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November 3, 2006

Research shows poor internal communications hit the bottom line

A lack of effective interaction with staff means companies are missing out on key ideas that could give them a vital competitive edge, according to recently released research  by Crystal Interactive. 

The study underlines the need for improvement in internal communications and shows how important internal events are for companies’ health.

EVENTS:review recently reported on research by Jack Morton Worldwide into the state of internal communications on a global level (Click here), which stated that around 67% of employees were dissatisfied with the communication within their company. Crystal Interactive's brand new research tackles a similar topic, with equally damning results… while its fair to say that some companies handle their internal communications very effectively, a large proportion don’t, and they’re definitely missing a competitive edge.

The new study, entitled The Human Touch, boldly states: “UK boards are missing out on valuable staff ideas, reducing their profitability and increasing staff churn – at a typical cost of  £943 per employee, per year – simply because they don’t talk to and listen to staff enough.”  

The study indicates that while boards are adept at dealing with the City and commercial partners, over half (55%) struggle to get their staff communication right and 47% are poor or very poor at communicating with their most junior employees.  
The research goes on to show how this poor communication is hitting the bottom line. Organisations that are better at internal communications are far more likely to get new ideas from staff – 90% of the best communicators ideas come from staff compared with the average of just 20%.  

Chris Elmitt, a director at Crystal Interactive, comments: “Organisations spent £17 billion on research and development in 2005. Who’s to say that money was focused on the best ideas, if over half of companies offered no formal opportunity for new ideas to be fed through?  

“It’s madness that companies worry about huge churn costs, go to enormous lengths looking for even modest improvements in margin, and spend time debating flexible working – yet some boards still haven’t mastered how to simply interact with staff.”

Despite this, the research suggests boards are twice as good at dealing with external audiences as internal ones, and at least five times better at dealing with investors, stakeholders and partners than employees.

Elmitt elaborates: “It’s easy to see why corporate leaders have become more focused on their external communications. An unconvincing presentation to analysts may have an immediate, negative impact on the share price, but the market will be less sensitive to the way leaders interact with staff. There is also perhaps a perception that ‘people skills’ are a talent you either have or don’t have, not something you can manufacture. But our research shows there are some very practical steps companies can take to build better communications into their organisations.”

For details of how to get hold of a full copy of the report go to www.crystal-interactive.co.uk

EVENTS:review will be running a full analysis of the report, plus a video interview with Crystal Interactive's Chris Elmitt in the next few weeks

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