Role of Internal Communications to Increase Employee Engagement at a Time of Organisational Change

Management Proposal

Introduction

This management proposal aims to analyse the role of using internal communications to increase employee engagement at a time of organisational change and put forward recommendations to Wolseley UK. 

Wolseley UK is a FTSE 100 organisation with approximately nine thousand employees who aim to be the world’s leading supplier of plumbing and heating products to the trade.  Wolseley UK is currently going through a transformation programme.  A big part of this programme is restructuring the business, closing and consolidating branches and relocating the head office. 

Throughout the transformation programme employee engagement has dropped, and employee morale is very low.  This is partly due to the lack of communication between senior managers and those on the front line.  This has had an impact on sales and customer service, and the NPS score has significantly dropped. 

Although the two-year transformation programme was due to end in July 2018, due to the fall in sales, employee engagement and customer satisfaction, the programme was put on hold, and the new MD is looking at how best to restart the programme whilst attempting to increase sales, employee engagement and customer satisfaction.  The aim is to go back to basics, fix the health and safety issues, fix the services issues, use these to grow sales and then focus on growing margin and trading profit. 

Definitions

Internal communication is defined as “the strategic management of interactions and relationships between stakeholders within organisations across a number of interrelated dimensions including, internal line manager communication, internal team peer communication, internal project communication and internal corporate communication”[i].  

Employee engagement has many definitions but for this report employee engagement is defined as “a positive attitude held by the employee towards the organisation and its values”[ii]

The Engage for Success reports states that employee engagement enables an adult, two-way relationship between leaders and managers, and employees, where challenges can be met, and goals achieved, whether it be improved patient care, higher quality production or more satisfied customers. [iii] 

Change management is defined as the leadership of the process of organisational transformation, especially about overcoming resistance to change[iv]. 

Employee voice

Employee voice is described as a process of continuous dialogue between employees and managers, whereby employees are given regular opportunities to express views, concerns, ideas and practical suggestions about the organisation to all levels of management in an environment where such communication is genuinely welcomed, taken seriously, considered and honest responses provided[v]. 

Importance of internal communications during a time of organisational change

Internal communication at a time of organisational change is often blamed when a large-scale project/programme fails.  It is suggested that if internal communication can be a contributor to change failure, it can also play a vital role in delivering successful change programmes [vi]. 

Importance of employee engagement during a time of organisational change

Employers want engaged employees because, as well as being happier, healthier and more fulfilled, they are more motivated and deliver improved business performance.  Positive relationships are evidenced by profit, revenue growth, customer satisfaction, productivity, innovation, staff retention, efficiency and health and safety performance.  Conversely, having a disengaged workforce brings huge risks.  As well as losses in performance, employers may lose talented people if they feel demotivated ordisengaged. They may also face greater difficulties when embedding organisational change if employees are not on board, so wider alignment with strategy and engagement with the organisation is also important[vii].

Evaluation of the role of internal communications to increase employee engagement at a time of organisational change at Wolseley UK.

Transformation programme

In October 2016 after two years of a decrease in trading profits, it was decided that Wolseley UK needed to embark on a two-year transformation programme. 

As a part of this programme, Wolseley UK would receive £100 million from their parent group Ferguson, and Wolseley UK would then raise another £100 million by exiting out stock (£80 million) and then an additional £20 million by exiting leases in property. 

On September 27 2016, an announcement was made to the city:

John Martin, Wolseley’s chief executive, said the company would redeploy some staff elsewhere, although he did not rule out further job losses while the firm’s restructuring programme is completed.

“This process is going to take two to three years to get to a conclusion, and the purpose is to build the best service available for our customers in the marketplace,” he said. “We need to exit these [branches] now and it will take a long time to exit.”

The closure of 80 branches and one distribution centre is expected to save up to £30m a year, and Wolseley estimated that the restructuring will cost around £100m, of which £70m is cash funded by working capital efficiencies and proceeds from disposals.

