Employers looking to increase shareholder returns and reduce employee turnover might want to look at how well they are communicating with workers, according to a study by Watson Wyatt.

The study found that companies with the most effective employee communication programs provided a 26 percent total return to shareholders (TRS) , compared to a negative 15 percent TRS experienced by firms that communicate least effectively. The study also found that a significant improvement in communication effectiveness is associated with a nearly 30 percent increase in market value.

"The survey results clearly demonstrate that the better a company has communicated with its workers, the better its shareholder returns have been," said Kathryn Yates, one of the study's co-authors. "The bottom line is that employee communication is no longer a `soft' function but rather a business function that drives performance and contributes to a company's financial success."

A total of 267 U.S. companies participated in the study, which examines the relationship between an organization's communication strategy and practices and its shareholder returns. The respondents are primarily large companies and represent all major industry sectors in the United States.

Reducing Turnover by Increasing Communication

The survey also found that high levels of effective communication have a positive impact on employee turnover. According to the survey, companies that communicate most effectively are more likely to report turnover rates below those of their industry peers than companies that communicate less effectively (51.6 percent versus 33.3 percent).

The study identified nine communication practices that are directly linked to an increase in shareholder value. The three practices associated with the largest increase in shareholder value are driving managers' commitment to effective communication, having a formal communication process in place (including a documented communication strategy and implementation plan) and creating a clear line of sight between business objectives and employees' jobs.

Employee Newsletters--On Your Intranet

Corporate intranets are shedding their image as a pit stop on the Information Superhighway, instead becoming an important destination for employees separated by work schedules, travel demands, and office locations.

Companies are investing more time and money in designing on-line tools to facilitate internal communications, outsource human resources functions, and foster a sense of community among employees.

Interest Growing, Multiple Uses

A survey conducted by employment consultant Watson Wyatt Worldwide, Bethesda, Maryland, showed that fully 79 percent of 295 companies polled use their intranet as the chief method of delivering human resource services and information to employees, up from 50 percent two years ago.

Ken Barksdale, president of RewardsPlus, a Web-based benefits company, noted that companies are only tapping the surface of the potential of their intranets. According to research conducted by RewardsPlus, employees are interested in a life-event focus design to their website--focusing on specific events in an employee's life and the subsequent action steps to follow. Some initiatives employers are reviewing as enhancements to intranets include the following:

• E-commerce capabilities and employee-driven volume purchasing
  
• Employee self-service (managing benefits, 401K)
  
• Ability to pay personal bills
  
• Instant messaging and bulletin boards
  
• Weather updates for traveling employees
  
• Company-wide scheduling/calendar access
  
• Ability to buy and order lunch from the corporate cafeteria or a nearby restaurant
  
• Local news updates
  
• Company Directory
  
• Form Submittal (Vacations, Personal Days, Sick Leave, Expense Reimbursement)
  
• Links to Vendors (Travel Agents, Childcare, Real Estate Brokers)
  
• Stock Information
  
• Online shopping access
  

"The beauty of the corporate intranets is that the possibilities are limitless," summed up Barksdale. "For employers it's an efficient way to communicate with employees and boost morale; for employees, it's the best way to solve the issues of every day work--and life."