Effective communication is important both within an organisation and externally. Effective communication improves business efficiency.

What is communication?


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 communications take place between people within organisations
  • Internal communications happen within the business.
  • External communications take place between the business and outside individuals or organisations.
  • 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 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, eg everyday conversation or gossip between staff.
  • A channel of communication is the path taken by a message.



Effective communication


Communication makes a big impact on business efficiency. Effective communication means:

  • Customers enjoy a good relationship with the business, eg complaints are dealt with quickly and effectively.
  • Staff understand their roles and responsibilities, eg tasks and deadlines are understood and met.
  • Staff motivation improves when, for instance, managers listen and respond to suggestions.



Barriers to effective communication

A balance needs to be struck in communication between management and staff. Insufficient communication leaves staff ‘in the dark’ and is demotivating. Excessive communication leads to information overload, eg when staff find hundreds of messages arriving in their intray each day.screen_fish


Communications fail when a message is unclear or the receiver does not understand technical jargon. Selecting the right medium is important. Messages may never be received if they are sent at the wrong time or to a junk email folder.

The result is inefficiency and higher costs, as more resources are needed to achieve the same result.

Training staff to select an appropriate medium and send clear, accurate, thorough messages will improve the quality of communications, especially if there is an opportunity for feedback.




Impact of ICT

ICT stands for information communication technology. Businesses have gained significantly from advances in computing. For instance, ICT enables:fishes_screen

Advances in ICT and telecommunications mean it has never been easier or cheaper to send messages by email or text. Senders can check that a message has been received and understood. The danger is that this will lead to information overload and staff will have to spend hours reading hundreds of electronic messages.

Staff training that emphasises the need to limit communications can help avoid the inefficiencies associated with information overload.


  • Home working and inexpensive call centres located overseas.
  • Automated stock ordering where items are reordered to ensure shelves are always full. Less paper work reduces administration costs.
  • E-commerce where products are traded and paid for on the internet





E-commerce opens up international markets to firms as overseas customers can view products for sale online.

A business can develop links with customers through email newsletters.