Communication MODULE - 1

Business Environment

6
Notes

COMMUNICATION

6.0 INTRODUCTION
Communication is very important function to manage any
organization whether it is small or large. In other words,
nothing happens in management until communication takes
place.
The word communication has been derived from Latin ward
“communis” which means common. Thus communication
means sharing of ideas is common. It can be defined as
exchange of facts, ideas, opinions or emotions between two
or more persons to create a common ground of
understanding.
Communication is the process of passing information &
message from one person to another. It involves atleast two
persons i.e. a sender & a receiver. The sender develops &
transmits a message to the receiver. The purpose is to
achieve common understanding between the sender & the
receiver.
The basic unit of communication in an organisation is the
link between manager & subordinator. Managers
communicate to their subordinates & receive messages from
them. To be effective as a manager, you need to be an
effective communicator.
6.1 OBJECTIVES
At the end of this lesson you will be able
 To know the communication process to be followed in
any organization
 How informal communication is more important than
DIPLOMA IN INSURANCE 1
SERVICES
 the formal communication

2 DIPLOMA IN INSURANCE
SERVICES
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6.2 COMMUNICATION FUNCTION IN ORGANISATIONS
The communication function as the means by which the
activities in the organisation are coordinated to achieve the
organisational goals. It is also the means by the which
behaviour is modified, change is effected, information is
Notes made productive & goals are achieved. Whether it is with a
business enterprise, a family, educational institution or
trade exhibition, the transfer of information from individual
to another is absolutely essential.
There are two main types of communication in every
organisation – formal & informal communication.
6.2.1 Formal Communication
Formal communication refers to official communication
which takes place through a chain of commands. It flows in
formally established channels & is concerned with work
related matters. Members of the enterprise and expected to
communication with one another strictly as per channels
laid down in the structure.
The formal communication may be divided into three
categories which are given as follows:
a) Downward Communication:
Under this system, the flow of communication from the top
management downward to be operating level. It may also be
called a communication from a superior to a subordinate. It
follows the line of authority from the top to the bottom of the
organisation hierarchy. Downward communication consists
of plans & policies, orders and instructions, procedures &
rules etc.
b) Upward Communication:
It means the flow of information from the lower levels of the
organisation to the higher level of authority. It passes from
subordinate to superior as that from worker to foreman,
foreman to manager. From manager to general manager & so
on. This communication includes opinions, ideas,
suggestions, complaints, grievances, appeals, reports etc.
It is very important as it serves as the feedback on the
effectiveness of downward communication. Management is
able
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to know how well its policies, plans & objectives are followed
by those working at lower levels of the organisation. It keeps
the management informed about the progress of the work &
difficulties faced in performance. On the basis of upward
communication, the management revises its plans & policies
& makes further planning.
Notes
c) Horizontal Communication:
The transmission of information and understanding between
people on the same level of organisation hierarchy is called
the horizontal communication. This type of communication
is also known as lateral or sideward or crosswise
communication. Usually, it pertains to inter departmental
managers working at the same level of organisation or
among subordinates working under one boss. Horizontal
communication speeds up information and promotes mutual
understanding. It enables the managers working at the
same level to exchange information and co-ordinate their
activities without referring all matters to the higher level of
management.
The horizontal communication is generally of an informal
nature. Whenever a departmental head requires some
information from another departmental head, he tends to
contact him directly. However, this type of communication
can be oral or written.
6.2.2 Informal Communication
There is also a great deal of informal communication in an
organisation. This communication flows through informal
channels and may or may not be work related. Informal
communication cuts through the formal organisational
structure. Most of us are familiar with the term ‘grapevine’
used to describe a network of informal communication.
Grapevines are present in all organisations. In fact, in large
organisations, there are many grapevines moving up, down
and across departments.
Grapevines flourish because communication is a natural
human tendency. People who know each other in the
organisation talk together informally. One thing they have in
common is the organisation they work for, so they talk about
the happenings in the organisation.
Grapevines carry two types of information : work related and
people related. Employees want to know what is going on in
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the organisation. When they are not kept informed through
formal channels, they seek information from the grapevine.
Likewise, they are curious about the people they work with.
Grapevine carry the type of personnel information not
generally communicated through formal channels.

