Business Communication I Notes: Corporate Communication | Formal and Informal Communication | Barriers of Communication

Corporate Communication - Formal and Informal Communication
Barriers of Communication
Business Communication Notes for B.COM, FYBCOM, BBA and MBA

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In this Article, You will Get Business Communication notes – Corporate Communication Part. Topics covered under this article – Formal and Informal Communication, Channels of Communication, Barriers of Communication.

Table of Contents – Corporate Communication (Formal & Informal Communication)

1. Meaning and Types of Corporate Communication 2. Formal and Informal Communication a) Meaning b) Features/Characteristics c) Advantages and Disadvantages 3. Factors Responsible for Grapevine. How grapevine can be used effectively. 4. Channels of Communication/Communication Networks 5. Difference between Formal and Informal Communication 6. Barriers of Communication a) Meaning b) Types (Physical-Social-Psychological-Mechanical-semantic-Sender’s and Receiver’s oriented) c) Steps to Overcome these barriers 7. Difference between Verbal and Non-Verbal Communication

Meaning of Corporate Communication

Corporate communication is broadly defined as a corporation's attempt to inform the public, including all its consumers, private investors and the media. Corporate communication represents the very voice with which corporate institutions interact with the outside world and is inclusive of communications regarding investor relations, government relations, labor relations and employee development. Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. It is concerned with internal communications management from the standpoint of sharing knowledge and decisions from the enterprise with employees, suppliers, investors and partners.

In the words of William Scott,” Administrative communication is a process which involves the transmission and accurate replication of ideas ensured by feedback for the purpose of eliciting actions which will accomplish organizational goals‖.”

Corporate communication is mainly divided into two parts:

a) Internal Communication

b) External Communication

INTERNAL COMMUNICATION :  It refers to the exchange of information and ideas within an organization. As employee, you are in a position to observe things that your supervisors and co-workers cannot see: a customer’s first reaction to a product display , a supplier’s brief hesitation before agreeing to a delivery date or a slowdown in the flow of customers. Managers and co-workers need these little gems of information in order to do their jobs. Internal communication helps employees do their jobs , develop a clear sense of the organization’s mission and identify and react quickly to potential problems. To maintain a healthy flow of information within the organization , effective communicators use both formal and informal channels.

EXTERNAL COMMUNICATION: The external communication network links the organization with the outside world of customers , suppliers , competitors , and investors , journalists , and community representatives. Sometimes this external communication is carefully orchestrated – especially during a crisis. At other times it occurs informally as part of routine business operations.

Internal and External communication are further divided into two parts:

1.       Formal Communication

2.       Informal Communication

Formal Communication: Communication takes place through the formal channels of the organization structure along the lines of authority established by the management is called Formal Communication. It is that route of communication which is institutionally determined and is associated with status or position of the receiver and sender. The formal channels are deliberately related to ensure that accurate information flows smoothly and timely. Such communications are generally in writing and may take any of the forms; policy; manuals: procedures and rule books; memoranda; official meetings; reports, etc.

Characteristics: Following are the chief characteristics of the formal communication

(1) Written and Oral: Formal communication can both be written and oral. Daily works are handled through oral communication, while the policy matters require written communication.

(2) Formal Relations: This communication is adopted among those employees where formal relations have been established by the organisation. The sender and the receiver have some sort of organisational relations.

(3) Prescribed Path: The communication has to pass through a definite channel while moving from one person to another. For example, to convey the feelings of a worker to the manager, the foreman’s help has to be sought.

(4) Organisational Message: This channel is concerned with the authorised organisational messages only and the personal messages are out of its jurisdiction.

(5) Deliberate Effort: This channel of communication is not established automatically but effort has to be made for its creation. It is decided keeping in view the objectives of the organisation.

Advantages of Formal Communication

Formal communication is required for any organization because it provides a list of below advantages:

1. Smooth Communication System: Formal communication moves through pre-determined channel and therefore everyone is aware for where and how to send the message. So, it does not face any problem to flow.

