A WHITEPAPER FROM SEQUEL GROUP

WHY YOU NEED TO COMMUNICATE WITH YOUR EMPLOYEES

CONTENTS

CHAPTER 1 – SMEs as part of the economic picture

1.1 Defining an SME1.2 Why Internal Communications

matters for SMEs

1.2.1 Productivity 1.2.2 Creativity and collaboration

CHAPTER 2 – Barriers and challenges

2.1 The Ultimate Weapon?

CHAPTER 3 – Overcoming the challenges

3.1 Time 3.2 Technology3.3 Resource

CHAPTER 4 – Conclusion: Paving the way for productivity and growth

CHAPTER 5 – Sources and further reading

SMEs are the engine of the UK economy. Collectively,

they employ more people than the country’s large

corporations, and are widely credited as one of the

driving forces behind the country’s economic recovery.

The Federation of Small Businesses says that at the

start of 2014, SMEs accounted for 47.8 per cent of

private sector employment and 33.2 per cent of

private sector turnover, employing more than

15.2 million people.

Research from Grant Thornton (Agents of Growth:

The power of mid-sized businesses) indicates that

Medium-sized businesses (MSBs) in particular have

outperformed expectation in recent years, contributing

£270 billion to the UK economy in 2013 alone.

MSBS IN THE UK:

The report goes on to say that MSBs are enjoying a more

favourable economic outlook than their larger and smaller

business counterparts:

“The UK mid-market has proven itself to be exceptionally

resilient during the economic downturn. It continues to

outperform other segments (SMEs and large corporates)

in terms of productivity and employment.

CHAPTER 1 SMES IN THE IC LANDSCAPE

2

1.1 Defining an SME

MICRO ENTERPRISES SMALL

ENTERPRISES

MEDIUM-SIZED BUSINESSES

UP TO 10 EMPLOYEES UP TO 50

EMPLOYEES

UP TO 250 EMPLOYEES

Annual turnover £712 BILLION

34,100 MSBS IN 2013

4.2 MILLION PEOPLE

employed by MSBs

124,000 JOBS CREATED in 2012-3 (500,000 more by 2030)

(compared to 3,180 large corporates)

Contributed £270BILLION

to the UK economy

7.5% total turnover growth in 2013

SMALL AND MEDIUM-SIZED ENTERPRISES IN NUMBERS:

“Headcounts are growing faster at MSBs than they are

at larger and smaller firms, and the significant majority

of mid-sized business leaders expect to create more jobs

in the next year.”

But this MSB optimism only tells half the story. Employee

productivity figures from the report show there’s untapped

potential within the MSB workforce:

“Though UK MSBs’ average productivity outshines the

domestic business community as a whole, it lags behind

that of counterparts in much of Europe.”

UK PRODUCTIVITY LAGS BEHIND LEADING EUROPEAN COUNTRIES:

If MSBs could achieve the productivity levels of the leading

European nations, their contribution to the UK economy

would be even more impressive. Internal Communications

has a part to play in unlocking this potential.

1.2 WHY INTERNAL COMMUNICATIONS MATTER FOR SMES

Internal Communications has firmly established its place

in the modern enterprise. Many large corporations now

accept there is a real return on investment when employee

communication is done in a considered, strategic way.

1.2.1 PRODUCTIVITYStudies show what we have long suspected: that there

is a clear link between internal communications and

employee productivity.

Research from the Hay Group, for example, found that

highly engaged employees are, on average, 50 per cent

more likely to exceed job-role expectations than the least-

engaged workers.

Companies with highly engaged people also outperform

those with the most engaged workforce by 54 per cent in

employee retention, 89 per cent in customer satisfaction

and fourfold in revenue growth.

But even with the mounting evidence, Internal

Communication is still low down on the list of priorities for

many SMEs. Precious resources are funnelled into day-to-

day operations at the expense of ‘softer’ investments like

employee engagement.

However, if SMEs can tap into the same benefits being

realised by their bigger business counterparts – and

approach internal communications in a manner fit for their

size and circumstance – they could discover the missing link

that helps drive employee productivity and further growth.

1.2.2 COLLABORATION AND CREATIVITYThe role of Internal Communicators has evolved into much

more than owning and delivering channels for one-way, or

3

even two-way, communication. Today, it’s also about

giving employees an opportunity to communicate with

peers across the organisation, flattening hierarchies

and breaking down functional silos.

A lot of this has to do with the influence of social media;

people expect to be able to participate in conversations,

not just listen in. Internal Communications should

enable peer-to-peer conversations, as much as it

does the CEO’s message or the latest health and

safety update.

Collaboration and knowledge sharing are critical in

the face of the increasingly competitive and fast-

changing business landscape. Letting employees share

ideas and problems leads to new and creative solutions –

and technology can help that happen quicker.

