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Internal Communications Makes the Difference To Success

The United Kingdom would be up to £50 billion a year better off if organisations made a greater effort to communicate with their employees. Years of economic buoyancy and a ceaseless drive towards greater competitiveness have created a business climate where effective IC is no longer a luxury, but an essential. That was one of the key findings after Headlines Corporate News worked with University of Oxford psychologist Laura Godwin to create a definitive study of the role of internal communications.

The research identified a dramatic shift in corporate culture, driven by more than a decade of consistently improving economic prosperity.

It found that loyal and engaged employees are now a prerequisite for success - at a time when loyalty and engagement are in serious deficit.

The demise in the 1980s of the 'job for life’ culture was at first seen as benefiting business at the expense of workers. But, 20 years later, it has led to a new generation of ‘consumer employees’ who feel little loyalty to their companies and are happy to change jobs, as they would credit cards or mobile phones, to get the best deal.

Over the same period, intense competition and the advent of new technology and globalisation have made it increasingly difficult for companies to keep ahead of the market. The effectiveness of an organisation’s human resource - measured by the level of employee engagement - has become the defining factor in determining its success.

Yet the research found that the majority of UK organisations are being held back by a failure to engage their staff properly.

The results include:

  • higher staff turnover,
  • higher absence levels,
  • poorer performance,
  • a breakdown in the
  • customer relationships
  • and satisfaction,
  • significant costs and some missed revenue opportunities.

Among the key findings:

  • 85 per cent of UK businesses experienced difficulty in recruiting new staff in 2004
  • 77 per cent of employers find it difficult to retain staff
  • The average cost of replacing a member of staff is £4,800
  • 83 per cent of UK workers have such little commitment to their jobs they are ‘not engaged’ or ‘actively disengaged’.
  • The average UK employee misses 9.1 working days per year through unplanned absence;
  • Disengaged employees cost the UK between £39 billion and £48 billion per year.


The research called upon the expertise of occupational psychologists - and the experience of many leading organisations - to provide hard evidence of the link between internal communication and performance.

It discovered that communication is the most significant factor in maximising the potential of employees - more important than pay or other benefits, which are increasingly taken for granted. Effective communication ensures ‘buy-in’ to the company message and therefore employee engagement.

As a result they have a genuine belief in the goals and values of their employer, are happier and more productive, and come up with better solutions that contribute to improving the business.

From the analysis of case studies, the report concludes that the business impacts of effective communication can include:

  • Employee retention - 44 per cent higher;
  • Customer loyalty - 56 per cent higher;
  • Safety - 50 per cent better;
  • Productivity - 50 per cent higher;
  • Profitability - 33 per cent higher.

A number of internal communications managers from The Sunday Times ‘100 Best Companies to Work For’ and the Financial Times ‘50 BestWorkplaces in the UK’ - together with Headlines’ clients - took part in the research.

One key factor that emerged was the standing of internal communication management within an organisation. Where the head of internal communication is a director, involved in strategic decision-making, employee engagement is at its highest.

Within the most successful organisations IC has a respected planning role; there is buy-in from senior and middle management and a measurable impact on staff loyalty and overall performance.

The research also looked at the most effective media for internal communication.

It found that, while newsletters and magazines are almost universally regarded as an essential part of the IC package, many organisations are now curtailing the use of new electronic media such as e-mail.

Milton Keynes-based Headlines Corporate News is a specialist corporate communications agency, offering a full range of IC services. To find out more about the Strategic Internal Communication research, see www.corpnews.co.uk
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