less likely to read an article, visit a website or attend a meeting on that topic, unless you find a way to intrigue them into learning more.
  • Also, tracking perceived understanding of a single topic over time can indicate whether your audience feels it is getting more information over time. This would be good to track against the volume of information you are sending out on that topic, and the channels you're using.

I absolutely recommend asking actual knowledge questions to track real improvements in understanding among your audience. This can be in the form of True-False or multiple-choice answers.

  • You can ask a couple of knowledge questions anonymously at the beginning of a meeting, training session, sales conference, etc. and then repeat them at the end of the session to measure the impact of that communication event.
  • Knowledge questions can be administered as part of a larger opinion survey or they can be asked one at a time just before you launch an informational campaign on a topic. For example, you could call 400 randomly selected employees and ask them up to three knowledge questions on a topic you're about to communicate heavily. This would give you a baseline to compare against during and after the campaign.
  • Depending on your audience's access to online communication channels, you could also administer these questions online.

I remember hearing about one company that turned a knowledge test into something very like a radio contest. They would randomly contact people either by phone or on the plant floor and ask them to name the three objectives for the year. Anyone who got it right won a mug, t-shirt, cap, etc. with the company logo and had their name put into a drawing for a really big prize. Obviously, news of the "contest" spread on the grapevine and everyone started studying so that they would know the right answers if they were called upon. This particular approach to measurement also has the advantage of actually improving the level of knowledge during the measurement process, which is the overall objective anyway. Even the company president got into the act and would ask employees the question when he was wandering around different work areas.

A few words of advice, though, on administering knowledge questions.

  • Be sure you know what the "right" answers are throughout the organization. I had one client where the corporate message was that a particular company initiative was NOT a cost-cutting program; however, during an in-house training session I conducted for them, we discovered that one of the business units was communicating to its employees that the initiative WAS a cost-cutting program.
  • It helps to introduce knowledge questions with a comment like: "The following X questions do have right and wrong answers. We're trying to find out how well the Communication Department has done its job of informing you about topics the company wants you to know about. Please circle the answers that you believe are correct. However, if you don't know, don't guess. Just choose the option that says 'I'm not sure.'"
  • The "I'm not sure" option helps provide you with richer data. First, you'll know how many people know that they don't know and might be more open to learning something about the topic. You'll also discover how many people think they know the right answer, but are wrong. They will be a tough audience to reach if they already think they know all there is to know on a topic. You may have to "market" the information to them in a way that reaches them before they know what hit them. The people who get the answer right is the number you want to track over time as a measure of the success of your communication program.

Angela D. Sinickas

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