Communication In Organizations 91
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Communication in organizations encompasses all the means, both formal and informal, by which information is passed up, down, and across the network of managers and employees in a business. These various modes of communication may be used to disseminate official information between employees and management, to exchange hearsay and rumors, or anything in between. The challenge for businesses is to channel these myriad communications so they serve to improve customer relations, bolster employee satisfaction, build knowledge-sharing throughout the organization, and most importantly, enhance the firm's competitiveness.


Perhaps the importance of good communication is best understood by considering what things would be like in its absence. For instance, if a company has no mechanism for recording and transmitting special order requests from its customers, and the employees in the sales and fulfillment areas only interact minimally, there's a good chance that when it receives a special request the company will have difficulty delivering what the customer wants. It may even lose the sale as employees grapple with an unusual request the management hasn't prepared them for.

Now consider a company going through a merger. Top executives at the merged entity proclaim that there will be thousands of layoffs to boost efficiency, but management is slow to say who will be affected, what the criteria are for deciding who is laid off, and what the separation terms will be. To make matters worse, an unauthorized list of persons facing the ax is rumored to be circulating, and specific names are bandied about as being on or off the list. This situation continues for weeks before management comes forward with the full details. It is hard to see how such a scenario could be anything but detrimental to employee morale, and it might well lead to valuable employees who were not slated to be let go jumping ship because of the chaos and management's thoughtless tactics.

As a final example of poor communication, imagine a business with a large, young workforce that is highly trained. However, the company is very hierarchical and a premium is placed on seniority over originality and other employee traits. A few younger employees have approached management with a new business idea, but their immediate supervisors haven't taken the proposal seriously and upper management is largely inaccessible to these employees. As a result, the small group decides to leave the company and start their own firm, which grows quickly and proves to be incredibly profitable.

If these scenarios seem rather predictable (some are based loosely on real events), they serve to illustrate obvious communication gaps and missteps businesses must surmount. In each case, not only were employees or customers left unsatisfied, but each incident also could have led to monetary losses for the companies. In short, communications—both internally and externally—must be open, timely, complete, and accurate to keep a business running smoothly and to maximize its returns on its human capital.


There is no formal history of business communication systems. It has existed in some form since the first business owner hired the first employees and issued the first instructions. Those instructions were the first official "employee communications," an action taken by management to make sure the employee knew what management expected of him or her. Once the business owner hired enough employees to create a staff, they reacted to those management mandates by creating the first form of informal company communications, "the grapevine."

This informal grapevine between and among top management, middle management, line management, and employees has always been, and no doubt always will be, part of the process of doing business.


During corporate America's early history, which stretches back little more than 150 years, American management operated as strict "top down" communications companies. Whatever the majority of the company's owners said was the law. If the company had a senior management committee, strategies for doing everything from selling product to dealing with employees would be discussed behind closed doors. Once those decisions were made by managers, lower levels of management were asked to put those decisions into effect. Employees had little input. They did as they were told or found work elsewhere.

Such management attitudes, particularly when they applied to worker safety issues in such places as coal mines and steel mills, led to the growth of labor unions. If nothing else, unions had the power in many cases to slow or shut down production until management at least listened to demands.

In reaction to union demands, corporations eventually set up communication systems where rank-and-file members could speak their minds through union representatives. While forced to create the systems by unions, corporate managers have realized over the past 20-30 years that employees are not the mindless drones that the managers of the early part of this century believed them to be. When presented the opportunity to help the company solve problems, many employees have jumped at the chance. This is called "bottom-up" communication.

Most corporations now encourage employees to take an active part in their company. Employees who notice ways to improve production lines are encouraged, and usually rewarded, for passing those ideas on to managers. Employees who submit ideas that withstand intense study can be rewarded with a percentage of the company's savings. Employees who are harassed on the job are strongly encouraged to report such harassment as far up the chain of management as necessary to stop it. Regular employee meetings are held where the lowest level employee can stand up and ask the CEO a direct question with the full expectation that a direct answer will be offered in return.

Top management also has a method of monitoring how the company is running while meeting employees and managers halfway. Sometimes called "management by walking around," this method of communication and management calls for top managers to get out and see what is happening at the level where work is done. Instead of reading reports from subordinates, the CEO visits the factories or service centers, observes line managers' employees on the job, and asks their opinions. Although the practice seems to be both praised and denigrated regularly by business management experts, this form of communications keeps the boss in touch.


Although the content of corporate communications within the organization has remained fairly constant through the years, technology has improved the way management and employees keep in touch with each other.

Almost all companies of any size have some regular method of keeping in touch with employees through bulletin boards, newsletters, or magazines. Larger, more technically proficient and geographically dispersed companies may also use corporate-produced television shows or copy-only messages transmitted by closed circuit television. Some companies distribute electronic mail newsletters or messages, which can be instantly transmitted and placed in all the computers wired into the company's network.

These forms of communications always get the approval of top management. Many newsletters, magazines, and television shows leave no doubt about this by including a "message from the president" column near the front of the publication.

Bulletin boards are the oldest form of corporate communications. In the early days of businesses, bulletin boards were frequently the only communication that management might have with employees. Everything from longer-hours demands to the announcement of new plant openings would be announced on the boards. Today, bulletin boards are not always found in businesses. Some companies use them for nothing more important than posting legal requirements such as wage and hour rates. Other companies try to make bulletin boards a force for employee recognition and information. The challenge all companies have with bulletin boards is that they fade in the consciousness of employees who get used to seeing them every day. Unless the boards' information is changed regularly and presented in an attractive way, employees can ignore it.