A 2013 study by Information Week looked at 629

organisations to measure the impact of Enterprise

Social Collaboration (ESC). The results were staggering:

businesses that had a clear strategy for enabling ESC

saw a 131 per cent greater increase in operational

efficiency, 122 per cent greater improvement in on-time

project delivery and 55 per cent greater increase in

annual company revenue.

It’s not just creativity that flourishes when you allow

employees to work together, but operational efficiency

and business performance too.

The larger businesses become – or the more

geographically spread their employee base – the

more difficult it is to enable these conversations to

take place. That’s where social collaboration tools

created specifically for the workplace can, and do,

make a big difference.

IRELAND

€373,000

AUSTRIA€310,000

FRANCE€273,000

GERMANY

€235,000

UK€226,000

4

CHAPTER 2 BARRIERS AND CHALLENGESBy their very definition, SMEs are a wide-ranging category:

a business with 10 people is hugely different to one with

250 employees, and the internal communications needs

and challenges of each are just as diverse.

Logic dictates that the smaller the organisation, the easier

it should be to communicate with and engage employees,

and enable collaboration. After all, small businesses have

the luxury of face-to-face communication.

The issue is a lot more complex. Research suggests

smaller businesses might actually be doing worse

than their bigger brothers and sisters when it comes

to employee communication.

In their study Money Talks: Communicating Employee

Benefits, Cass Business School looked at the specific area

of employee benefits, to see whether the way businesses

communicate their benefits affects employee understanding

and business performance.

They found that 64 per cent of organisations fail to

communicate their benefits packages to employees and

perform no better than those who don’t offer any benefits

at all. Communicating benefits is just as important as

investing in them in the first place.

Perhaps even more surprising, the companies that

performed worst in the study were smaller organisations

of fewer than 50 people.

Report author Professor Nick Bacon says:

“With the cost of living rising more quickly than many

people’s income, and employers struggling for growth,

staff retention is a vital issue. When organisations can’t

easily increase salaries, they need to identify other ways

to build staff engagement - and a good benefits package

does this. However, our research shows that even if

companies are offering good benefits, if they fail to tell

staff what’s available, it’s no better than not offering

these benefits at all.”

This research focuses on employee benefits, but how

many other areas of business strategy and performance

are suffering from a lack of communication?

If you’re not telling your employees what’s good about your

business, ask about customer feedback, what’s bad, what

needs to change and how they contribute, are you making

the false assumption that they already know these things,

or worse, implying that they don’t need to know?

2.1 THE ULTIMATE WEAPON?SMEs might have all the intention to communicate well and

foster engagement, but resource constraints can often get

in the way.

Internal Communications Adviser to the Federation

of Small Businesses, Bridget Moylan, in Sequel Group’s

AQ magazine, says:

“Time, technology and resource are the three big challenges

facing SMEs. For example, many business owners are often

the internal communications team, along with HR, Finance,

IT and more and juggling everything can be a challenge.

“With the rise of technology, people expect information

fast and this comes at a cost. Keeping up can also be

challenging for a business that may not be able to

prioritise communications to their employees, despite

knowing its value.”

The key point here is that what works for a multi-national

corporation doesn’t necessarily work in a small business.

There is never a perfect out-of-the-box solution when it

comes to internal communications, and that applies equally

to businesses of a similar size.

SMEs do not need to establish dedicated Internal

Communications departments to reap the benefits of

an informed, engaged – and therefore more productive

– workforce. However, they do need to understand the

reasons for communicating well, the options available to

them, and have the right tools and partners to deliver a

communications strategy that is fit for purpose.

Time, technology and resource are the three big challenges facing SMEs.

5

CHAPTER 3 OVERCOMING THE CHALLENGESEvery business is different, but one thing there is usually

a shortage of is resource – be it budget, people’s time, or the

right systems and tools to support the business strategy.

For many SMEs, the term ‘Internal Communications’ can

be a daunting one. It implies a drain on precious resources

and that means it falls behind more business-critical needs

like day-to-day operations or good accounting.

Bridget Moylan of the Small Business Federation says:

“I think the definition of ‘internal communications’ can

cause confusion with SMEs, it’s more important to focus

on the tools they need to create an informed and engaged

workforce.”

3.1 TIME It is not unusual for SME employees to take on additional

work or roles alongside their core focus areas, so time

is always in short supply. When it comes to delivering for

clients or working on an employee engagement campaign,

there’s no prize for guessing which falls to the bottom of

to-do lists again and again.

Proper planning is one of the best ways SMEs can save time

in delivering their internal communications.

A strategic plan that lays out which areas are important

to communicate and why can help businesses save time

by focusing their attention on the messages and channels

that really matter.

Taking a longer-term view also means that tactical

communications can be planned in advance, giving

the people responsible for communications greater

opportunity to schedule their time accordingly.

Creating that plan requires time and expertise. Bringing

in an expert to help develop the strategy and roll-out plan

can be an investment worth making up front.