Notes Employees get to know plans, promotions, punishments, etc,

much before they are formally announced. Informality
however, reduces uniformity of communication and
sometimes false or distorted news is circulated.
Some employees consider the grapevine their main source of
information. It is fast- they get information quickly and more
information is given than is normally included in formal
downward communications, which are often written and may
originate from some one they do not know personally.
Manager often become frustrated with grapevines,
particularly when they carry incorrect information. But
grapevines exist; managers cannot stop them. Managers can,
however, increase the accuracy of the grapevine by feeding it
correct information. And they can try to reduce the relevance
placed on grapevines by making certain that formal
communication is complete and timely.

INTEXT QUESTIONS 6.1

1. Discuss Types of formal communication.

2. Whether informal communication is good for any
organization?

6.3 IMPORTANCE OF COMMUNICATION

Communication is an indispensable part of the process of
management. The success of an enterprise depends upon the
effective of communication. Every manager must
communicate in order to get things done through
others. A good communication system offers the following
benefits :
1. Basis of Decision-Making and Planning.
Communication is essential for decision-making and
planning. It enables the management to secure
information without which it may be possible to take
any decision. The quality of managerial decisions
depends upon the quality of communication. Further,
the decisions and plans of the
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management need to be communicated to the
subordinates. Without effective communication, it may
not be possible to issue instructions and orders.
Effective communication helps in proper implementation
of plans and policies of the management.
2. Smooth and Efficient Working: Communication makes Notes
possible the smooth and efficient working of an
enterprise. It is only through communication that the
management changes and regulates the actions of the
subordinates in the desired direction.
3. Facilitates Co-ordination: Management is the art of
getting things done through others and this objective of
management cannot be achieved unless there is unity of
purpose and harmony of effort. Communication through
exchange of ideas and information helps to bring about
unity of action in the pursuit of common purpose. It
binds the people together and facilitates co-ordination.
4. Increases Managerial Efficiency: Effective communi-
cation increases managerial efficiency. It is rightly said
that nothing happens in management until
communication takes place. The efficiency of a manager
depends upon his ability to communicate effectively with
the members of his organisation. It is only through
communication that management conveys its goals and
desires, issues instructions and orders, allocates jobs
and responsibility and evaluates performance of
subordinates.
5. Sound Industrial Relations: Effective communication
creates mutual understanding and trust among the
members of the organisation. It promotes co-operation
between the employer and the employees. Without
communication, there cannot be sound industrial
relations and industrial peace. It is only through
communication that workers can put in their
grievances, problems and suggestions to the
management.
6. Helps in Establishing Effective Leadership:
Communication is the basis of effective leadership.
There cannot be any leadership action without the
effective communication between the leader and
the led. Communication is absolutely necessary for
maintaining man to man relationship in leadership. It
brings the
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manager (leader) and the subordinates (led) in close
contact with each other and helps in establishing
effective leadership.
7. Motivation and Morale: Communication is the means
by which the behaviour of the subordinates is modified
Notes and change is effected in their actions. Through
communication workers are motivated to achieve the
goals of the enterprise and their morale is boosted.
Although motivation comes from within yet the manager
can also motivate people by effective communication,
e.g., proper drafting of message, proper timing of
communication and the way of communication, etc.
8. Effective Control: Communication acts as a tool of
effective control. The plans have to be communicated to
the subordinates, the actual performance has to be
measured and communicated to the top management
and a corrective action has to be taken or
communicated so as to achieve the desired goals. All
this may not be possible without an efficient system of
communication.
9. Job Satisfaction: Effective communication creates job
satisfaction among employees as it increased mutual
trust and confidence between management and the
employees. The gap between management and the
employees is reduced through the efficient means of
communication and a sense of belongingness is created
among employees. They work with zeal and enthusiasm.
10. Democratic Management: Communication is also
essential for democratic management. It helps to achieve
workers’ participation in management by involving
workers in the process of decision-making. In the
absence of an efficient system of communication, there
cannot be any delegation an decentralization of
authority.
11. Public Relations: In the present business world, every
business enterprise has to create and maintain a good
corporate image in the society. It is only through
communication that management can present a good
corporate image to the outside world. Effective
communication helps management in maintaining good
relations with workers, customers, suppliers,
shareholders, government and community at large.
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6.4 PURPOSE OF COMMUNICATION
In its broadest sense, the purpose of communication in an
enterprise is to effect change to influence action towards
achieving the goals of the enterprise. Communication is
essential for the internal functioning of the enterprises,
because it integrates the managerial functions. Especially, Notes
communication is needed to:
— establish and disseminate goals of an enterprise,
— develop plans for their achievements,
— select, develop and appraise members of the organisation,
— lead, direct, motivate and create a climate in which
people want to contribute,
— control performance,
— develop rapport with various agencies and organisations
concerned with the business enterprise.
The Management Process
External Environment
Customers
Enterprise Suppliers
– Goals Wholesalers
Retailers
– Planning Communication Government
– Organising Community
– Leading Others

