The Importance of Good Communication in Business 

Communication is about passing messages between people or organisations. Messages between a sender and receiver take place using a medium such as email or phone. 

One-way communication is when the receiver cannot respond to a message. Two-way communication is when the receiver can respond to a message. This allows confirmation the message has been both received and understood. 

Types of communication 

Internal and External Communication 

• internal communications happen within the business 
• external communications take place between the business and outside individuals or organisations 

Horizontal and Vertical Communication 

Communication Channels – routes along which information might travel in a business.

• Downward Communication – passing messages from top to the bottom of the organisation. 
• Upward Communication – passing messages from bottom to the top of the organisation. 
• Vertical communications are messages sent between staff belonging to different levels of the organisation hierarchy 
• Horizontal communications are messages sent between staff on the same level of the organisation hierarchy
• Formal and Informal Communication 
  • Formal communications are official messages sent by an organisation, eg a company memo, fax or report 
  • Informal communications are unofficial messages not formally approved by the business, e.g. everyday conversation or gossip between staff. 

The Effects of Poor Communication 

• Mistakes occur – e.g. when there is a misunderstanding, defective goods might be produced which have to be scrapped
• Costs rise – e.g. if a construction project is delayed owing to a breakdown in communication, financial penalties might be incurred.
• Decision making slows down – e.g. if information takes too long to reach its destination, there may be a delay in decision making. This could result in the business missing out on an important opportunity.
• Staff motivation suffers – e.g. poor communication can frustrate employees and could result in higher absenteeism and staff turnover.

Methods of Communication 

• Face-to-Face Communication – takes place when information is exchanged by people who can see each other. Eg. Interview, training. 
• Written Communication – this can be information written in a variety of methods. Each of them would have advantages and disadvantages of their own. 
• Letters – are a common way to send written communication. They are flexible and easy. They can also be sent to many different people such as customers, employees, suppliers. However, it takes time to receive and also might have poor writing skill. 
• Reports – information which are important communicated in a formal manner. However, it takes time to structure and also it should be carefully presented. 
• Memorandums (short written notes) – are used for internal communication only. These are brief messages and are flexible. Furthermore, helps remind people about events and to pass on simple instructions. 
• Forms – used for routine information. Helps in collecting information such as for jobs, loans. 
• Notice Boards – cheap and easy to pass information to a large number of people. However, it can become untidy and often overlooked. 
• Electronic Communication involves the use of electronic tools to send messages. Common ways of communicating digitally include:
  • Email – one of the most common methods of electronics communication. 
  • Internet – can be used for internal and external communication. The internet can be used to:
    • Market products by displaying them on shopping sites
    • Allow customers to buy products with credit and debit cards
    • Provide general information about the history and nature of the business
    • Advertise jobs to people inside and outside the business
    • Obtain information about other companies and products for market research
    • Obtain information about potential suppliers
    • Deal with customer queries online

• Mobile phones – These are the valuable method of communication for businesses. They are useful when employees work away from the office or move around frequently. 
• Video conferencing and teleconferencing – this allows people in different locations to have face-to-face meetings. Individuals and groups of people in different parts of the world can be linked at the same time by using a system of cameras, computers and telephones. 
• Social media – businesses rely heavily on the use of social media platforms such as Instagram , Facebook. 
• Intranets – is where all computers in a particular department or organisation are linked together. This helps users to have access to common information. 
• Public address (PA) systems – used in factories, hotels and large stores to pass on information to staff or customers. Messages are broadcast over the loudspeakers. 
• 
• Electronic notice boards – similar to PA systems except written messages, pictures, videos and sounds are used. Eg.Airports and train stations. 

These tools have influenced business activity in a number of ways: 

• Improved speed and accuracy of information– electronic tools allow easy editing and checking of written communication, helping to reduce grammatical and spelling errors. Messages can be communicated at a much faster pace, which can help to keep external stakeholders up to date while giving internal stakeholders information quickly to aid decision-making. 
• Better customer service – the use of digital communication has enabled businesses to improve the service they provide to their customers by offering a wider range of options for getting in touch. Customers are now able to contact businesses at a time that is convenient to them. 
• Improved productivity – digital communication makes it possible to solve many problems with production machinery remotely, eg screen sharing to address computer issues. This reduces costs and lessens the impact of equipment breakdowns. 
• Access to a wider audience – businesses can now access a wider audience much more easily. This can be beneficial when targeting customers with marketing materials. However, the human resources function may also find this useful, as they may want to attract a wide pool of applicants for a job vacancy.