BUSINESS COMMUNICATION

Communication is neither the transmission of a message nor the message itself. It is

the mutual exchange of understanding, originating with the receiver. Communication
needs to be effective in business. Communication is the essence of management. The
basic functions of management (Planning, Organizing, Staffing, Directing and
Controlling) cannot be performed well without effective communication.
Business communication involves constant flow of information. Feedback is integral
part of business communication. Organizations these days are verly large and involve
large number of people. There are various levels of hierarchy in an organization.
Greater the number of levels, the more difficult is the job of managing the organization.
Communication here plays a very important role in process of directing and controlling
the people in the oragnization. Immediate feedback can be obtained and
misunderstandings if any can be avoided. There should be effective communication
between superiors and subordinated in an organization, between organization and
society at large (for example between management and trade unions). It is essential
for success and growth of an organization. Communication gaps should not occur in
any organization.
Business Communication is goal oriented. The rules, regulations and policies of a
company have to be communicated to people within and outside the organization.
Business Communication is regulated by certain rules and norms. In early times,
business communication was limited to paper- work, telephone calls etc. But now with
advent of technology, we have cell phones, video conferencing, emails, satellite
communication to support business communication. Effective business
communication helps in building goodwill of an organization.
Business Communication can be of two types:
Oral Communication - An oral communication can be formal or informal. Generally
business communication is a formal means of communication, like: meetings,
interviews, group discussion, speeches etc. An example of Informal business
communication would be - Grapevine.
Written Communication - Written means of business communication includes -
agenda, reports, manuals etc.

Communication is a process of exchanging verbal and non verbal messages. It is a

continuous process. Pre-requisite of communication is a message. This message
must be conveyed through some medium to the recipient. It is essential that this
message must be understood by the recipient in same terms as intended by the
sender. He must respond within a time frame. Thus, communication is a two way
process and is incomplete without a feedback from the recipient to the sender on how
well the message is understood by him.
Components of Communication Process Communication Process
The main components of communication process are as follows:

