• Strategy
  • CFO Magazine

Talking Points

Poor employee communications can undermine the best-laid strategy.

Of all the functions under the corporate roof, employee communications is the one that most managers pay lip service to. It’s not that they regard it as unimportant. Executives acknowledge that when it comes to effecting major change — a shift in strategy, or a merger, or a restructuring — employee communications can potentially make the difference between success and failure. Moreover, most managers, including CFOs, will admit they could do a better job of keeping everyone on the same page.

Yet, when change is in the works, the task of telling employees about it tends to slip down the to-do list. In fact, that’s the number-one mistake companies make in a change situation, says Deborah Barrett, director of the MBA Communications Program at Rice University’s Jesse H. Jones Graduate School of Management. “I’ve even seen that in merger situations,” she says, when managers have realized practically on the day of the announcement that they didn’t have a plan to let employees know what’s going on.

That’s not the only way companies fail to communicate. Generally, managers overestimate how well they convey messages about change, says Barrett, who previously worked as a consultant at McKinsey and Hill & Knowlton. “When you find that there’s dissension, and the rumor mill is controlling the message, then you know you’re not out in front of the communication,” she says.

And even if they think they’ve done enough talking, managers may not have done enough listening. At one Houston energy company, senior managers conducted monthly road shows for employees, which ought to be a good thing. But the road shows consisted largely of PowerPoint presentations, with no opportunity for questions. “Everybody was bored,” Barrett says, “and the managers were thinking, ‘Why are we here?’”

Says Paul Sanchez, global director of employee research for Mercer Human Resource Consulting: “I can’t tell you how many times, when we’ve worked with a company and done an employee opinion survey about how things are going, that the communications dimension is one of the lower reported factors.”

A Common Understanding

Making internal communications relevant and effective begins at the top.

“The first and most important thing is to have a clear understanding about the importance of communicating comprehensively, promptly, with as much transparency as is possible,” says Sanchez. “That has to start with a commitment from the leadership group that they will work as hard as they can to create a communication environment that shares with employees a mutuality of interest, a common understanding, and alignment on goals.”

No one understood this better than Lou Gerstner at IBM in the 1990s, says Sanchez. In his 2002 memoir, Who Says Elephants Can’t Dance? the former CEO repeatedly stresses how critical communication was to IBM’s turnaround, and devotes a 54-page appendix to memos he sent to employees. Gerstner “realized very early on that it would be impossible to move IBM without winning the hearts and minds of people,” says Sanchez.


Your email address will not be published. Required fields are marked *