Back in 1999, Harry Matlay's article in the journal Employee Relations, "Employee Relations in Small Firms: A Micro-Business Perspective," posited that owners and managers of small firms have more independent management styles, they recognize the value of communication, and they value the trust and community that are built on the foundation of communication.
Eight years later, a new IABC Research Foundation study, "Employee Communication Practices in Small Businesses," confirms those statements, reporting that for owners and managers of small businesses, best practices in employee communication include a combination of strategies that grows and changes along with the company.
In particular, direct, face-to-face employee communication practices are the most valuable for building employee engagement and increasing productivity. "When we were small, just five people, face-to-face was enough," said one Canadian respondent, the managing director of a rehabilitation and vocational services company. "As we have grown in size and number of locations, communication has by necessity become more formal. But we still prefer to communicate face-to-face."
The study also illustrates the power of positive productive relationships in the workplace and how trust built from a foundation of effective communication practices contributes to productivity and business success.
"Communication has actually helped the organization to [tackle] change head-on and make a smooth transition from being an old, traditional organization to a vibrant and active organization," noted another respondent.
Connecting with HR
The findings also suggest connections between greater profit margins and employee communication within small and medium-size enterprises. The survey responses and the company interviews indicate that communication plays a role in engaging and retaining employees, both of which contribute to an organization's profitability and productivity.
A report from Gevity Institute and Cornell University, Human Resource Management Practices and Firm Performance in Small Businesses, shows that small-business employers using a family-type HR strategy have 4 percent better sales growth, 13 percent faster profit growth and 19 percent lower employee turnover. This example also helps illustrate the business impact of effective employee communication on small organizations.
"We encourage employee feedback, suggestions and opinions," noted one respondent, the HR manager for a floral business, who reported using a mix of formal and informal communication strategies. "It is what keeps our employees engaged."
While small firms are doing many things well, there is room for improvement, most notably when it comes to strategic communication planning and formal measurement of communication practices.
Many respondents indicated that their company does not formally evaluate its employee communication practices--only 25.3 percent said that they used employee opinion surveys, and just 15.4 percent have used communication audits--but they claim to know which practices appear to be most successful because of employee retention rates, employee satisfaction and engagement with the firm. Others acknowledged that as the number of employees and locations has grown, formal communication practices have increased, along with the need to train managers in communication skills and evaluate the company's communication activities. …