2. Increase in Efficiency: Such Communication increase overall efficiency of the management as organizational rules and procedures are required to be followed always.

3. Permanent Record: All formal communication like letters, report & memos are kept permanently. So it is helpful in future decision making.

4. Discipline: This communication creates the discipline in the mind of employees in any organization.

5. Less Errors and Mistakes: It maintains all formalities of communication for which there is less chance of errors and mistakes.

6. Co-ordination of Work: Formal communication provides the scope of co-ordination among various functions and departments of an organization.

7.  Reliability: Formal communication is more credible and more reliable for sending important issues like objectives, orders and directions etc.

Disadvantages of Formal Communication

In formal communication, there exists a set of rules and regulation which must be maintained. And for this, there are grown some disadvantages of Formal communication too. In spite of enjoying some advantages of formal communication, it suffers from the following limitations:

1. Authoritarian System: Formal communication states clear relationship between upper level management and lower level management. When there is a downward communication, there is an authoritarian tone to dominate lower level employees.

2. Inflexibility: It is a rigid form of communication as make up or change cannot be considered easily when required.

3. Costly: This sort of communication maintains all formalities of communication for which it involves more cost.

4.  Wastage of Time: Formal communication process passes through various stages or levels of an organization and therefore requires more time to reach to its destination. This is ultimately wastage of time.

5. Delay in Decision Making: Everyone has to maintain specific framework of communication in case of formal communication. Therefore management requires more time which delays decision making process.

6. Lack of Initiative: In such communication there is no option to select any other system which is the best one compared to the prescribed system. As a result creative ideas are ignored here.

7. Lack of Cordiality: In formal communication, established rules are strictly observed. More emphasis is given to the formalities rather than human side; As a result, there is no scope to develop cordial relationship between the sender and receiver.

Informal Communication: Communication arising out of all those channels of communication that fall outside the formal channels is known as informal communication. Informal communication does not flow lines of authority as is the case of formal communication. It arises due to the personal needs of the members of an organization. At times, in informal communication, it is difficult to fix responsibility about accuracy of information. Such communication is usually oral and may be covered even by simple glance, gesture or smile or silence.

Informal communication is known as grapevine. Grapevine arises because of the desire of the people to communicate without following the formal channel of communication. It follows no setlines, nor any definite rules, but spreads like grapevine, in any direction anywhere.

Informal or grapevine communication has the following characteristics:

(1) Formation through Social Relations: This communication is born out of social relations who mean that it is beyond the restrictions of the organisation. No superior-subordinate relationship figures therein. A more sociable superior can gather much information through this channel.

(2) Two types of Information: Through this communication, information about the work and the individual can be collected.

(3) Uncertain Path: Since it is beyond the restrictions of the organisation, it follows no definite channel. Like a grapevine, it moves in a zigzag manner.

(4) Possibility of Rumour and Distortion: Responsibility for the true or false nature of communication does not lie on any individual and, therefore, not much attention is paid to its meaning while communicating. Consequently, the rumours keep floating.

(5) Quick Relay: Informal communication makes news spread like wildfire. Not only this, people start adding something of their own which sometimes changes the real meaning of the communication.

Advantages of Formal Communication

Informal communication is free from maintaining rules and regulations, procedures and others. Such communication bears low cost than formal communication. Although informal communication does not follow any set rules or principle but it offers some advantages which are as follows:

1. Alternative System: There are some messages which cannot be sent through formal way and therefore requires some alternative. Such alternative can be informal communication. 

2. Interpretation: Message sent to subordinates requires explanation or interpretation and informal communication is the valuable means here. 

3. To Present Grievances: Employees can't make any complaints to superiors through formal communication. But informal communication gives the employees a better opportunity to raise their complaints, grievances or claim. Sometimes, in this way, as an informal communication system, grapevine affects much. 

4. Increase Efficiency: Employees can freely exchange their opinions in terms of informal communication. They can ask any question without any hesitation. Thus a cordial communication environment is created to increase the efficiency of employees. 