Context Communication is affected by the context in which it takes place. This context
may be physical, social, chronological or cultural. Every communication proceeds with
context. The sender chooses the message to communicate within a context.
Sender / Encoder - Sender/Encoder is a person who sends the message. A sender
makes use of symbols (words or graphic or visual aids) to convey the message and
produce the required response. For instance - a training manager conducting training
for new batch of employees. Sender may be an individual or a group or an
organization. The views, background, approach, skills, competencies, and knowledge
of the sender have a great impact on the message. The verbal and non verbal symbols
chosen are essential in ascertaining interpretation of the message by the recipient in
the same terms as intended by the sender.
Message - Message is a key idea that the sender wants to communicate. It is a sign
that elicits the response of recipient. Communication process begins with deciding
about the message to be conveyed. It must be ensured that the main objective of the
message is clear.
Medium - Medium is a means used to exchange / transmit the message. The sender
must choose an appropriate medium for transmitting the message else the message
might not be conveyed to the desired recipients. The choice of appropriate medium of
communication is essential for making the message effective and correctly interpreted
by the recipient. This choice of communication medium varies depending upon the
features of communication. For instance - Written medium is chosen when a message
has to be conveyed to a small group of people, while an oral medium is chosen when
spontaneous feedback is required from the recipient as misunderstandings are cleared
then and there.
Recipient/Decoder - Recipient / Decoder is a person for whom the message is
intended / aimed / targeted. The degree to which the decoder understands the
message is dependent upon various factors such as knowledge of recipient, their
responsiveness to the message, and the reliance of encoder on decoder.
Feedback - Feedback is the main component of communication process as it permits
the sender to analyze the efficacy of the message. It helps the sender in confirming
the correct interpretation of message by the decoder. Feedback may be verbal
(through words) or non-verbal (in form of smiles, sighs, etc.). It may take written form
also in form of memos, reports, etc.
Importance of Communication in an Organization
Effective Communication is significant for managers in the organizations so as to
perform the basic functions of management, i.e., Planning, Organizing, Leading and
Controlling.
Communication helps managers to perform their jobs and responsibilities.
Communication serves as a foundation for planning. All the essential information must
be communicated to the managers who in-turn must communicate the plans so as to
implement them. Organizing also requires effective communication with others about
their job task. Similarly leaders as managers must communicate effectively with their
subordinates so as to achieve the team goals. Controlling is not possible without
written and oral communication.
Managers devote a great part of their time in communication. They generally devote
approximately 6 hours per day in communicating. They spend great time on face to
face or telephonic communication with their superiors, subordinates, colleagues,
customers or suppliers. Managers also use Written Communication in form of letters,
reports or memos wherever oral communication is not feasible.
Thus, we can say that "effective communication is a building block of successful
organizations". In other words, communication acts as organizational blood.
The importance of communication in an organization can be summarized as
follows:
• Communication promotes motivation by informing and clarifying the employees
about the task to be done, the manner they are performing the task, and how to
improve their performance if it is not up to the mark.
• Communication is a source of information to the organizational members for
decision-making process as it helps identifying and assessing alternative course of
actions.
Communication also plays a crucial role in altering individual's attitudes, i.e., a well
informed individual will have better attitude than a less-informed individual.
Organizational magazines, journals, meetings and various other forms of oral and
written communication help in moulding employee's attitudes.
• Communication also helps in socializing. In todays life the only presence of another
individual fosters communication. It is also said that one cannot survive without
communication.
• As discussed earlier, communication also assists in controlling process. It helps
controlling organizational member's behaviour in various ways. There are various
levels of hierarchy and certain principles and guidelines that employees must follow in
an organization. They must comply with organizational policies, perform their job role
efficiently and communicate any work problem and grievance to their superiors. Thus,
communication helps in controlling function of management.
An effective and efficient communication system requires managerial proficiency in
delivering and receiving messages. A manager must discover various barriers to
communication, analyze the reasons for their occurrence and take preventive steps to
avoid those barriers. Thus, the primary responsibility of a manager is to develop and
maintain an effective communication system in the organization.
Forms And Types Of Communication
Oral communication implies communication through mouth. It includes individuals