“We’ve made the decision to close those branches because… we believe we can service those areas with less real estate,” Mr Martin added. As part of the changes, Wolseley’s Pipe Center, Drain Center and Plumb Center brands will be run as a single network, and it will look to achieve quicker deliveries with changes to its systems.

The firm is also overhauling its Nordics business, although it is yet to announce the outcome of the review.

Wolseley’s UK trading profit was £74m for the year to July 31, down £16m from the previous 12 months. It attributed the loss to a decline in its core repair, maintenance and improvement markets.

Total pre-tax profits jumped 43pc from £508m to £727m, following healthy growth in Ferguson, its US business. The American arm generates more than 80pc of the company’s trading profit, compared to 8pc in the UK.

“Residential and commercial markets, which make up three-quarters of that 80pc, have continued to grow very well so we’re very pleased with that,” Mr Martin said.

Wolseley’s revenue rose by 8pc to £14.4bn while the company increased its dividend by 10.2pc to 100p a share.

“We have experienced general weakness in the UK market, although the headwinds we’re experiencing will go away in the future and there remains a decent outlook.”

Mr Martin said that the company would continue to target acquisitions, having spent £300m buying other businesses during the year. “Ferguson continues to be the main priority for organic expansion and bolt-on acquisitions,” he said.

Wolseley’s shares tumbled 3.49pc to £41.45 in morning trade[viii].

Although the announcement had some positive comments, the overall impact on the UK was huge.  In the opinion of the staff involved, this was handled very badly.  The announcement was released to the City at 7.30am, and the first any employees were made aware via a conference at 8.30am, by which time they had all read the information available on the intranet and on BBC news.  This was the first error that caused a lot of turmoil with employees, the feeling was that the senior executive team did not trust employees to give them the information in advance, or even earlier in the morning. Radical programmes such as the one announced by Wolseley UK can lead to turmoil [ix]. With research backing up the way in which the employees were feeling, it makes you think whether the senior executive had completed any research on transformational change before initiating the change. 

 A point to note is that the new Head of Communication started three days prior to the change being communicated, therefore they cannot be held accountable for the errors that took place.  They were not in the role long enough for them to effect any change to the way in which the initial communications were handled.  It is also worth noting that all the internal and external communications were outsourced to a communication agency (due to not having a Head of Communication in post), who did not know enough about the organisation or the employees.  This clearly came through in the communications that were sent out, and the way in which the timings were handled. 

The issues only got worse, with employees being promised regular communication and this not being delivered.   A pulse survey (employee engagement survey) was carried out in May 2016 with the next one due in November 2016, but to date this has not been carried out.  The reason for not completing the survey in November was that the survey costs too much, and due to cost saving activities it was not practical.  However, the employees felt that this was because the senior management team did not want to hear the truth about the way in which they felt.  Employees felt that they had been cheated out of the opportunity of giving the senior executive team anonymous views of how they felt.  The employees felt as though they had no voice and had no place to express views, concerns and ideas[x].

The results from May 2016 show that employee engagement was already on the decrease, and issues were present from then. 

Verbatim comments from the May 2016 survey:

“We are not valued”

“It’s us against management”

“There is a lack of direction on where we are going”

“We need more staff in branches”

Thus, cancelling the employee engagement survey for future months continued to have a negative impact on employees. 

The programme has not only impacted employees but also customers.  The £80 million of stock which needs to be exited from the business has meant that the availability of stock has decreased, and a new range has been rolled out into branches.  This has led to customers not having access to products as they did previously.  This means that they often must wait for the product to arrive into branch the next day for them to then collect, where previously this would have been available. 

This impact on customers has been demonstrated by a decrease in the Net Promoter Score (NPS) for Wolseley UK.  Prior to the transformation the NPS score was on an upward trajectory, however since the lack of products in branches and issues with the number of staff in branches, the NPS has decreased to levels below that are unacceptable (figure 1).

Figure 1: Chart showing the NPS score for Wolseley UK from May 2016 – August 2018.