5. Improving Relations: Any created between management and the labor can be settled through informal communication. Co-operation and co-ordination can be established through harmonious relationship between management and labor. Such relationship is only possible through informal communication.

6. Providing Recommendations: Subordinates feel free to provide management with their suggestions and recommendations on different job related issues like work methods, procedures and conditions etc.

7. Measuring Reaction: Before releasing any new information, management wants to know the reaction of employees. In such a case, informal communication can be valuable in measuring the reaction of employees before any information is conveyed through formal channels.

8. Solution to Problems: With the help of informal communication, the management is able to know problems, conflicts and complaints and the like. Therefore management can take necessary action timely and effectively.
Disadvantages of Formal Communication

Although informal communication creates so many advantages but they are not free from drawbacks or limitations. Some significant demerits or disadvantages of informal communication system are as follows:

1. Distortion: Informal communication networks do not follow any set of rules, definite liners or ways. So it can transmit any kind of information to any person without any respect or fear. It may spread wrong or distorted news which may sometimes prove harmful even to the employees. So, it is the one of most considerable disadvantages of informal communication.

2. Lack of Secrecy: In informal communication, everybody can freely interact as there are no restrictions or rules. Any secret matter is likely to be flashed without any problem or hesitation. This may cause a huge damage to any organization.

3. Incomplete Information: Information released from such communication network is usually incomplete. So, There is each and every chance of it to be misunderstood or misinterpreted.

4. Non-Co-Operation: Sometimes, confusion develops among the persons involved in informal communication. As a result, they may remain separate without any co-operation. 

5. Lack of Resistance: As informal communication does not follow any established system, it is beyond any control. Organization has no mechanism to resist its movement.

6. Huge Rumor: Most of the time, informal communication fabricates the real facts and makes some rosy picture. This really damages the working environment of any organization.

7. Misunderstanding: Lack of conduct, decency, decorum and rules cause misunderstanding in informal communication. As a result there may be conflict between employees.

8. Committing Mistakes: This sort of communication are subject to errors and mistakes because no official’s rules or regulation operate in this case of informal communication.

Factors responsible for Grapevine

According to Keith Davis Grapevine is a product of situation. It steadily takes place when:-

1. Workmen in the organization are faced with uncertainties like promotional chances, increments, job insecurities, etc.

2. When there are possibilities of certain changes in an organization like change in policy, adoption of new technology, etc.

3. When workmen are physically situated closes enough to influence and trust each other.

How can the Grapevine be used effectively?

Grapevine is quite powerful and influential. It can cause considerable damage. Hence management tries to crush it completely. But Grapevine cannot be completely eliminated. The Grapevine can be used effectively in the following way:-

1. The manager should adopt an open door policy and should keep each one well versed about plans, prospects policy matters or any other changes in the organization.

2. The manager should identify the leader and try to win his confidence. The manager should involve the leaders in the decision making.

3. The manger should listen to every gossip or rumours and analyse it to get to the nerve of the feelings of employees.

4. The manager should maintain a cordial relationship with his subordinates so as to reduce the possibility of grapevine.

5. As far as possible the manager should work towards providing healthy atmosphere at the workplace. One cannot stop rumours or curb grapevine altogether but efforts should be taken to check these as far as possible.

Channel of communication/Communication Networks

A channel means a path or a way. Thus a channel of communication is the path or way through which information is transmitted throughout the organization. It is the route through which the message flows from the sender to the receiver.  Human beings in an organization are inter-related to each other. They are related both formally as well as informally. These relationships are maintained by means of communication. Therefore there exists in an organization two channels of communication: -

1. Formal channel of communication

2. Informal channel of communication

Various forms of Formal channel of communication

Formal Channel of Communication are classified into following forms:

1. Downward communication: Communication that flows from the top level of the organization to the bottom level along with the scalar chain is known as downward communication. Example for such type of communication are orders, instructions, rules, policies, programs and directives etc. it specifies the extent of the subordinates authority and their responsibility.