conversing with each other, be it direct conversation or telephonic conversation.
Speeches, presentations, discussions are all forms of oral communication. Oral
communication is generally recommended when the communication matter is of
temporary kind or where a direct interaction is required. Face to face communication
(meetings, lectures, conferences, interviews, etc.) is significant so as to build a rapport
and trust.
Advantages of Oral Communication
There is high level of understanding and transparency in oral communication as it is
interpersonal.
1. There is no element of rigidity in oral communication. There is flexibility for allowing
changes in the decisions previously taken.
2. The feedback is spontaneous in case of oral communication. Thus, decisions can
be made quickly without any delay.
3. Oral communication is not only time saving, but it also saves upon money and
efforts.
4. Oral communication is best in case of problem resolution. The conflicts, disputes
and many issues/differences can be put to an end by talking them over.
5. Oral communication is an essential for teamwork and group energy. 6. Oral
communication promotes a receptive and encouraging morale among organizational
employees.
7. Oral communication can be best used to transfer private and confidential
information/matter.
Disadvantages/Limitations of Oral Communication
 1. Relying only on oral communication may not be sufficient as business
communication is formal and very organized.
2. Oral communication is less authentic than written communication as they are
informal and not as organized as written communication.
3. Oral communication is time-saving as far as daily interactions are concerned,
but in case of meetings,long speeches consume lot of time and are
unproductive at times.
4. Oral communications are not easy to maintain and thus they are unsteady.
5. There may be misunderstandings as the information is not complete and may
lack essentials.
6. It requires attentiveness and great receptivity on part of the receivers/audience.
7. Oral communication (such as speeches) is not frequently used as legal records
except in investigation work.
Written communication has great significance in today's business world. It is an
innovative activity of the mind. Effective written communication is essential for
preparing worthy promotional materials for business development. Speech came
before writing. But writing is more unique and formal than speech. Effective writing
involves careful choice of words, their organization in correct order in sentences
formation as well as cohesive composition of sentences. Also, writing is more valid
and reliable than speech. But while speech is spontaneous, writing causes delay and
takes time as feedback is not immediate.
Advantages of Written Communication
1. Written communication helps in laying down apparent principles, policies and rules
for running of an organization.
2. It is a permanent means of communication. Thus, it is useful where record
maintenance is required.
3. It assists in proper delegation of responsibilities. While in case of oral
communication, it is impossible to fix and delegate responsibilities on the grounds of
speech as it can be taken back by the speaker or he may refuse to acknowledge.
4. Written communication is more precise and explicit.
5. Effective written communication develops and enhances an organization's image.
6. It provides ready records and references.
7. Legal defenses can depend upon written communication as it provides valid
records.
Disadvantages of Written Communication
1. Written communication does not save upon the costs. It costs huge in terms of
stationery and the manpower employed in writing/typing and delivering letters.
2. Also, if the receivers of the written message are separated by distance and if they
need to clear their doubts, the response is not spontaneous.
3. Written communication is time-consuming as the feedback is not immediate. The
encoding and sending of message takes time.
4. Effective written communication requires great skills and competencies in language
and vocabulary use. Poor writing skills and quality have a negative impact on
organization's reputation.
5. Too much paper work and e-mails burden is involved.
Scenario 1 - You are sitting in front of an interview panel with arms crossed. So far
you have not been asked a single question, however, your crossed arms have spoken
louder than the words.
Tip 1 - Never keep your arms crossed especially during formal one-on-one meetings.
It suggests you are not open to feedback and could also suggest that you are trying to
dominate the situation.
Scenario 2 - You are giving a presentation to a group of 20 people. You keep your
gaze fixed at the centre of the class / room through the presentation - your gaze has
spoken louder than your words.
Tip 2 - Your gaze at one person should not be more than 4 - 5 seconds while delivering
a presentation / communicating with a large group unless you are addressing an
individual.
Scenario 1 and 2 clearly demonstrate the importance of Non Verbal Communication.
Verbal Communication
It is communication of feelings, emotions, attitudes, and thoughts through body
movements/gestures / eye contact, etc.
The components of Non Verbal Communication are:
Kinesics: It is the study of facial expressions, postures & gestures. Did you know that
while in Argentina to raise a fist in the air with knuckles pointing outwards expresses
victory, in Lebanon, raising a closed fist is considered rude?
Oculesics: It is the study of the role of eye contact in non verbal communication. Did
you know that in the first 90 sec - 4 min you decide that you are interested in someone