The chart shows a clear path of the NPS score for Wolseley UK showing a downward trajectory, with no scope of recovering until something is done about the change programme.  Although this could have nothing to do with internal communication, Wolseley UK can provide internal communication to employees in branches so that they can provide customers with updates on any issues that they are facing with the levels/availability of stock.  Informed customers may not react so badly and will probably forgive the branches for the lack of stock availability.  Wolseley UK did not give any tools to employees to help the inform customers of the changes to Wolseley UK.  All of this has impacted sales, which are also on a decrease, with profits falling (figure 2)

Figure 2: Trading profits at Wolseley UK. 

The transformation programme was supposed to increase the trading profit of the company however from what has been announced to the City and to employees this is not the case.  The decrease in sales can be attributed to low employee engagement.  As previously mentioned the CIPD have suggested low employee engagement can lead to a decrease in sales, this rings true for Wolseley UK and is clearly shown in figures 1 and 2.

Communication challenges faced by Wolseley UK

There are number of features of change projects that can create a challenging environment for communicators of change, table 1 breaks these down and aligns them to the challenges faced by Wolseley UK.

Challenge	Wolseley UK
Starting at the right time	It is clear from the way that the timing of the communication was handled, that Wolseley UK picked the wrong time to inform staff.  Employees should have been informed prior to the news being made available to the press which in turn got the rumour mill going within head office and the branches.
Having the right resources and practices in place	It appears that Wolseley UK were in some type of rush to make the announcement to the city about the changes it was proposing to its business.  However, if they had waited for the new Head of Communications to be embedded into the business, to familiarise themselves with the organisation, the communication may have been handled better.  But in fact, the communication team were not up to daily fitness[xi].
Coping without a firm implementation plan	With the messaging being so finite, closure of a distribution centre, loss of 800 jobs, there was no room for the communication team to communicate a range of possibilities.  They had to go with the information that had been communicated to the press, but without the ability to provide any more information.  There was a plan of where the 800 jobs were being lost from, but this was not shared.  When it was shared, it was shared in small chunks, which led to further rumours, and with employees not having the full facts.
Taking different staff groups through the change journey	Taking different staff groups through the change journey was one of the biggest challenges faced by the communication team.  There were those employees who were not impacted by the change that would need to be kept informed, and then there were those employees who were heavily impacted by the change.  These employees needed the right amount of information at the right time, with regular updates.  This was not provided by Wolseley UK, communication was not delivered when it was agreed, and this caused a lot of angry employees, along with a lot of rumours.
Getting the communication content right	The content of the communication that was shared with employees was one of the things that Wolseley UK got correct.  It was concise, to the point and relevant for the audience group.

Table 1: What are the challenges of communicating change adapted from Harrison 2015.

Communication Channels

When communicating the change to employees, Wolseley UK used four distinct channels:

• Emails
• Conference calls
• Face to face meetings
• UK Press

Emails

The emails sent out by the communication team were impersonal quite vague, and a repeat of the message already sent to the UK press.  Employees were not give any more information nor were they given a timeline of when they can expect more information. 

Conference calls

Senior Managers held conference calls with the direct reports, due to the disparity of the business, in which they were provided a script.  Unfortunately, the script was the same as the email that the employees had already received (and the messaging in the UK Press) so once again the information provided was very vague, and employees were not given the option to ask any questions. 

Face to face meetings

The employees at head office were given the opportunity to attend a face to face meeting with the MD.  Employees assumed that they would be given more information, however this was incorrect.  Once again all employees were treated to was the same messaging they had heard throughout the day already, 

UK press

Employees felt that they had come second to the UK press as the press were the first to know about the changes, with employees finding out after the fact.  This caused a lot of anger and frustration, which was the last thing the senior management team needed. 

Recommendations 

The evidence in this document supports the need for Wolseley UK to manage change communication better to ensure that employees are engaged throughout the change programme.