2. Upward Communication: Upward communication is just the opposite of downward communication. In this communication system, the message is transmitted from the bottom of the organization upward to the top of the organization through the middle managers along with the line. Usually this includes workers grievances, suggestions and reactions. This communication system was not appreciated by the superiors. But it has assured importance in modern times and is considered to be a main source of motivating employees.

3. Horizontal communication: The flow of information between departments or people of equal level in an organizational structure may be termed as horizontal or lateral communication. The two departments may be under the same superior or may have different heads. Such communication may be written or oral. The main object of lateral communication is to co-ordinate the efforts of different departments or persons.

4. Diagonal communication: Diagonal communication is between people who are neither in the same department nor on the same level of organizational structure. It cuts across departmental lines. It generally takes place when members cannot communicate effectively through other channels. 

These upward, downward, horizontal or diagonal communications may be oral, written, informal or gestural.

Various forms of Informal channel of communication

Keith Davis has identified four different networks for transmitting information via the grapevine:-

1. Single Strand Chain: In single strand chain one person communicate with only one person. In this the first person tells something to the 2nd, the 2nd to the 3rd person, the 3rd to 4th person and so on till the message is communicated to all.

2. Gossip Chain: In gossip chain one person communicates with many persons. As soon as a person gets some interesting non jog related information he conveys the same to every other person.

3. Probability chain: In probability chain communication takes place between many persons. There information is conveyed from one person to another irrespective of the fact that they are related to each other or not whether formally or informally. In this the information passes at random.

4. Cluster Chain: In cluster chain one person communicates with many other persons but selectively. In this one person may convey information to 4 or 5 persons whom he knows very well and can trust out of these 4-5 persons one or two may again pass on the information. As the number grows larger and larger and information staler, it gradually dies out. This is knows as cluster chain because one person while conveying message may from cluster.

Difference between Formal and Informal Communication Channel

Basis	Formal Communication	Informal Communication
01. Rules	In Formal communication, Organizational rules are strictly followed.	It does not generally follow the rules of organization
02. Recognition	Such communication requires official’s recognition.	In informal communication, It does not require any official’s recognition.
03. Flexibility	It is inflexible in nature as it cannot be changed when desired.	Being flexible, It can be changed easily.
04. Secrecy	Such Communication is not free and open to all. So, Secrecy is maintained here.	It is free and open to all, So it is very difficult to maintain secrecy here. i.e. Grapevine communication which spread informally.
05. Time & Cost	It follows various rules of organization. So, It requires much time and cost.	Informal communication does not bother for the formalities of organization and therefore it requires less time and cost.
06. Record Keeping	This type of communication involves written procedure, So record can be kept in formal communication.	Permanent record is impossible here because almost nothing is written here.
07. Errors or Mistakes	Very careful attention is given here in encoding the message and sending the message through formal way. Due to this seriousness, there is less chance of placing mistakes or errors.	It is personal in nature and therefore less attention is involved which can cause many errors or mistakes.
08. Compulsion	It is bound to follow the formal rules of communication.	There is no pressure here to follow any rules.
09. Necessity	Formal communication is necessary to achieve organizational goal.	Informal communication is necessary to improve personal relation.
10. Delegation or Authority	Authority can be delegated through formal communication.	Authority cannot be delegated through such communication.

 

Barriers of Communication:

Communication is the process of passing information and understanding from one person to another, anything that obstructs the free flow of communication is referred to us Barrier of communication. E.g. Problem in encoding and decoding, wrong or defective communication channel, noise in the channel etc. Barrier may arise at any of the following level:

a)      Sender oriented,

b)      Receiver oriented

Sender-oriented barriers could be voluntary or involuntary. At any cost, efforts should be made on the part of the sender to identify and remove them. As the sender is the originator of communication, he should be extremely careful not to erect barriers. If his interaction gives rise to or indicates that there are barriers, the communication comes to a grinding halt. Some of the barriers that are sender-oriented are as follows:

Receiver can also have some barriers in the course of the interaction. Although his role in the initial phase is passive, he becomes active when he starts assimilating and absorbing the information. He is equally to blame if the situation goes awry and communication comes to a stop, or there is miscommunication. Some of the barriers emanating from the side of the receiver are as follows:

Types of Barriers in communication: The barriers to communication in an organization may be broadly categorized into following groups:

1. Physical barriers (RECEIVER’S ORIENTED)

2. Socio- psychological or personal barriers (RECEIVER’S ORIENTED)

3. Organizational barriers (SENDER’S ORIENTED)

4. Semantic barriers (SENDER’S ORIENTED)

5. Mechanical barriers (SENDER’S ORIENTED)

However, such a classification does not suggest that these are mutually exclusive. Rather, it is helpful in understanding the nature of communication barriers.

1. Physical Barriers: There are the environmental factors that also obstruct or reduces the sending and receiving of communication, such as physical distance distracting noises and other interferences difficulty arises in communicating a message, when the physical distance increases:-

Noise: Noise is first and foremost barrier to effective communication. Noise may be caused by machines, equipment, communication device, disturbances in the time of transmission etc. noise also encompasses many other factors such as the sender may use ambiguous or confusing signal. The receiver may misinterpret the message. Thus communication is likely to be spoilt due to noise.

Time and distance: Time and distance also acts as a barrier in smooth flow of communication. Distance between the sender and receiver acts as a hurdle. Although this barrier can be overcome by technology but still in case of breakdown, this exists. Different timing of shifts at workplace also act as barriers in imparting on vital information.

2. Socio-psychological or personal Barriers: There are certain socio psychological factors which restrict the free flow of communication. They are the attitude and opinions, status consciousness, ones relations with fellow workers, seniors, and junior’s etc. family background. These restrict participative communication:

I. Motives, attitudes, judgments, emotions, and social values of people from the part of the personal barriers. Psychological distance is also developed with this.

II. Individual Differences: There are differences in the motives, attitudes and sentiments of the people. So this causes problems in encoding and decoding other’s sentiments, attitudes and motives.

III. Differences in interest: The interest of people also differs. A problem may be important for one person but may not carry weight for another. The ideas, question, attitudes, feelings etc of other party may represent an obstacle to one’s own personal goal.

IV. Division of People: Communication is ideas and viewpoint also gets affected by the division of people into classes, castes and communities.

V. Difference of viewpoints: Communication suffers when there are differences in view point of the different people.

VI. Lack of planning: Good communication never happens but has to be planned. When people take it lightly and communicate without planning it turns into miscommunication or mal communication.

VII. Cultural barriers: Due to difference in the cultural background the same word, phrases, symbols, actions etc. may mean different to different group of people. Mis understanding may take place due to this.

3. Organizational Barriers: Organisational barriers arise due to defects in the organization structure and the communication system of an organization:

I. Hierarchical distance: Downward communication promotes hierarchical distance. The chances of information being filtered are more at this structure, because there are several layers. Information received from the top may not reach at bottom in the same shape. The information gets coloured which brings hierarchical distance.

II. Diversion: Diversion of information is also one of the causes which brings barrier to communication process. For example sometimes a manager diverts the information meant for one person or group to another.

III. Colouring: Information are also coloured by the manager intentionally with a view to twist the situation in their favour. For example, an office may quote his subordinate wrongly, to spoil his career or his chance of promotion or his image in the eyes of the boss.

IV. Status barriers: Status is a barrier of communication in a formal organization. Organizational interaction and communication are influenced by the status and the expectations.

V. Goal conflicts: Goal conflict acts as communication reducers. Different goal lead to bifurcation of interest. Due to this communication suffers.

4. Semantic Barriers: Semantic means the relationships of signs of their reference. Semantic barrier arises from the disadvantages of the symbolic system. Symbols have got number of meaning and one has to choose any one of them according to the requirement of communication. Symbol or the language is the most important tool of communication which has to be used very carefully:-

I. Words with different meaning: Some words convey more than one meaning. When the receiver assigns a different meaning to a word than what the sender intended, there occurs miscommunication.