or not. Studies reveal that 50% of this first impression comes from non-verbal
communication which includes oculesics. Only 7% of comes from words - that we
actually say.
Haptics: It is the study of touching. Did you know that acceptable level of touching
vary from one culture to another? In Thailand, touching someone's head may be
considered as rude.
Proxemics: It is the study of measurable distance between people as they interact.
Did you know that the amount of personal space when having an informal conversation
should vary between 18 inches - 4 feet while, the personal distance needed when
speaking to a crowd of people should be around 10-12 feet?
Chronemics: It is the study of use of time in non verbal communication. Have you
ever observed that while an employee will not worry about running a few minutes late
to meet a colleague, a manager who has a meeting with the CEO, a late arrival will be
considered as a nonverbal cue that he / she does not give adequate respect to his
superior?
Paralinguistics: It is the study of variations in pitch, speed, volume, and pauses to
convey meaning. Interestingly, when the speaker is making a presentation and is
looking for a response, he will pause. However, when no response is desired, he will
talk faster with minimal pause.
Physical Appearance: Your physical appearance always contributes towards how
people perceive you. Neatly combed hair, ironed clothes and a lively smile will always
carry more weight than words.
Remember, "what we say" is less important than "how we say it as words are only 7%
of our communication. Understand and enjoy nonverbal communication as it helps
forming better first impressions. Good luck!
Communication Flows in an Organization
In an organization, communication flows in 5 main directions
1. Downward
2. Upward
3. Lateral
4. Diagonal
5. External
1. Downward Flow of Communication: Communication that flows from a higher level
in an organization to a lower level is a downward communication. In other words,
communication from superiors to subordinates in a chain of command is a downward
communication. This communication flow is used by the managers to transmit work-
related information to the employees at lower levels. Employees require this
information for performing their jobs and for meeting the expectations of their
managers. Downward communication is used by the managers for the following
purposes-
• Providing feedback on employees performance
• Giving job instructions
•Providing a complete understanding of the employees job as well as to communicate
them how their job is related to other jobs in the organization.
• Communicating the organization's mission and vision to the employees.
• Highlighting the areas of attention. Organizational publications, circulars, letter to
employees, group meetings etc are all examples of downward communication. In
order to have effective and error-free downward communication, managers must:
• Specify communication objective
• Ensure that the message is accurate, specific and unambiguous.
• Utilize the best communication technique to convey the message to the receiver in
right form
2. Upward Flow of Communication: Communication that flows to a higher level in
an organization is called upward communication. It provides feedback on how well the
organization is functioning. The subordinates use upward communication to convey
their problems and performances to their superiors.
The subordinates also use upward communication to tell how well they have
understood the downward communication. It can also be used by the employees to
share their views and ideas and to participate in the decision-making process.
Upward communication leads to a more committed and loyal workforce in an
organization because the employees are given a chance to raise and speak
dissatisfaction issues to the higher levels. The managers get to know about the
employees feelings towards their jobs, peers, supervisor and organization in general.
Managers can thus accordingly take actions for improving things
Grievance Redressal System, Complaint and Suggestion Box, Job Satisfaction
surveys etc all help in improving upward communication. Other examples of Upward
Communication are -performance reports made by low level management for
reviewing by higher level management, employee attitude surveys, letters from
employees, employee-manager discussions etc.
3. Lateral / Horizontal Communication: Communication that takes place at same
levels of hierarchy in an organization is called lateral communication, i.e.,
communication between peers, between managers at same levels or between any
horizontally equivalent organizational member. The advantages of horizontal
communication are as follows:
• It is time saving.
• It facilitates co-ordination of the task.
• it facilitates co-operation among team members.
• It provides emotional and social assistance to the organizational members.
• It helps in solving various organizational problems.
• It is a means of information sharing
• It can also be used for resolving conflicts of a department with other department
or conflicts within a department.
4. Diagonal Communication: Communication that takes place between a manager
and employees of other workgroups is called diagonal communication. It generally
does not appear on organizational chart. For instance - To design a training module a
training manager interacts with an Operations personnel to enquire about the way they
perform their task.
5. External Communication: Communication that takes place between a manager
and external groups such as - suppliers, vendors, banks, financial institutes etc. For
instance - To raise capital the Managing director would interact with the Bank
Manager.