• Create regular meetings and touchpoints to discuss points and reinforce collaborative behaviour
• Set up an employee forum
• Restart the employee engagement survey
• Develop managers to give them the tools to communicate change in an engaging way
• Develop senior leaders’ communication capabilities
• Review the internal communications that have been used in recent years, gathering data on what colleagues find most useful in the way of updating them on company information
• Advise senior leaders not to make promises that they cannot adhere to – i.e. communicate when they have said they would

Review of Proposal for Change

Overview of secondary research

Research Philosophy

Mixed methods research is defined as being a methodology by which research is carried out using qualitative and quantitative data in a single study[xii].  Mixed methods research offers a potentially valuable alternative for researchers interested in undertaking multi-dimensional research[xiii].

As with all research philosophies, mixed methods research has its strengths as well as weaknesses.  One of the biggest strengths of this type of research is that it allows researchers to explore different themes and aspects of a single research project.  The biggest criticism of mixed methods research is that due to the multidimensional levels that can be explored the research can be very time consuming and complex. 

In this project, the researcher has used primary and secondary data sources.  The primary research consisted of an employee engagement survey and provided quantitative data, the secondary research consisted of literature-based research provided qualitative data.

Epistemological and Ontological Stance

Epistemology is defined as being the theory of knowledge, with regard to its methods, validity and scope, and the distinction between justified belief and opinion[xiv]. Epistemology can also be described as a path to how we come to know what distinguishes what is true from false and how researchers understand the conditions under which such distinction is possible and meaningful[xv]. Ontology is described as a method by which the world can be organised[xvi]. Ontology is also described as what constitutes reality and how researchers can understand existence[xvii].

The researcher collected both qualitative and quantitative data; therefore, the researcher has taken a pragmatic approach to data collection. Pragmatism is presented as an alternative methodological position for both positivism and anti-positivism[xviii]. It is argued that through an epistemology where human purposes are highlighted, it can better incorporate practical relevance into organisational research[xix]. It is posited that the central tenet of pragmatism is the idea that knowledge is not about representing the world but coping with it[xx]. In light of Watson’s argument, the researcher analysed the quantitative data to provide scientific evidence but also used the qualitative literature to substantiate what the evidence stated.

Questionnaires

Researchers from many disciplines are starting to see the benefits of collecting data using the Internet[xxi]. Questionnaires have few open questions, have easy to follow designs, and can be shorter than interviews and so can reduce respondent fatigue.  Questionnaires are cheap and quick to administer, have the absence of the researcher having influence over the respondent, thus reducing bias[xxii].  The limitations of using questionnaires are that there is no room to ask probing questions, should something interesting be revealed, there is a risk of missing data and often the questionnaires are not appropriate for all types of respondents[xxiii].

Secondary Research

Literature-based research is defined as being a scientific tool which is used to communicate the results of unmanageable quantities.  Literature-based research uses an inductive approach as it enables the analysis of relevant theoretical perspectives to analyse data and support the findings from interviews and questionnaires. It is helpful to break down the process of conducting a review of the literature into several stages and to examine each one in turn (table 2).

Table 2: The Systematic Literature Review Process [xxiv]

This research used a prescribed deductive method to critically evaluate the theoretical perspectives found in literature and applies them practically to the project, whilst at the same time highlighting the literature’s strengths and limitations. To eliminate irrelevant sources the researcher used the prescribed method to provide structure, and a process.

The literature review for the project consisted of the analysis of academic research, on change management importance of communication at a time of change and employee engagement, which were gathered by searching databases of Emerald Insights, Science Direct and by browsing the Internet using Google Scholar.

The limitations of using a prescribed systematic review method include (but are not restricted to):

• Failure to evaluate the quality of studies
• Failure to exclude poorly designed studies
• An inadequate search of the literature[xxv]

Validity and Reliability of Research Methods

Reliability is defined as the degree of stability exhibited when a measurement is repeated under identical conditions. The validity of a research method is determined by how well the research method concludes what it set out to conclude.[xxvi]

The reliability and validity of the primary research were measured by obtaining employee engagement survey results from the HR department because engagement surveys are quite emotive, it is not always possible to replicate the results.  