– Controlling

The Purpose and Functions of Communication

The above figure graphically shows not only that
communication facilitates the managerial functions but also
help an enterprise to relate to its external environment. It is
through information exchange that managers become aware
of the needs of customers, the availability of suppliers, the
claim of stockholders, the regulations of governments, and
the concerns of a community. It is through communication
that any organisation becomes an open system interacting
with its environment.
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6.5 COMMUNICATION PROCESS
Communicati sender, transmission of message through a selected channel,
on process receiver and the feedback. The specific steps in
involves communication process are
described below :
Notes
(a) The Sender of the Message :
Communication begins with the sender, who has a
thought or an idea which is then encoded in a way that
can be understood by both the sender and the receiver.
While it is usual to think of encoding a message into the
English language, there are many other ways of
encoding, such as translating the thought into computer
language.
(b) Channel for Transmission of Message :
The information is transmitted over a channel that links
the sender with the receiver. The message may be oral
or written, and it may be transmitted through a
memorandum, a computer, the telephone, the telegram
or television. Television of course, also facilitates the
transmission of gestures and visual clues. At all times
two or more channels are used. In a telephonic
conversation, for instance, two people may reach a basic
agreement that they later confirm by a letter. Since
many choices are available, each with advantages
and disadvantages, the proper selection of the channel
is vital for effective communication.
(c) The Receiver of the Message :
The receiver has to be ready for the message so that it
can be decoded into the idea. A person thinking about
an exciting cricket match may pay insufficient attention
to what is being said about an inventory report, thus
increasing the probability of a communication
breakdown. The next process is the decoding, in which
the receiver converts the message into thoughts.
Accurate communication can occur only when both the
sender and the receiver attach the same or atleast
similar meanings to the symbols that compose the
message. Thus, it is obvious that a message encoded
into German requires a receiver who understands
German. Less obvious, and frequently overlooked, is
the fact that a message in
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technical or professional jargons requires a recipient
who understands such language. So communication is
not complete unless it is understood. Understanding is
in the mind of both the sender and the receiver. Persons
with closed minds will normally not completely
understand messages, especially if the information is
contrary to their value system. Notes

(d) The Feedback :

