The ROI of Internal Communication
PDP’s employee engagement software uses touch screen terminals to communicate with ‘non-desk’ employees
The Gallup research organization this year produced a statistic that literally defines the market place for Mankato-based company People Driven Performance, PDP: Gallup says 70 percent of U.S. employees are not engaged, which costs the U.S. $450 to $550 billion per year on lost productivity.
PDP uses a software product to help standardize effective internal employee communications via touchscreen terminals throughout the company. Through these terminals, employees can access performance metrics, company news, and an enhanced employee directory.
“We know that effective internal communication helps engage employees and really drives organizational performance,” says Lou Dickmeyer, PDP’s president. “We’re focused on helping everyone in an organization understand their role in the system.
PDP is primarily interested in enhancing internal company communication with production employees, its “non-desk” workforce. Offsite employees can access the software through laptops, digital tablets, or even phones.
The spirit of PDP has its roots in the early ‘80s when an economic downturn forced Denny Dotson to seek some concessions from his employees at Dotson Iron Castings, a Mankato-based foundry.
They turned him down flat, the story goes, telling him that “you never communicate with us unless there is a problem.”
From that moment Dotson committed to weekly communications sessions and went to great lengths to transparently share performance metrics throughout the organization.
And when Dotson was contemplating his transition out of the CEO position in the early 2000s, he asked his brother Jerry to write a computer program that would further fortify transparent communications into his company’s culture.
But it soon became a standalone business.
Today, PDP operates 30 sites in eight states, in manufacturing, health care, and banking. “The interest is growing significantly,” Dickmeyer says.
PDP’s sweet spot client is probably between 150 and 500 employees. Even companies that have 75 or a hundred employees can begin to lose track of who’s who, Dickmeyer says.
On top of that, Dickmeyer says their best opportunity for success is to work with CEOs “who are willing to own their culture.” But often HR professionals are looking for effective communications tools. If they are viewed as a strategic part of their organization, she says, “that is a great indicator for us.”
To manage the process, clients typically designate one administrator that becomes the key liaison to PDP. PDP trains clients about how to determine what needs to be communicated which can include a CEO message, customer service highlights, safety messages, training events, new products, and human-interest stories.
Company performance metrics can include any measureable process a company wants to track in real time, such as daily goals for shipping or tracking returns or defects. Employees can view metrics in rolling or calendar modes, from information gathered automatically from the company.
“It is fascinating the breadth of content and the granularity that companies begin to communicate about what’s happening,” Dickmeyer says.
News content is typically driven by an internal group that Dickmeyer calls an editorial board that convenes for a 15-minute weekly meeting – which can be a nationwide teleconference or an in-office meeting.
PDP produces a kit called Shop Talk that provides a prescriptive editorial calendar and content library to help facilitate the production of information.
Dickmeyer says that recruiting someone internal to be “keeper of the message” has been relatively easy. “There is always someone who is outgoing enough to get out there and get content. With some clients a lot of different people contribute content.
To follow up, PDP sends each client a weekly report that tracks how many times the system has been accessed and how many times the news has been read.
Among PDP’s most satisfied clients is Sarah Richards, president and CEO of Jones Metal Products, the Mankato-based custom metal fabricator with 80 employees.
“Before PDP we had a secretive culture,” she has said. “It was very top down driven.” The CEO and CFO at the time were guarded about sharing financial details or company goals, she told a PDP videographer.
PDP, she says, transformed the company culture. “Our whole personality has changed since we implemented the PDP system,” she says. That personality change encompasses what they share with employees, from finance, financial planning, even personal information. Personal information: knowing more about each other and caring more about each other.
Jones now shares key performance indicators with all employees. “Even if we still have some that are left only for the CFO and CEO, the majority are shared by both the management team and the employees – and the information is easily accessible to them.”
Richards says the company once would have rejected sharing metrics about dollars shipped. “Everyone here thought that was some giant secret that would change everybody’s feelings about the company.” People would stop working hard, they thought, if they knew the company was making more money.
In fact, she says, when the company started communicating those numbers, the opposite has occurred. “People were actually looking forward to meeting milestones, keeping track of how we were doing, based on how we were billing out customers.”
Not only did they not react negatively and work less, she says, “they worked even harder, because they knew from history that we had some milestones that we were trying to get back to as we were recovering from the recession.”
The cost of poor internal employee communication
Companies that take time to strategically engage employees are more productive and more profitable
The cost of poor employee communication is well illustrated through information collected by PDP.
- Companies that have highly effective internal communications had 47 percent higher total returns to shareholders over the last five years, compared to companies with the least effective internal communications. (Towers Watson)
- Companies with high levels of employee engagement reported an average improvement of 19.2 percent in operating income, while companies with low levels of employee engagement declined an average of 32.7 percent. (http://www.thankgoditsmonday.com/blog/2013/06/09/connectingengagement)
- Organizations that improved engagement by just 10 percent increased profits by an average of $2,400 per employee per year. And the “engaged” organizations grew profits as much as three times faster than their competitors. (The Work Foundation, Lancaster University)
- A business with 100 employees spends an average downtime of 17 hours a week clarifying communication, which translates to an annual cost of $528,443. (360 Solutions)
- Unengaged employees cost an average of $392 per employee safety incident, compared to just $63 for an engaged employee. What’s more, engaged employees were five times less likely than non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident. (MolsonCoors)
- Employees with the highest level of commitment perform 20 percent better and are 87 percent less likely to leave the organization. (Paulson Training)
- The U.S. national turnover for disengaged employees is 23 percent. The cost of replacing an average worker equals 50 percent to 100 percent of annual salary and up to 150 percent annual salary for highly skilled employees.
- 71 percent of employees feel managers do not spend enough time explaining goals and plans.
- Two thirds of employees do not receive enough information during corporate change; poor communication during change increases misconduct by 42 percent. (The Holmes Report)