I’m often asked how you measure the impact of better communication on your company’s success. Watson Wyatt recently published a 2009-2010 survey that shows communication is a leading indicator of financial performance and a driver of employee engagement. According to the survey, companies that have highly effecctive communicators had 47% higher total returns to shareholders over the last five years compared to firms that are the least effective communicators.

The survey found the best companies invest in helping leaders and managers communicate with their employees. They measure how effectively they are communicating. ”Companies that are less effective communicators are three times as likely as highly effective communicators to report having no formal measurement of communication effectiveness,” which proves once again that what gets measured gets done.

Watson Wyatt says successful firms:

• articulate the employee value proposition
• use social media to reach employees in real time
• treat their managers as a special audience
• focus on the customer
• measure behavior change and business outcomes

The term “employee value proposition” broadly refers to what employees can expect from the company and what the company expects from employees.

While Watson Wyatt defines this as pay, benefit, professional development and work environment. I would expand the definition of employee value proposition. As you know if you follow this column or have read my second book, Motivate Like a CEO, Communicate Your Strategic Vision and Inspire People to Act! (McGraw Hill 2009) I believe leaders need to connect people with purpose and passion toward a common goal. Once employees basic needs are met, you still must help them engage by harnessing their talent and skills and aligning them with the mission of the organization. As a leader, your success depends upon communicating and aligning the organization with a powerful purpose. Those who do make a huge impact on your company’s financial performance. It’s inevitable.

If you don’t believe you’re a ten on a scale of ten when it comes to communicating the value proposition, Watson Wyatt recommends that you “re-communicate” it to your employees. We are closing out a challenging year, where we’ve focused our communication on cost cutting, productivity and protecting the business; all necessary. However, now is a good time to get out and re-engage your employees in seeing how they can make great things happen next year. Talk about financial performance but then engage them by sparking their imagination and sharing your mission and goals. Harness the purpose and passion that will carry you into 2010 and improve your top line growth. People are ready and willing to get engaged and will respond to leaders who recognize their talent and encourage them to become part of the grand plan.

Here are three steps you can take right now to make this happen:

• Get clear in your own mind what the value proposition is. Write it out and make sure that your top leaders agree. What is the mission and purpose that drives your business forward and will engage your employees?
• Include the employee value proposition in all communications. This includes your end of year performance presentation, end of year performance reviews, emails, and informal conversations.
• Create a robust feedback loop. This will help you monitor whether employees are getting the employee value proposition message. You can do this formally through surveys and informally through brown bag lunches, off-site planning meetings and conversations.