To ensure that the message has reached the intended
receiver correctly, the communicator has to get feedback
from the receiver about the message. Feedback ensures
that the process of communication has intact taken
place. The feedback provides learning opportunities to
the sender and the receiver because it mirrors the
consequences of the behaviour. In addition, if the
behaviour has been found to be incongruous with the
message it opens avenues to make corrections wherever
necessary. Without feedback it would be difficult to
ascertain whether communication has been received as
indicated or not.
In organisational settings feedback is essential. Each
employee needs to know where he stands vis-a-vis the
organisational expectations, so that he can adjust his
behaviour. Similarly, all organisations need some
feedback from employees on their policies and practices
in order to make improvements whenever necessary.
All organisations have mechanisms to seek and receive
feedbacks because the overall viability depends to a
large extent on the sharing of information. However, it is
often noticed that the efforts of a management to plan
and establish reliable and formalized systems of
feedback are often defeated because of the widespread
tendency of people to establish informal channels and
also because of various sources of distortions. Since most
of the feedback in organisations is work related, the
system should be improved and made more effective.
The following observations are useful pointers :
To avoid unpleasantness some managers and
supervisors provide only positive feedback. Whenever an
employee does something commendable, a useful
positive acknowledgement is made. Actually, both
positive and
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negative feedback should be provided. It is equally
necessary to tell the employee that he is not doing
something correct.
Feedback should be focussed on the specific action
rather than on the individual. Comments relating to
Notes behaviour are accepted more easily than those
relating to an individual’s personalities, attitudes,
feelings, etc.
Feedback can be valuable if it refers to the description of
behaviour. It makes sense to say ‘improve your skills’ or
‘make fewer mistakes’ to an erring employee rather,
than ‘your work is absolutely incorrect’.
Feedback which is provided ‘here and now’ is more
meaningful than delayed feedback. If an employee has
done something inappropriate it is necessary to tell him
immediately rather than wait for an opportune moment.
By then he might have forgotten the event.
Efficiency and satisfaction in an organisation can be
improved by providing feedback as a way of sharing
information rather than insisting on the right way of
doing things. Sharing means that the employers and
employees together study the problems, evaluate various
alternatives, and choose the best. This conveys the
message to the employee that his opinion is valued and
he can contribute meaningfully in achieving
organisational goals, Feedback plays an important role
in the communication process. It requires skill and
willingness on the part of the managers and
entrepreneurs to involve employees in decisions and
share the necessary information with them. As the
organisation grow in size, people may not be able to
keep in touch with each other and with the
organisation’s activities and plans. Hence, there is a
constant need to evolve mechanisms to communicate
with employees, so that they feel part of the
organisation.

(e) Noise and Filters in Communication :

Unfortunately communication is affected by noise,
which is anything- whether in the sender, the
transmission, or the receiver- that hinders
communication. Communication suffers from
distortion, something intended, sometimes
unconscious and it seldom reaches
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the intended receiver in the form it originated. Distortion
in communication takes place because of both
environment and human factors.
In factory situation the roar of machines makes it
difficult for both sender and receivers to transmit. They
either shout or resort to some form of body Notes
communication rather than verbal. Gestures, use of
various parts of the body, facial expression, etc, are
some of the mechanisms that serve the purpose of
communication in case of high environmental noise.
However, the most important are human factors.
Assumptions, values, past experiences, stereotypes and
predisposition influence both the transmission and
reception of the messages. Thus the filters and
messages passing through them get distorted.
6.6 BARRIERS & BREAKDOWNS IN COMMUNICATION
The managers frequently cite communication breakdowns as
one of their most important problems. However,
communication problems are often symptoms of more deeply
rooted problems. For example, poor planning may be cause
of uncertainty about the direction of the firm, Similarly, a
poorly designed organisation structure may not clearly
communicate organisational relationships. Vague
performance standards may leave people uncertain about
what is expected of them. Thus the perceptive manager will
look for the causes of communication problems instead of
just dealing with the symptoms. Barriers can exist in the
sender, in the transmission of the message, in the receiver, or
in the feedback. Specific communication barriers are
discussed below :

