What is Business Communication?

The word ‘Business’ stands for any economic activity undertaken with a view to earning profit. The communication undertaken in the process of this activity is termed business communication. From the very inception of the idea of the Business to running the day-to-day activities of the Business, communication is involved. It includes oral, written, formal, informal, upward, downward, lateral, diagonal, inward, and outward as well as nonverbal communication.

Role of Communication in Business

In business organisations, communication performs several roles that include:

  • Information Sharing
  • Feedback
  • Influence
  • Problem-solving
  • Assists in Decision-making
  • Facilitating Change
  • Group Building
  • Gatekeeping
  • Conveying the Right Message
  • Helps in the co-ordination of Effort
  • Good Industrial Relations
  • Development of Managerial Skills
  • Ensuring the effectiveness of Policies
  • Motivating People
  • Performance Feedback
  • Job Instruction
  • Controlling People
  • Useful as Grapevine
  • Motive function

Information Sharing

The main purpose of communication is to transmit information for a source to target individuals or groups. Various type of information is transmitted in the organization: policies and rules, changes and development in the organization, etc. There may be a need for fast diffusion of some information in the organization, for example, special rewards and awards were given, settlements with the union, and major changes in the organization.


There is a need to give feedback to the employees on their achievements, to the department on their performance, and to the higher management on the fulfillment of goals, difficulties encountered in the communication of feedback help in taking corrective measures and making necessary adjustments, and it motivates people in developing challenging and realistic plans.


Information is power. One purpose of communication is to influence people. The manager communicates to create a good environment, the right attitude, and a congenial working relationship. All these are examples of influencing.


In many cases communications aim to solve problems. Communication between the management and the unions on some issues (negotiation) is aimed at finding solutions for a problem and evolving a consensus.

Assists in Decision-making

The most important function of every manager is decision-making. In order to make accurate and appropriate decisions, a manager needs to obtain information available in various channels of communication. Here the way decision is communicated will have an impact upon the outcomes of the organization in terms of cooperation and support of the people to achieve organizational goals. For arriving at a decision several kinds of communication are needed, e.g., exchange of information, views, and available alternative, etc., communication helps a great deal in decision-making. 

Facilitating Change

The effectiveness of a change introduced in an organization depends to a large extent on the clarity and spontaneity of the communication. Communication between the managers and employees helps in recognizing the difficulties in the planned change, and in taking corrective action.

Group Building

Communication helps in building relationships. If communication breaks down the group may disintegrate. Communication provides the necessary lubrication for the proper functioning of a group Basics of Communication.


Communication helps to build linkages of the organization with the outside world. The organization can use its environment to increase its effectiveness. It can also influence the environment, the government, its clients, its resource systems, etc. Communication plays a critical role in this respect.

Conveying the Right Message

The main object of communication is to convey the right message to the right person, i.e., to the person for whom it is meant. The message conveyed should be well understood and accepted by the receiver in the right perspective. In other words, it should carry the same meaning, which has been conveyed so that it may be translated into action effectively.

Helps in co-ordination of Effort

Communication is an effective tool for coordinating the activities of different persons engaged in running a business. Coordination without communication is a remote possibility. In organizations, there exist a lot of differences, which are many times formally created by an organization through departments, divisions, delegation, decentralization, authority, and power. Through various effective communication mechanisms like letters, circulars, meetings conferences, telephones, cellular phones, etc., these differences are minimized and activities are properly coordinated to achieve organizational goals. The individuals or groups come to know what others are doing and what is expected from them only through communication.

Good Industrial Relations

Communication develops good industrial relations as it conveys the feelings, ideas, opinions, and viewpoints of one party to the other party. The two parties–the management and the subordinates come closer through communication. They understand each other and dispel any misunderstanding. Thus, it promotes cooperation and good industrial relations. 

Development of Managerial Skills

Communication helps managers to understand human behavior at work. Communication of facts, ideas, opinions, information, feelings, etc., adds value to the knowledge of managers about various happenings, in the organization and the behavior of people. Thus, communication is a process of learning.

Ensuring the effectiveness of Policies

The organization formulates policies and programs to guide the workforce. This should be conveyed properly to those who are really responsible for the execution of work to achieve the organization’s objectives. Only effective communication can translate policies into action. The effectiveness of the policies can be judged by their success, which surely depends upon an effective communication system.

Motivating People

If people working in organizations are not regularly informed about their management’s expectations, plans, and policies with respect to their future career and growth, promotion and welfare measures, they feel frustrated and de-motivated. Through various communication devices, managers declare rewards and incentives to motivate employees.

Performance Feedback

People working in an organization need to know well they are performing and what needs to be done to achieve and exceed the standards set by management. Through measures like letters of appreciation or suggestions, the subordinates are given feedback about their performance status.

Job Instruction

Managers need to communicate to their subordinates the job instructions in terms of the requirements of the job from time to time. Failure on the part of managers in communicating these instructions may lead to confusion, wastage, and inefficiency in an organization.

Controlling People

Every organization has its own rules, regulations, and procedures framed by the management in order to perform various activities to regulate the behavior of people. Therefore, an organization issues notices, circulars, letters, etc. to communicate the existing or changed rules, regulations, and procedures. The management information system is well-known as a control mechanism. Information is transmitted to ensure that plans are being carried out according to the original design. Communication helps in ensuring such control.

Useful as Grapevine

Informal communication or grapevine in organizations, sometimes leading to rumors, is often used by employees to create misunderstanding. But sometimes management also takes the help of this route to assess the impact and reaction of employees before introducing proposed policy changes in the organization.

Emotive function

Communication facilitates the expression of feelings and satisfaction. It also enables people to express their dissatisfaction and unhappiness through words or in writing to release their tension and frustration. That is why in organizations there exists grievance resolution machinery and often managers and supervisors are trained on how to handle employees’ emotional problems and grievances.

Factors Determining Quantum of Communication

Just how much communication a business organization needs, depends on a number of factors:

  • Nature of the Business
  • Volume of Communication
  • People who make up the Organization

Nature of the Business

Some businesses such as insurance companies have a much greater need to communicate than do others such as janitorial services.

Volume of Communication

It generates much of the information flow.

People who make up the Organization

The people who make up the organization affect the extent of communication. As we would point out later, every human being is different. Each one has unique communication needs and abilities. Thus, varying combinations of people produce varying needs for communication.

Success of Communication is the Success of Business

Business communication may make relations or may break relations. Business communication maintains, sustains and animates business relations. It can solve the problems of the organization and it can create problems if the executives are not perfect in communication with employees, suppliers and customers.

Business communication can lead to industrial unrest and at the same time can bring industrial peace. In a nutshell, following points further justify the need or significance of communication.

  • Basis of planning
  • Basis of decision making
  • Create coordination and co-operation
  • Establishment of effective leadership
  • Development of human relations
  • Build image Helps in achieving peace and effective control
  • It leads to high morale and motivation
  • Unseen infrastructure of an organization
  • Communication is helpful in delegation of authority.

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