Automotive industry challenge: proving ROI for a social intranet

Call it Employee Engagement, HR or Internal Communications – it has long been criticized over its ability - or willingness - to make data-driven decisions.

It’s difficult to measure the impact Internal Communications has on the company when its influence is often indirect. We don’t immediately reduce costs like procurement does, we don’t directly drive revenue by signing new clients like sales, and we rarely sit in on board meetings. But one thing we do know: not having us around is detrimental to the health of an organization and its lifeforce – employees. Changes in legislation, technology and globality are enforcing massive change on the automotive industry, putting every investment under the microscope.

In Mike Klein’s third research report, titled “How to measure what matters”, we start seeing ways to look past the narrow-mindset of Return on Investment and onwards to more meaningful data that help justify those investments. For the first time we’re seeing the formation of a framework on what will hopefully become the next steps in proving our worth – without the stress-induced, defensive mindset.

“We need to measure what matters. We measure too much of what doesn’t matter” says one Internal Communicator in the report. “Data is great if you are quantitative, but words are where the story lives” says another. This is where things get interesting. Data, in the mindset of many, consists of figures, numbers and is represented in charts and graphs. But really, data is just factual representation of reality. It isn’t limited to numbers and figures, and words are equally suitable to help identify patterns. Why, for example, do we not measure the amount of times certain terms are mentioned in our digital workspaces, social intranet platforms or Enterprise Social Networks, after an official message has gone live? What if we’ve just rebranded and introduce new brand values – wouldn’t the amount of times that these are mentioned in our company’s digital space count as significant?

Looking beyond eyeballs and "likes"

“You learn a lot by understanding how people search and what they search for. It’s crazy we don’t use this”. One of the most challenging and informative quotes from the report hits the nail on its head: in the digital space there is much more to measure than just page-or-post views, “likes” and a general amount of comments. Taken directly from the report, Mike Klein says “The power of enterprise search as an employee data source is that the data is both quantitative and qualitative. Not only can the popularity of search terms be identified, but the prevalence of alternative terminology (‘performance optimization’ vs ‘cost-cutting’) can be assessed. In some cases, search term usage can be analyzed geographically and even demographically. It also is possible to track and measure changes in popularity and terminology over time.”

Measuring the impossible, or the impossible measurement?

In Mike Klein’s interviews, one respondent states:

“Is there a causality between employee engagement and performance? Do we really know which drives which?”

It’s something we’ve all struggled with, even if we know that the financial impact of -not- having Employee Engagement activities can be significant. Measuring our impact is difficult. The report highlights the two reasons why:

• Return on Investment is a linear measure, and Internal Communication / Employee Engagement supports both linear improvements in performance and the achievement of binary (all or nothing) objectives.
  
  
• The extent to which Internal Communication / Employee Engagement is a factor in achieving improvements and objectives is generally subjective.

This results in a new framework for measurement. Comparing investments in comms with other investments means looking at three different, key numbers, namely:

• The size of the anticipated change in behavior,
  
  
• The additional revenue that change will generate or save,
  
  
• The level of credit an agreed communication approach should be given – something Mike Klein calls “The Comms Factor”.

Mike highlights “The Comms Factor” as something difficult, because it’s an agreement between the Comms function and the business. And perhaps that is the beauty of it. We’ve long said that getting buy-in from senior leadership and the C-suite is one of the biggest challenges to Internal Comms and HR. What better way could there be than making them part of the conversation in what determines our success?

Case study on Employee Engagement ROI

ACME inc. has a new yearly sales target – a 30% increase over last year’s target. In spite of declining market conditions, it’s position as the market leader - coupled with its excellent reputation - made this forecast realistic. In order to achieve the target, ACME has hired 20 new “boots-on-the-ground” sales executives. They need to be onboarded ASAP, so they can really hit the ground running. Next to that, they also need to learn a lot from senior colleagues. The company also has a wealth of internal files, content and marketing material available for them to use when they see their prospects. There’s just one major problem: sales people are always on the road. So how will you get them aligned with what people in the office make?

A social intranet tool is a clear benefit here. It will help bring remote workers together, offer static pages with on-boarding information and its search functionality means the wealth of information and material available won’t cost them hours to sift through. But how do you put those intangibles into a metric?