(i) Lack of Planning: Good communication seldom

happens by chance. Too often people start talking and
writing without first thinking, planning and stating the
purpose of the message. Giving the reasons for a
directive, selecting the most appropriate channel, and
choosing proper timing can greatly improve
understanding and reduce resistance to change.
(ii) Unclarified Assumptions: Often overlooked, yet very
important, are the uncommunicated assumptions that
underlie messages. A customer may send a note stating
that he will visit a vendor’s plant. Then he may assume
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that the vendor will meet him at the airport, reserve a
hotel room, arrange for transportation, and set up a full-
scale review of the programme at the plant. But the
vendor may assume that the customer is coming to town
mainly to attend a wedding and will make a routine call
at the plant. These unclarified assumptions in both
Notes instances may result in confusion and the loss of
goodwill.
(iii) Poorly Expressed Message: No matter how clear the
idea in the mind of the sender of communication, it may
still be marked by poorly chosen words, omissions, lack
of coherence, poor organisation of ideas, awkward
sentence structure, unnecessary jargons and a failure to
clarify the implications of the message. This lack of
clarity and precision, which can be costly, can be
avoided through greater care in encoding the message.
(iv) Loss of Transmission and Poor Retention: In a series
of transmissions from one person to next, the message
becomes less and less accurate. Poor retention of
information is another serious problem. Thus the
necessity of repeating the message and using more
than one channel is rather obvious. The loss may also
be due to long distance, distracting noises and similar
interferences.
(v) Poor Listening and Premature Evaluation: There are
many talkers but few listeners. Everyone probably has
observed people entering a discussion with comments
that have no relation to the topic. One reason may be
that these persons are pondering over their own
problems - such as preserving their own egos or
making a good impression on other group members
instead of listening to the conversation. Listening
demands full attention and self-discipline. It also
requires that the listener avoid premature evaluation of
what another person has to say. A common tendency is
to judge to approve or disapprove what is being said-
rather than trying to understand the speakers frame of
reference. Yet listening without making hasty
judgements can make the whole enterprise more
effective and efficient. For example, sympathetic
listening can result in better labour management
relations and greater understanding among managers.
Specially sales personnel may better understand the
problems of production people, and the credit manager
may realize that an over-restrict credit policy may
lead to a
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disproportionate loss in sales. In short, listening with
empathy can reduce some of the daily frustrations in
organised lies and result in better communication.
(vi) Semantic Distortion: Semantic is the science of the
meaning of words and symbols. Another barrier to
effective communication is semantic distortion, which Notes
can be deliberate or accidental. An advertisement that
states ‘we sell for less’ is deliberately ambiguous; it
raises the question - less than what? Words may evoke
different responses. To some people the ‘Government’
may mean interference or deficit spending; to others,
the same word may mean help, equalization, and
justice.
(vii) Distrust, Threat and Fear: Distrust, threat and fear
undermine communication. In a climate containing
these factors, any message will be viewed with
skepticism. Distrust can be the result of inconsistent
behaviour by the superior, or it can be due to past
experiences in which the subordinate was punished for
honestly reporting unfavourable, but true, information
to the boss. Similarly, in the light of threats - whether
real or imagined - people tend to tighten up, become
defensive, and distort information. What is needed is a
climate of trust, which facilitates open and honest,
communication. Other personal barriers may arise
from the judgements, emotions and social values of
people. They cause psychological distance between the
people, which may prevent communication. Our
emotions, for example, act as filters in nearly all our
communications. We see or hear what we are
emotionally tuned to see or hear. Thus communication
can not be separated from the personality itself.

(viii) Insufficient Period for adjustment to Change: The

purpose of communication is to effect change that may
seriously concern employees: shifts in the time, place,
type and order of work or shifts in group arrangements
or skills to be used. Some communications point to the
need for further training, career adjustment, or status
arrangements. Change affects people in different ways,
and it may take time to think through the full meaning
of a message. Consequently, for maximum efficiency, it
is important not to force change before people can
adjust to its implications.
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(ix) Information Overload: One might think that more and
unrestricted information flow would help people
overcome communication problems. But unrestricted
flow may result in too much information. People
respond to information overload in various ways. First,
they may disregard certain information. A person getting
Notes too much mail may ignore letters that should be
answered. Second, if they are overwhelmed with too
much information, people make errors in processing it.
For example, they may leave out the word ‘not’ in a
message, which reverses the intended meaning. Third,
people may delay processing information either
permanently or with the intention of catching up in the
future. Fourth, people may filter information. Finally,
people respond to information overload by simply
escaping from the task of communication. Efforts
should be made to reduce the information overload at
each level.

6.7 IMPROVING COMMUNICATION

Although many problems make effective communication
difficult the picture is not entirely bleak. As an
entrepreneur/ manager, you can improve your
communication effectiveness. Whether communication is
effective it can be evaluated by the intended results.
Guidelines for Improving Communication
Senders of the messages must clarify in their minds what
they want to communicate. This means that the purpose of
the message and making a plan to achieve the intended end.
Clarity is very essential in any communication.
Effective communication requires that encoding and
decoding be done with symbols that are familiar to the
sender and the receiver of the message. Thus managers
should avoid unnecessary jargons, which is intelligible to
the experts in their particular field. Common problems
in written communications are that writers omit the
conclusion or bury it in the report, are too wordy, and use
poor grammar, ineffective sentence structure and incorrect
spellings. Yet a few guidelines may do much to improve
written communication:
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Writing style should fit the situation and the effect the writer
wants to achieve. The forceful style should be used when the
writer has power. The tone should be polite, but firm.