FORMAL AND INFORMAL COMMUNICATION NETWORK

Formal Communication
Definition: The Formal Communication is the exchange of official information that
flows along the different levels of the organizational hierarchy and conforms to the
prescribed professional rules, policy, standards, processes and regulations of the
organization.
The formal communication follows a proper predefined channel of communication and
is deliberately controlled. It is governed by the chain of command and complies with
all the organizational conventional rules. In the organizational set up the formal
communication can observe any of the following forms:
1. Downward Communication: The downward communication is when the
information passes from the management level to the subordinate level. This is the
most common form of formal communication wherein communication flows
downwards, i.e. from the people occupying top positions in the organization to the
people at lower levels.
It mainly includes orders and instructions and can either be written or oral depending
on the importance of the message and also the status of individuals involved in the
communication process. Reports, emails, letters, manuals, etc. are the commonly
used communication tools.
2. Upward Communication: The upward communication is when the message
passes from the subordinate level to the management level. Here, the communication
flows upwards i.e. from the subordinates to the managers in the form of request,
reports, suggestions, complaints, and instructions.
3. Horizontal or Lateral Communication: Horizontal communication means when
the Co-workers with different areas of responsibilities, but at the same level in the
organization communicate with each other. The communication between the
managers of a different department, such as marketing, finance, production, HR, is
the best example of horizontal communication.
4. Diagonal or Crosswise Communication: When the employees of different
departments at different levels communicate with each other irrespective of the chain
of command, then the communication is said to be a diagonal or a cross wise
communication. The communication between the floor manager and the sales team is
the example of diagonal communication.
The way in which the formal communication can be facilitated is called as the formal
communication network. There are several forms of Formal Communication Network
that individuals use to get their message transmitted to others.
Informal Communication
Definition: The Informal Communication is the casual and unofficial form of
communication wherein the information is exchanged spontaneously between two or
more persons without conforming the prescribed official rules, processes, system,
formalities and chain of command.
The informal communications are based on the personal or informal relations such as
friends, peers, family, club members, etc, and thus is free from the organizational
conventional rules and other formalities. In the business context, the informal
communication is called as a "grapevine" as it is difficult to define the beginning and
end of the communication.
The informal communication is characterized by an indefinite channel of
communication, which means there is no definite chain of command through which the
information flows. Hence, the information can flow from anywhere. Often such
communication arises out of the social relations that an individual creates with other
persons on the basis of common interest, likings or dislikings.
There are four types of Informal Communication (Grapevine) network that show how
the communication is facilitated. These are:
1. Single Strand Chain
2. Gossip Chain
3. Probability Chain
4. Cluster Chain
The gossip in the organization is the best example of informal communication, wherein
the employees of different department irrespective of their hierarchical positions come
together and communicate with each other. The grapevine satisfies the social needs
of people and smoothens the formal relations by filling in the gaps and even bring
together different people who do not fall under the common chain of command.
Comparison Chart
FORMAL COMMUNICATION INFORMAL COMMUNICATION

Meaning A type of verbal communication A type of verbal communication

in which the interchange of in which the interchange of
information is done through the information does not follow any
pre-defined channels is known channels i.e. the communication
as formal communication. stretches in all directions.
Another Official Communication Grapevine communication
Name
Reliability More Comparatively less
Speed Slow Very Fast
 Evidence As the communication is No documentary evidence.
generally written, documentary
evidence is present.
Time Yes No
Consuming
Advantage Effective due to timely and Efficient because employees
systematic flow of information. can discuss work related
problems, this saves time and
cost of the organization.
Disadvanta Distortion due to long chain of Spread of rumors
ge communication.

Secrecy Full secrecy is maintained. It is difficult to maintain the

secrecy.
Flow of Only through predefined Can move freely
Information channels.

Barriers and Gateways to Communication

Communication is a process beginning with a sender who encodes the message and
passes it through some channel to the receiver who decodes the message,
Communication is fruitful if and only if the messages sent by the sender is interpreted
with same meaning by the receives. If any kind of disturbance blocks any step of
communication, the message will be destroyed. Due to such disturbances, managers
in an organization face severe problems. Thus the managers must locate such
barriers and take steps to get rid of them.
There are several barriers that affects the flow of communication in an organization.
These barriers interrupt the flow of communication from the sender to the reciever,
thus making communication ineffective. It is essential for managers to overcome these
barriers. The main barriers of communication are summarized below.
Following are the main communication barriers:
• Perceptual and Language Differences: Perception is generally how each individual
interprets the world around him. All generally want to receive messages which are
significant to them. But any message which is against their values is not accepted. A
same event may be taken differently by different individuals. For example: A person is
on leave for a month due to personal reasons (family member being critical). The HR
Manager might be in confusion whether to retain that employee or not, the immediate
manager might think of replacement because his teams productivity is being
hampered, the family members might take him as an emotional support.
• The linguistic differences also lead to communication breakdown. Same word may
mean different to different individuals. For example: consider a word "value".
• What is the value of this Laptop?
• I value our relation?
• What is the value of learning technical skills?

