Voice/Internal Communications : Confidence through communication

Four years ago, dtr was in trouble. It had grown from its earliest days as one of New Zealand’s first suppliers of televisions, to national chain of 27 stores with more than 150 staff.
And yet, by 2006, following more than 40 years of successful operation, the company was facing crisis; years of neglect had reduced profits and the entire business was under threat.
Morale was at an all-time low. Staff were uncertain of the future of the business, and ultimately, the company faced the challenge of having to change its culture or die.
The solution came initially through management buy-out in November 2006 by myself and executive chairman Gordon Howlett, coupled with new three-year plan to restore profitability and growth, with the goal of achieving $3 million in EBIT within three years.
Given the loss-making status of the firm at the time, $3 million certainly qualified as lofty ambition, one that wouldn’t be achieved without successful change in the business culture.
Perhaps more important than any other initiative to turn the business around were our efforts in communicating the new direction for the business with our employees.
The first task was to address the lack of trust that existed within the business. Setting the right tone was vital.
We decided to be absolutely and brutally transparent to our employees about what was happening in the business and what was going to happen, which included providing them with all figures and financials.
We presented bad news early and were open to anyone who offered criticism – embodying the age-old maxim of not shooting the messenger.
By creating community of confidence, staff could take ownership in finding solutions to the business problems. People began to trust each other again, building better relationships that benefitted the brand.
The key point for all internal dtr communication following the buy-out was to start with the ‘why’. No matter what was happening if our people were clear about why it was happening, their level of engagement went through the roof.
While we used multiple forums to communicate with our staff – newsletters, intranet, face-to-face meetings or the annual company video – being consistent in communication provided clarity of purpose, which was then carried throughout the business. We communicated regularly on schedule, working hard to ensure no voids in communication – voids are seldom interpreted positively.
By having common, established goal, it was easy to see when particular decision didn’t support this fundamental ‘why’. If all communications referred back to the common goals and involved everyone in the process, we could form common destiny.
At dtr, we underpinned this strategy of creating ownership and common goal with the establishment of company-wide Long Term Incentive Plan, which essentially gave our staff 15 percent ownership stake in the company.
This in turn helped them feel directly connected to the health of the company, which focused them even more on contributing to its success.
It’s now been four years since dtr’s management buy-out. In that time, dtr has achieved substantial turnaround as business, $3.7 million earnings swing: from $1.5 million loss in 2007 to posting $2.2 million EBIT in 2010. We are now set for further 40 percent EBIT growth in 2011.
There is no doubt in my mind that this success is being achieved largely due to effective internal communications. It’s created the community of confidence within our people that all businesses need to succeed.