Newsletters and magazines try to address the inability of management to speak to each employee. Written communication explains management policies, announces new products, answers questions, and provides each employee with a reminder of what the company is all about. The downside of written communication is that it is a slow and cumbersome process. In other cases, the editorial content of such newsletters might not be aligned with any corporate objectives, and thereby may convey confused or irrelevant messages.

That is one of the reasons why closed-circuit, satellite, and videotape-based programs have become popular with some corporations. Employees are used to watching television. Some corporations have spent millions of dollars in developing a television presence that would be difficult to distinguish from the quality produced by regular television networks, an approach that can quickly grab the attention of employees. Television is also immediate. A CEO who has to make an emergency announcement to employees can do so within minutes' notice, while a newsletter or magazine takes weeks to produce.

The latest and fastest growing method of corporate communications is e-mail. E-mail is instantaneous and is available to anyone with a computer terminal. An employee who has a great idea, but who is afraid a superior may take credit for it, can send the CEO a message on the corporation's computer system. There is no guarantee that the CEO has not set up a program to filter out such E-mail messages from employees, but most report that they have not. Some corporations even encourage their computer-literate customers to e-mail comments and complaints directly to the people at the top. The downside, of course, is that e-mail, particularly in group distributions, can be misused for personal or trivial matters, tying up network resources and causing employees to ignore messages that aren't personally directed to them.

Memos and reports are the life blood of many corporations. They frequently are the only way some business gets done. The boss either approves or disapproves something based on what a sheaf of memos and stack of reports recommend. Live presentations are sometimes conducted to put life in what the reports have concluded.

The key to making memos and reports effective is to make them both readable and pertinent to the entire company. A memo from the head of accounting outlining procedure changes may be useless to the CEO who has a marketing background unless the memo plainly spells out why accounting changes will improve the company's operations.

Bureaucratic language, pompous phrasing, technical jargon, departmental protection, and incorrect conclusions all contribute to unclear communication within the corporation. One management book author estimates that up to 70 percent of business communications between managers misses the mark.

Informal methods of communication, such as rumors and the company "grapevine," can be out of the company's control. The grapevine is a bottom-up form of communication, in which employees try to understand what is happening around them when there is no official word from management. When management is silent, employees fill the void with verbal guesses about what is happening. It may start when the graveyard shift's loading-dock workers are laid off because better production scheduling eliminates their jobs. The second shift loaders may interpret the loss of that shift's jobs as an economic signal that the company is in trouble. A telephone receptionist who fields calls for senior managers from competitors might conclude that the company is negotiating to buy out, or be bought out. She passes the word that something big is up. Junior managers who notice out-of-town consultants nosing around may smell "restructuring" in the wind.

There is no way the grapevine can be stopped. It can only be influenced. When dealing with questions that cannot, or should not, be answered, senior managers should take the initiative before negative rumors get started. If it is true and obvious to employees that the company will soon undergo major changes, management should be as forthright as possible as quickly as possible. In any event, management should never lie or threaten people to stop the rumors. The most respectful and effective approach is to tell the employees that management recognizes they have legitimate concerns, which will be addressed when possible. If official talk would damage the company, employees should be told as much.


Various writers on management topics have addressed the problems of communicating within an organization. What follows is a short compilation of obstacles frequently encountered.


Old school managers of employees sometimes do not believe that employees can contribute anything useful to the operation of a company other than their unquestioning labor. These managers separate "management" from "employees" with the idea that managers will tell employees what to do. They don't want any questioning or backtalk. Employees, operating from the same circumstances, usually see little stake for themselves in a company in which they are not personally involved.


Most people pick and choose what they actually retain when someone is talking. Any number of factors can cause this, ranging from the respect a person has for the speaker to what the speaker is saying and how it relates to what the employee is doing. For example, line employees might not pay too much attention to a hated supervisor who stands up in a general meeting to address quality problems of components that are delivered to the line. They may listen more attentively to a respected supervisor who urges them to shut down the line and remove the bad parts before they are installed so a poor quality product does not reflect on them.


Ringing phones, scheduled meetings, and unfinished reports all contribute to the problem of hurried and sometimes misunderstood communications. Careful listening and understanding takes dedication. Time must be put aside for communication.


All forms of communication, even the lack of it, can have an impact. A stiffly worded, legalistic memo to employees telling them not to talk to the press about impending litigation could be interpreted as admitting that the company did something wrong. Management's repeated "no comments" to employees and the press on rumored merger talks may only fuel speculation about company suitors, how much the company will sell for, and how many employees will be laid off.

Communication should be seen as a continuous, systematic process by which interested parties within the company learn what they need (or, in some cases, want) to know. While not all information is appropriate for all people to know, in general open and free communications should be encouraged within and across all levels and divisions of the enterprise.

Communication in organizations should easy and understandable. Management terms and jargon or stiff or flowery language may contribute to the impression among employees that management is talking down to them, or may simply loose their interest and defeat the purpose.

Management should obtain and analyze feedback about the state of communications at their company. Indeed, managers may have misperceptions about the quality of communications because they have failed to avail themselves to pertinent information from others. What do employees think of management's communications efforts? Do they believe what management says? Do they want more information? Are some methods more effective than others? How quickly can management adjust its efforts to make the communication better?

SEE ALSO : Organization Theory

[ Clint Johnson ]


David, Werner. Managing Company-Wide Communicaton. London: Chapman & Hall, 1995.

Johnson, J. David. Organizational Communication Structure. Norwood, NJ: Ablex Publishing, 1993.

Poertner, Shirley, and Karen Massetti Miller. The Art of Giving and Receiving Feedback. Amer Media, 1996.

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