The planning of the communication should not be done in a

vacuum. Instead, other people should be consulted and
encouraged to participate to collect the facts, analyse the Notes
message, and select the appropriate media.

Make certain that your message is complete. If you do not

supply all of the necessary information people make
assumptions about the missing information. This can result
in incorrect meaning.

Select the proper time to communicate. Messages received

too early or too late decrease communication effectiveness.
People are most receptive when there is a need for
information. If information is received too late, it may be of
no value.

Another aspect of timing concerns the volume of

communication. At times we suffer from communication
overload : we miss some of the information transmitted to us.
You need to be careful not to add to communication
overload, rather select a better time to communicate.

Encourage upward communication. Feedback is one of the

most important steps in the communication process.
Without feedback you cannot be certain the receiver has
actually understood what you have communicated.
Managers need to be particularly conscious of the
importance of checking subordinates’ reactions to
communications. In face-to-face communication, direct
feedback is possible.

Upward communication is necessary to get employees ideas,

opinions, and suggestions. Such communication does not
occur automatically; it must be encouraged. We need to
develop good relationship with our employees, one that is
characterised by openness and trust. Once this relationship
is established, employees will feel more free to communicate,
to respond to our communication, and to make suggestions
on their own.

There is a saying that the tone makes the music. Similarly,

in communication the tone of the voice, the choice of
language,
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and the congruency between what is said and how it is said
influence the reactions of the receiver of the message. An
autocratic manager ordering subordinate supervisors to
practice participative management will create a credibility
gap that will be difficult to overcome. People believe in
Notes actions more than they do in words. Actions speak louder
than words in the long run. The amount of difference
between what one says and what one does is that person’s
communication credibility gap. When a person’s credibility
gap is large, poor human relations are likely to follow, such
as losing confidence in that person.

The function of communication is more than transmitting

information. It also deals with emotions that are very
important in interpersonal relationships between superiors,
subordinates and colleagues in an organisation.
Furthermore, communication is vital for creating an
environment in which people are motivated to work towards
the goals of the enterprise while they achieve their personal
aims.

6.8 SUMMARY

Communication is very important in every organization

whether it profitable or non profitable organization. Effective
communication is the responsibility not only of the sender
but also of the receiver of the information. We need to be a
good listener. We need to listen actively with both our ears
and our eyes open, hearing what others are saying and
understanding their non-verbal communication.

6.9 TERMINAL QUESTIONS

1. Distinguish between formal & informal communication.

2. Discuss the importance of communication in an
organization.
3. Explain the communication process.

6.10 OBJECTIVE TYPE QUESTIONS

1. Find Odd man out

a. Upward communication
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b. Down ward communication
c. Horizontal Communication
d. Vertical Communication

2. Choose the correct Option

Notes
Statement A: Formal Communication is the only way to
improve the organization.
Statement B: Informal communication is also part of the
communication system.
a. both b. neither
c. Statement A d. Statement B

3. Communication process
a. involves sender
b. transmission of message through a selected channel,
c. receiver and the feedback
d. All the above

4. Choose the correct Option

Statement A: Communication is always within the
organization only.
Statement B: Communication is always within the
organization as well as with the external agencies.
a. both b. neither
c. Statement B d. Statement A

5. Choose the best way of communication

a. Verbal
b. writing
c. Email
d. a& b
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6.10 ANSWERS TO INTEXT QUESTIONS

6.1
1. Three types of formal communication
i) Down ward ii) Horizontal iii) Upward
Notes
2. No organization can work without informal
communication.

6.10 ANSWER TO OBJECTIVE TYPE QUESTIONS

1. d 2. d 3. d 4. c 5. d