"Value" means different in different sentences. Communication breakdown occurs if

there is wrong perception by the receiver.
1. Information Overload: Managers are surrounded with a pool of information. It is
essential to control this information flow else the information is likely to be
misinterpreted or forgotten or overlooked. As a result communication is less effective.
2. Inattention: At times we just not listen, but only hear. For example a traveler may
pay attention to one "NO PARKING" sign, but if such sign is put all over the city, he no
longer listens to it. Thus, repetitive messages should be ignored for effective
communication. Similarly if a superior is engrossed in his paper work and his
subordinate explains him his problem, the superior may not get what he is saying and
it leads to disappointment of subordinate
3. Time Pressures: Often in organization the targets have to be achieved within a
specified time period, the failure of which has adverse consequences. In a haste to
meet deadlines, the formal channels of communication are shortened, or messages
are partially given, i.e., not completely transferred. Thus sufficient time should be given
for effective communication.
4. Distraction/Noise: Communication is also affected a lot by noise to distractions.
Physical distractions are also there such as, poor lightning, uncomfortable sitting,
unhygienic room also affects communication in a meeting. Similarly use of loud
speakers interferes with communication.
5. Emotions: Emotional state at a particular point of time also affects communication.
If the receiver feels that communicator is angry he interprets that the information being
sent is very bad. While he takes it differently if the communicator is happy and jovial
(in that case the message is interpreted to be good and interesting).
6. Complexity in Organizational Structure: Greater the hierarchy in an organization
(i.e. more the number of managerial levels), more is the chances of communication
getting destroyed. Only the people at the top level can see the overall picture while the
people at low level just have knowledge about their own area and a little knowledge
about other areas,
7. Poor retention: Human memory cannot function beyond a limit. One can't always
retain what is being told specially if he is not interested or not attentive. This leads to
communication breakdown.
Overcoming Communication Barriers
There are a lot of communication barriers faced these days by all. The message
intended by the sender is not understood by the receiver in the same terms and sense
and thus communication breakdown occurs. It is essential to deal and cope up with
these communication barriers so as to ensure smooth and effective communication.
As, in the previous section we have discussed the major barriers of communication.
Let's talk about how to overcome these barriers of communication.
1. Eliminating differences in perception: The organization should ensure that it is
recruiting right individuals on the job. It's the responsibility of the interviewer to ensure
that the interviewee has command over the written and spoken language. There
should be proper Induction program so that the policies of the company are clear to
all the employees. There should be proper trainings conducted for required employees
(for eg: Voice and Accent training).
2. Use of Simple Language: Use of simple and clear words should be emphasized.
Use of ambiguous words and jargons should be avoided.
3. Reduction and elimination of noise levels: Noise is the main communication
barrier which must be overcome on priority basis. It is essential to identify the source
of noise and then eliminate that source,
4. Active Listening: Listen attentively and carefully. There is a difference between
"listening" and "hearing". Active listening means hearing with proper understanding of
the message that is heard. By asking questions the speaker can ensure whether
his/her message is understood or not by the receiver in the same terms as intended
by the speaker.
5. Emotional State: During communication one should make effective use of body
language. He/she should not show their emotions while communication as the receiver
might misinterpret the message being delivered. For example, if the conveyer of the
message is in a bad mood then the receiver might think that the information being
delivered is not good.
6. Simple Organizational Structure: The organizational structure should not be
complex. The number of hierarchical levels should be optimum. There should be a
ideal span of control within the organization. Simpler the organizational structure, more
effective will be the communication.
7. Avoid Information Overload: The managers should know how to prioritize their
work. They should not overload themselves with the work. They should spend quality
time with their subordinates and should listen to their problems and feedbacks actively.
8. Give Constructive Feedback: Avoid giving negative feedback. The contents of the
feedback might be negative, but it should be delivered constructively. Constructive
feedback will lead to effective communication between the superior and subordinate.
9. Proper Media Selection: The managers should properly select the medium of
communication. Simple messages should be conveyed orally, like: face to face
interaction or meetings. Use of written means of communication should be encouraged
for delivering complex messages. For significant messages reminders can be given
by using written means of communication such as: Memos, Notices etc.
10. Flexibility in meeting the targets: For effective communication in an organization
the managers should ensure that the individuals are meeting their targets timely
without skipping the formal channels of communication. There should not be much
pressure on employees to meet their targets.