Effective Communication: A Leading Indicator of Financial Performance - 2005/2006 Communication ROI Study™
Research Report November 2005
View the latest 2009/2010 Communication ROI Study Report .
This report summarizes the findings of our 2009/2010 multiregional study. It identifies what the companies with highly effective communication practices are doing to inform and engage their employees in challenging economic times, and shows how these practices vary around the world.
Effective communication is the lifeblood of a
successful organization. It reinforces the
organization’s vision, connects employees to
the business, fosters process improvement,
facilitates change and drives business results
by changing employee behavior. No matter
how you look at it, communication is an
important part of the business landscape and
cannot be taken for granted.
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.
- 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
Other Survey Findings
- 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.
- Global firms are not customizing their
messages to meet local needs or cultural
- On average, firms within the financial and
retail trade sectors rank among the most
effective communicators. Health care,
basic materials, telecommunications and
other service companies rank among the
least effective communicators.
Comparing the 2003 and 2005/2006 Studies
The 2005/2006 study sought to confirm
findings from the 2003/2004 study. Additional
questions focused on employee engagement,
global communication, the relationship
between the communication function and
senior management, and new communication
tools and technology. Compared to the
2003/2004 study, the 2005/2006 study found
- An 8 percent increase in companies relying on a reactive approach to communication
- A 10 percent increase in companies using formal communication measures
- An 18 percent increase in companies in which communicators play a lead role in managing the content of the intranet