RoI calculation on Internal Communications initiatives! But why?

Back

“Are you crazy? Who calculates RoI on Internal Communications initiatives?”

A similar, or slightly amended response could be expected early on in my career, if someone asked you to calculate the Return on Investment (RoI) on Internal Communications initiatives.

RoI calculations were reserved for analysing impact of big-ticket advertising campaigns, and definitely not for Internal Communications.

And that was because of what Internal Communications entailed three decades back.

Some posters with messages would be put up in office reception areas; sometimes a desultory mail from HR would find its way into an employee’s inbox; on some rare occasions, there would be a town hall in the lobby area. And of course, there was an employee satisfaction survey (where only a brave few shared honest feedback!) Few companies invested in building intranets, and there was definitely no one evangelising the phrase ‘employee engagement’!

But times, well, they have changed.

Today internal communications plays a big role in aligning employees across sites, functions and geographies, by delivering all relevant messages to people as needed. And IC comms covers the gamut — from benefits and diversity, equity and inclusion (DEI) to strategy, change management, employee recognition, career development and sustainability, among other subjects that matter to employees and the organisation at large.

Establishing the business case for IC

Today, no internal communications initiative will pass muster unless the team can put mechanisms to calculate RoI in place. In fact, the importance of internal communications is increasingly evident and even finding a place in board room discussions.

Let’s cut to the chase. As an internal communicator, you should not lose sight of the big-picture value of what your team and your tools provide to the organisation. To make a strong business case for IC improvements, you’re going to have to be able to communicate this value, backed up with data.

Why is ROI relevant to internal comms?

Understanding ROI in internal communications is crucial for justifying the budget and resources allocated to communication initiatives. It demonstrates the tangible outcomes of effective communication, such as reduced turnover rates, improved employee morale, and increased collaboration, which directly contribute to the organisation's success.

To measure the ROI of internal communications initiatives, you need to track both quantitative metrics as well as qualitative data. Here are some metrics to help you:

Engagement metrics

•  Open rates: Percentage of employees who open internal emails or access intranet posts
•  Click-through rates: Percentage of employees who click on links within internal communications
•  Page views: Number of times specific pages on the intranet are accessed

Employee feedback metrics

•  Employee surveys: Measure employee perception of communication effectiveness, clarity, and relevance
•  Employee Net Promoter Score (eNPS): Gauge employee willingness to recommend the company to others
•  Focus groups: Gather qualitative feedback on specific communication initiatives

Business impact metrics

•  Productivity: Track changes in productivity levels after implementing communication improvements
•  Customer satisfaction: Assess whether improved internal communication leads to enhanced customer service
•  Employee retention: Monitor employee turnover rates to see if effective communication impacts retention
•  Sales performance: Analyse if improved communication aligns with sales targets

Based on the above, you can calculate the return on investment by comparing the cost of the communication initiative against the benefits gained.

The value is clear

Data gathered for IC initiatives has resulted in multiple research reports, which validate the need to have an RoI computing process in place.

Some examples:

•  According to Gallagher’s most recent State of the Sector report, 74% of more than 2,000 respondents said the primary purpose of internal communications is to support culture and belonging.

This is a key post-pandemic shift away from IC’s long-standing leading role in communicating strategy and creating alignment around an organisation’s vision and purpose (67%).

In the Gallagher survey, 72% of respondents said that employee experience was on their leadership team’s radar. And about one-third said they have a clear mandate to improve it.

•   According to Deloitte's Global Human Capital Trends report, organisations with a positive employee experience have:
• - Twice the customer satisfaction (Net Promoter Score)
• - 12% greater shareholder returns
• - 25% greater profitability compared to their peers
•   WTW's Global Workforce Study shows that firms with the highest levels of employee engagement outperformed the market, having a 19% increase in operating income over a 12-month period, while their counterparts with low engagement saw a decline of 32%.
•   McKinsey & Company have indicated that companies with the best employee and customer experiences achieve revenue growth at a rate 1.8x their competitors.
•  Gallup's State of the American Workplace found that organisations with a high level of engagement report 21% higher profitability. What’s more, highly engaged teams show a 41% reduction in absenteeism and a 17% increase in productivity.

RoI processes

Given the criticality of the role served by Internal Communications, RoI is an integral part of the strategy. Here are some best practices for measuring RoI in Internal Communications:

•   Set clear objectives for your internal communication strategies.
•   Identify key performance indicators (KPIs) linked to these objectives.
•  Collect baseline data before implementing new communication initiatives.
•  Measure the changes post-implementation and compare them against the costs.
•   Use surveys, employee feedback, and productivity metrics to gauge impact.

And finally, here’s another suggestion. Give TIC a call. We can help you identify and integrate measurement metrics for evaluating your internal communications initiatives.

 

To get in touch for our services or any other communication requirement, please contact + 91 842 581 4016 / 17 or simply drop an email at solutions@ticworks.com.