II. Denotation and connotation: Words have two types of meaning = Denotation and connotation. Denotation is the literal meaning of the words connotation are the suggestive meaning of the words. Connotation is the suggestive meanings of the words. Connotation may be positive or negative.

III. Offensive style of communication: Badly expressed messages lose their impact. Offensive style of communication leads to communication breakdown causing loss of time and money.

IV. Wrong assumptions: Communication should not be based on assumption as it may lead to wrong interpretation. All possible efforts should be made to clarify assumptions.

V. Selective perception: many a time the message is decoded by the receiver in a way which may be selective. In other words most of the receivers protect their own interest and expectations leading to a particular type of feedback which becomes a communication problem.

5. Mechanical Barriers: Mechanical barriers include inadequate arrangement for transmission of news, facts and figures. Example poor office layout and defective procedure and the use of wrong media led to poor communication.

I. Information overload: Excess of communication is called information overload. Brevity is the soul of communication. The receiver cannot comprehend and absorb beyond his mental capacity. His mind will remain closed for the excess part of the communication. Therefore one should be brief and to the point.

II. Loss of transmission: When messages are transmitted from person to person they are filtered. In other words they are diluted and distorted on the way. In oral communication about 30% of the information is lost in each transmission.

Steps to overcome the barriers of communication in an organization

In order to remove barriers to communication an open door communication policy should be prepared and followed by managers at all levels. The superiors in the organization must create an atmosphere of confidence and trust in the organization so that the credibility gap may be narrowed down. Major efforts in this direction are:

1.       Two-way communication: The organization’s communication policy should provide for a two-way traffic in communication upwards and downwards. It brings two minds closer and improves understanding between the two parties the sender and the receiver. There should be no communication gap.

2.       Strengthening Communication Network: The communication network should be strengthened to make communication effective. For this purpose the procedure of communication should be simplified, layers in downward communication should be reduced to the minimum possible. Decentralization and delegation of authority should be encouraged to make information communication more efficient.

3.       Promoting Participative Approach: The management should promote the participative approach in management. The subordinates should be invited to participate in the decision making process. It should seek cooperation from the subordinates and reduce communication barriers.

4.       Appropriate Language: In communication certain symbols are used. Such symbols may be in the form of words, pictures and actions. If words are used, the language should be simple and easily comprehensible to the subordinates. Technical and multi-syllable words should, as far as possible be avoided. The sender must use the language with which the receiver is familiar.

5.       Credibility in Communication: One criterion of effective communication is credibility. The subordinates obey the orders of their superior because they have demonstrated through their actions that they are trustworthy. They must practice whatever they say. The superior must also maintain his trust worthiness. If the superior is trusted by the subordinates, communication will be effective.

6.       Good Listening: A communicator must be a good listener too. A good manager gives his subordinates a chance to speak freely and express their feelings well before him. The manager also gets some useful information for further communication and can also have a better understanding of the subordinates needs, demands etc.

7.       Selecting on Effective Communication Channel: To be effective the communication should be sent to the receiver through an effective channel. By effective channel mean that the message reaches its destination in time to the right person and without any distortion, filtering or omission.

8.       Preventing Predictable Decision Making Errors: Predictable errors in decision making are preventable errors. And a few simple techniques can help in clear of the most common wrong turns in decision making.

Difference Between Verbal and non Verbal Communications

Though verbal and non-verbal communications are complementary to each other, but there are some basic differences between them. Differences are as follows:

Basis	Verbal Communication	Non-verbal Communication
Definition	It is a process of communication through words.	Communication without using words of writing known as non-verbal communication.
Formality	Degree of formality is more than non-verbal communication.	It is less formal, infact, no formality is required.
Evidence	It has legal evidence.	It has no documentary evidence.
Scope in business communication	It’s scope is larger than non-verbal communication.	It’s scope is limited in business communication.
Media	Face to face conversation, conversation over telephone, meeting, video conference, interview, etc are different media of verbal communication.	Facial expressions, body language, gestures, silence etc, are used as a media of communication.
Consistency	It is more consistent in nature.	Lack of consistency is a major feature of non-verbal communication.