This is where The Comms Factor comes into play. The Comms Factor is a guess, but it’s no less real than other business metrics that get thrown around the organization. It’s based on an agreement between the comms function and the business of how much the success or failure of an initiative will be credited to Employee Engagement or Internal Communications. As imperfect as it is, it provides an approach for valuing the full range of comms activities in an organization in financial terms comparable to those that drive the rest of the business.

In other words: the department that owns the social intranet software needs to approach the department responsible for the 30% sales increase metric. Through negotiation, an appropriate level of accreditation should be made clear. If the goal is to increase sales by 30%, and that means $60 million extra revenue, and we can negotiate that the social intranet platform is accredited 15% stake of that 30% sales increase, then it means the social intranet’s ROI is $9 million when the target is achieved, $4.5 million if you reach the target halfway and $2.25 million if the organization underperforms. There you have it – an appropriate calculation of direct return.

Now let’s list out those indirect returns.

Less time spent looking, more time spent cooking

Remember that marketing material we talked of? Those invaluable brochures that are buried in digital layers upon layers of other collateral? How will your sales guy find that quickly? Every employee spends an average of nine hours per week searching for information. By offering one central, interconnected social intranet solution with search functionality, those nine hours become mere minutes.

Strategic Employee Engagement

We can roughly state that the work of people concerned with Employee Engagement or Internal Communications is divisible into four main categories, namely:

• Communication execution
  
  Designing posters, writing internal messages, proofreading the CEO’s quarterly update, organizing internal events and more.
  
  
• Communication coaching
  
  Coaching management to improve their communication, and align it with the overall organization.
  
  
• Strategy
  
  Aligning Internal Communications and Employee Engagement with the organization’s strategy.
  
  
• Change management
  
  Guiding the organization through meaningful change.
  
  There’s a clear difference in the tasks outlined in the first two levels, versus those in the last two. The problem with Employee Engagement practitioners and Internal Communicators is that their time gets swallowed up by first-level tasks, resulting in less time for strategic work guiding meaningful change throughout an organization. The sheer volume of communications can be overwhelming, and frustrating. As Employee Engagement practitioner or Internal Communicator, you’re left with no time to drive strategy and change – and this can be some of the most rewarding work in our field.

Data-driven Employee Engagement

Organizations have to be flexible, and need engaged employees. Insight in social-intranet activities that benefit Employee Engagement simplifies strategic decision making. Without data, you’re just guessing. Reporting on your activities becomes easier. Who are the top contributors in the organization? What type of news works, and what doesn’t? Which Channels are the most popular? Best-in-class social intranet platforms will always be able to show you this.

Knowledge retention

Talent-turnover is higher than ever before. There are more jobs and opportunities lurking around the corner too. No matter how great your HR department is, the threat of losing “that one key employee”, even in large organizations, is ever present. So what happens when that person walks out the door? Does their knowledge go with them? On average it costs a company $15.000 when an employee leaves. Creating a knowledge archive reduces that cost significantly. Hi there, social intranet! Before that key-employee leaves, ask him to write “How-to” articles on his most important tasks, and see if he can’t share his knowledge in weekly “Ask Me Anything” (AMA) sessions in a dedicated social-intranet Channel. Bonus points: that information can later be found with “search”.

Increased agility and growth

The world moves faster than the rules of yesteryear. Moving with the market, or becoming “Agile”, isn’t just something you can achieve with fancy project-management methods, or organizational structures. It’s about adaptability. And how do we humans adapt? By learning. By gaining new insights through the information that’s available at our fingertips at all times. By facilitating fast communicating, you don’t just increase the speed at which decisions get made. You increase every single employee’s ability to do their job the best they can, because what the information they need is available to them at all times.

Look at it like this: in a casual conversation, a friend asks me who the Greek god of the sea is. I want to impress my friend, but I never learned anything about Greek mythology during my years of study. So what do I do? I Google it. Answer found: Poseidon is your man.

What if we could do that with all the knowledge in our organizations? Evolution - whether organizational or personal - is intrinsically linked to our ability to communicate information effectively.

The bottom line

At the end of the day, your business case needs to make your social intranet’s vision happen. Make sure your business case highlights the following:

1. The problems you’re currently facing.
   
   
2. How a social intranet solution solves this.
   
   
3. What the investment is (time and money).
   
   
4. The consequences for different departments within the organization.
   
   
5. The consequences for the organization at large.
   
   
6. The expected ROI and time-to-value.