How to measure return on investment (ROI) in Internal Communications? Is it time to ask a different question?
— January 24th, 2017
First, that wonderful and inarguable fact that everybody involved in Internal Communications knows as well as they know their boss’s name (or should do, anyway): companies with highly effective IC strategies are likely to outperform their industry peers by a factor of 3.5.
That, by any measurement, is a rather amazing return on investment for those organizations who know the real value of effective internal comms. How do we know this? Well, the good, and impressively resourced people at Willis Towers Watson have confirmed it in their latest (2013-2014) global survey of 651 organizations.
The Ultimate Guide to Internal Communications Strategy
And WTW are serious players with impressive pedigree. They have been measuring the link between IC and ROI for over a decade and their meticulous research over this period has consistently proved the link between effective internal communications and ROI.
So why, then, do the words ‘measurement’ and ‘ROI’, even individually used, strike fear into the hearts of so many IC professionals, and when used together are enough to reduce them to blubbering brain-freeze?
We know the critical importance of measurement, which has become vastly easier in recent years thanks to smart technology, and we know from Newsweaver’s 2016 global survey that the number of IC professionals who don’t value measurement are in a tiny minority.
Almost 100% of the 700 respondents said they considered measurement “extremely important” yet over 50% admitted that it was the activity they spent least time on each week - possibly because 2 out of 3 said the found comms “difficult to measure”.
We also know that communicators who measure the outcomes of their communications are more likely to be ‘trusted advisors’ to the C-level with greater strategic involvement.
But parking the measurement issue for a moment, is it right or does it make good sense to foist on internal communicators the dreaded: ‘can you please prove the Return on Investment of your internal communications?' especially when definitions or interpretations of ROI can vary.
It is one thing for large specialist international research experts like Willis Towers Watson to prove the IC-ROI link, but it is extraordinarily difficult for most IC professionals to show a quantifiable, precise and provable correlation between their communications and their company’s bottom line, the return on investment.
ROI, after all, is an accounting construct, and a very valuable one it is. But with all due respect to accountants, measuring intangibles, which can frequently be the result of good internal comms, is generally not their forte and such work can be difficult if not impossible to measure and is therefore undervalued.
It is abundantly clear that it is critical Internal Communications are linked to business goals and performance, and prove value, with measurable outcomes which underpin the role of IC in the eyes of senior leaders, consequently elevating the function’s strategic position in the organization.
But while stressing the absolute necessity of keeping measurement and evaluation of communication strategies front and center, is it time we considered removing the phrase ROI from the vocabulary in relation to IC, and changed the entire language to focus instead on more easily understood, more easily measurable concepts?
And it’s not just semantics, but words are important, and I can’t help feeling that something like a Communications Effectiveness Index or a Value Proved Index, or several Indexes - measurable across various metrics such as organizational and behavioral change etc. - which would prove the value of IC activity, would be a less hostile and more approachable concept for internal comms professionals than the specter of proving ROI.
Or should IC performance and effectiveness be assessed, for example, on it’s contribution to a company Empathy Index, given that there is a proven link between empathetic companies and commercial success. As Belinda Parmar noted in the Harvard Business Review the top 10 companies in the Global Empathy Index in 2015 increased in value more than twice as much as the bottom 10 and generated 50% more earnings.
And while empathy might seem like an intangible, Parmar explains that The Global Empathy Index uses a combination of publicly available information and proprietary data drawn from its surveys and from social and financial feeds. The analysis, which focuses on global companies, looked at CEOs’ approval ratings among staff, the ratio of women to men on the board, frequency of complaints, the companies’ performance on social networks, the impact of controversy such as ethical lapses - among other metrics, including internal culture.
Interestingly, five of the top 10 most empathetic companies are based in Silicon Valley and at the other end of the spectrum are some major car manufacturers.
Whatever index or range of indexes used, IC professionals would, of course, still measure everything that can be measured, because without relevant data their value is at the very least questionable, if not useless. For example, they can calculate financial savings from specific initiatives or behavioral changes, and hard-cash benefits emanating from others, therefore proving the value of IC to the organization on a very basic level without getting hung up on the whole concept of ROI.
But other benefits from effective communications can be more difficult to prove precisely in purely monetary terms, but are no less important to an organization’s health, yet can slip under the return on investment radar.
In 2010 Bruck K Berger of the University of Alabama and Dayton University’s Juan Meng reported that the ROI of internal communications has been an issue of importance in academic research since the 1980s. But while organizational research has shown that effective communication is one of the leading indicators of an organization’s financial performance, Weng and Berger argue that more information is needed as to how and to what extent communicators measure the relationship between communication and performance.
In the six years since the Berger and Dayton report, much has changed in IC, most notably an increasing elevation of IC to strategic partner level by large and progressive organizations, even if there is still much room for improvement in that regard. According to the 2016 Newsweaver survey, 55% of IC professionals believe their senior leaders see them as trusted advisors and drivers of employee engagement more now than in years past.
Technological advancements are playing a huge role in the evolution of the IC industry. Last year Facebook caused a stir with the launch of its Workplace into the Enterprise Social Network sphere.
Last year too, internal communicators were, for the first time, able to easily measure complex communication challenges across multiple platforms (email, intranet, video and ESN) following the release of Cross Channel Analytics by Newsweaver, which has just developed its new Campaign Outcomes Survey capability.
This does what it says on the tin and is specifically designed to get valuable insights by measuring communication outcomes rather than the ineffectual measurement of outputs, thus proving the true value of IC campaigns and initiatives.
Without an ROI in sight.