Using peer-reviewed journals found from Google Scholar and the PR Academy library ensured the reliability and validity of the secondary research.

Mitigating Strategies

The issues and challenges that the project might have encountered due to the pragmatist approach are listed as follows:

• Making bias conclusions as the researcher is also impacted by the change
• Amount of literature available for change management importance of communication at a time of change and employee engagement in the construction/merchant industry

To mitigate these risks, the employee engagement survey results were obtained from the HR department.

To refrain from making biased conclusions the researcher used the data presented to summarise the project. To mitigate the risk of the amount of literature being available which is relevant to the industry, the researcher has tried to use research, which is for large organisations rather than small organisations to ensure the research is relevant.

Frameworks and models

To improve employee engagement at a time of change at Wolseley UK recommendations were made based on the following frameworks or models. 

Conceptual Model

The conceptual model (figure 3) illustrate the impact of communication on employee engagement at an organisational level. The model positions aspects of leadership communication from senior managers in relation to employee engagement[xxvii].  This model clearly describes what is needed at Wolseley UK to increase employee engagement.  The lack of communication, or the lack of communication when promised has caused employee engagement to drop dramatically at Wolseley UK.  The idea that the staff feel its “them against us” shows that there is a lack of commitment.  Commitment is often associated and affected by leadership communication. 

Figure 3: the employee engagement concept and internal corporate communication: conceptual model

The model depicts innovation, competitiveness and organisational effectiveness as organisational outcomes of employee engagement promoted by effective internal corporate communication^xx.

Work and Organisational Engagement

Table 3 describes the difference between work and organisational engagement. 

Table 2: Work and organisational engagement

Engagement can also be defined as being positively present during the performance of work by willingly contributing intellectual effort.  This definition does not have connections to the organisation, a broad set of drivers were identified:

• Meaningfulness of work – created through regular communication
• Voice – feeding your views upward
• Senior management communication and vision
• Supportive work environment
• Person-job fit
• Line management style[xxviii]

Of these drivers they state that meaningfulness and voice are the most important factors. Both factors were forgotten at Wolseley UK.  There was lack of regular communication and the engagement surveys were cancelled, which meant that employees could not feed their views upwards.  Having a voice is important for employees to feel engaged.  So, for Wolseley UK to scrap the survey caused even more damaged to the engagement of employees. 

Communication Themes

At a time of change employees expect a certain amount of communication, and without this they struggle to complete the journey of the change with the senior management team.  Table 4 shows a number of these alongside the researchers who suggested them. Studies have been conducted whereby these themes where tested with a group of individuals who understand change management.  It was found that the individuals agreed that communication is required based on these themes, when taking employees through a period of change.  This supports the recommendations made that Wolseley UK need to provide more regular senior management communication to keep employees informed during a period of change. 

Table 4: Communication themes[xxix]

Ethical considerations

The ethics of internal communication are rarely discussed in literature and codes of ethical considerations or practices specific to internal communication is very limited.

An ethical internal communicator:

• Ensures that employees receive important organisational information at the right time for them
• Ensures that employees have a say about what goes on in the organisation and that what is said is treated seriously
• Ensures that senior managers communicate regularly with employees, providing them with important organisational information, listening to their opinions and suggestions and responding to them
• Challenges senior managers when important information is not forthcoming
• Challenges senior managers when employee voice is not in place across the organisation[xxx]

In terms of the research, the researcher took into consideration the following ethical implications:

• ensured that the quality of the research is not compromised by using valid sources
• ensured to reference all material/literature accurately to ensure the integrity of the project is not compromised

This gives the research a solid foundation to be taken seriously. 

With the help of the recommendations made in the management proposal, Wolseley UK should be able to improve employee engagement by providing regular internal communication during a period of change.  The improvement in employee engagement and provision of an employee voice will increase sales and hopefully increase customer NPS.

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