3.2 TECHNOLOGYThere are now so many tools that encourage two-way

dialogue and collaboration that technology is no longer

a barrier, but an enabler for small companies wanting

to invest in their internal communications.

Bridget Moylan from the Federation of Small Businesses says:

“With the rise of technology, people expect information

fast and this comes at a cost. Keeping up can also be

challenging for a business that may not be able to prioritise

communications to their employees, despite knowing its

value. This is where mobile and social tools (many free)

can be helpful for a growing and disparate team and

encourage self-generated content.”

The first word of reassurance is that just because all these

tools are available, doesn’t mean you need to use them all

(you shouldn’t).

Technology should match existing ways of working wherever

possible. Engagement with a new tool or channel is much

higher if you aren’t asking people to change their behaviour.

For instance, if you have a workforce that spends time out

on the road or away from their desks, a mobile or printed

channel might work better than an email or online solution.

Understanding your audience is the first, and most

important, step when selecting tools to help inform and

inspire your people. Working back from there, you can

find a technological solution that meets those needs and

suits the type of information you want to deliver, and the

budget you have to work with. The cost of technology is

also coming down all the time, particularly if you don’t

require a bespoke solution.

££

666

3.3 RESOURCEResource usually means money, but it also means your

human resource: do you have the people to deliver your

internal communications strategy and crucially, do they

have the right skills?

Money can also be difficult to find in companies stuck in

short-term cycles of paying suppliers and wages, and

receiving customer payments. Having the right comms

strategy is an invaluable starting point that can save costs

and time down the line.

Where talent is concerned, you might have a perfectly

capable employee who is willing to take on some internal

communications responsibilities, but do they have the

right combination of strategic and creative skills to deliver

communications that get results?

They might be a good writer, handy with design software,

or great at seeing the bigger picture and mapping the

strategic communication goals for your business – but

can they do it all?

Your internal communications plan should play to the

strengths of the people you have at your disposal, and

recognise where there are skills gaps. Outsourcing a

portion of your internal communications activity can save

time and can result in a better quality ‘product’. It can also

cost less than the cost of hiring an internal person and

doesn’t add to your head count or regular overheads.

7

Internal communication has been delivering benefits for

large businesses for years. The ROI is being demonstrated

more and more, and internal communicators are getting

their place at the boardroom table – such is their growing

importance in a changing business world.

At the other end of the spectrum, SMEs are largely still

to reap the benefits of a strategic approach to employee

communication and engagement.

To quote Bridget Moylan from the Federation of Small

Businesses again:

“We know that confidence is high among small firms and they

are looking to employ more, and nearly 60 per cent intend to

grow over the next year. From an external perspective, I would

argue that now has never been a better time for SMEs to

engage their workforce and to reach these growth aspirations,

as engaged and productive workforce is crucial.

“No matter a business’s size, an engaged team to support

growth and deliver its objectives is essential. It’s about

creating the right ethos within a company.”

Given the proven uplift in productivity and performance,

and the benefits of collaboration, it should no longer be

a case of SMEs asking whether they should be doing

internal communications, but rather how.

An internal communications strategy need not be overly

complex. It should be mapped backwards from the needs

of the business, the needs and behaviours of employees,

and the budget tools and resources available.

When all those needs are considered, internal

communication no longer becomes a scary concept for

small businesses – it becomes an exciting new way to

connect employees to each other and to the goals of the

business, paving a path towards profitability and growth.

CHAPTER 4 CONCLUSION: PAVING THE WAY FOR PRODUCTIVITY AND GROWTH

No matter a business’s size, an engaged team to support growth and deliver its objectives is essential.

78

CHAPTER 5 SOURCES AND FURTHER READING

HERE TO HELPDo you need help developing an internal communications

strategy that’s right for your business?

Sequel Group helps businesses of all sizes and types to

communicate with their people in creative and impactful

ways. We can provide a full suite of internal communications

services, or simply support you in delivering certain aspects

of your strategy.

We have 40-plus writers, editors, project managers,

designers, coders, web and video developers and

strategists, and together we’ve won more than 30 awards

in the last four years for our client work.

We’d be happy to discuss your internal communications

needs with you, and how to get your people united behind

your company’s vision and goals.

SOURCES AND FURTHER READING:1. Agents of Growth: The power of mid-sized businesses,

Grant Thornton, 2014

2. Hay Group research, cited in “Creating the Best

Workplace on Earth”, by Rob Goffee and Gareth Jones,

Harvard Business Review, 2013

3. “Why Enterprise Social Collaboration Means Business”,

www.informationweek.com, 2013

4. Money Talks: Communicating Employee Benefits,

Cass Business School, 2013

TWITTER @sequel_group

LINKEDINSequel and Aspic Communications Network – Home of AQ

STORYBOARDJoin our Storyboard mailing list by emailing: nick.andrews@sequelgroup.co.uk

www.sequelgroup.co.uk020 7354 5577hello@sequelgroup.co.uk

in