Effective communication in business is vital to the success of an organization. Regardless of your industry or the size of your company, it is likely that communication is an important part of your day. Business owners communicate with employees, customers, partners and other stakeholders on a regular basis.
It’s important to understand the four types of organizational communication so you can use them effectively to express your ideas and make sure the recipient understands the message. While the functions of organizational communication vary, the goal is always to ensure that the message is conveyed accurately to your audience.
Four Types of Organizational Communication
The importance of organizational communication in a business environment cannot be underestimated. The way employees communicate with each other, with managers or with external stakeholders such as customers and partners reflects on the business itself. As a result, it’s vital to be aware of the kind of communication in which you are participating. There are four types of organizational communication:
- Formal and informal communication
- Directional communication
- Internal and external communication
- Oral and written communication
Most business communication can be organized into these four major categories. Each kind of communication is used in specific business scenarios and with different types of audiences.
There are many overlaps between the different kinds of communication. For example, communication can be from two or more different categories at the same time, such as a performance appraisal that is formal, downward, internal and written. It encompasses all four types of organizational communication.
About Formal Communication
Business communication can be categorized by the level of formality that is used. Formal communication generally has a specific organizational structure and a standardized and carefully crafted message. The company ensures the communication flows through a channel that caters to the audience.
For example, formal company news that is for customers may be sent through an official press release. However, formal company news that is for employees may be sent through a memo or be conveyed through a town hall meeting.
About Informal Communication
Informal communication, also known as the grapevine, is free flowing and spontaneous. This kind of communication takes place between employees one on one or in small groups. It can also involve quick interactions between employees and customers or partners.
Unlike formal communication, which moves at a slower pace, informal communication is more impulsive. This can lead to inaccurate or misinterpreted information. However, many organizations favor informal communication over formal communication because it enables employees to be more creative and self-driven.
Directional Communication: Downward
Basic forms of organizational business communication are also directional. This means that information can flow downward, upward or horizontally.
Downward communication flows from managers and supervisors to front-line employees. This kind of communication often involves instructions or tasks that employees need to complete. It can also include organizational policy or performance appraisals.
While most downward communication comes in written form, such as emails, memos and policy guidelines, it is also verbal, such as through meetings and phone calls.
Directional Communication: Upward
The opposite of downward communication is upward communication, in which messages flow from lower-level employees to superiors. This kind of communication can include projects or materials that employees need to show their managers.
Employees can also provide feedback and suggestions to superiors about their jobs, performance or company business. This kind of communication often provides upper management with insight and data that is used to make important company decisions.
Directional Communication: Horizontal
Communication also flows horizontally through a business. This kind of communication takes place between employees who are on the same level of the hierarchy. They can be in the same department or in other areas of the company.
Much like informal communication, this kind of communication is quick and often spontaneous. Most horizontal communication is verbal as opposed to written.
About Internal Communication
Other examples of organizational communication are internal and external. Internal communication takes place between members of the organization. It can be among the entire company or in small groups of people, such as departments or project teams.
Formal internal communication is often in written form and includes performance appraisals, company updates and sales performance. This kind of information is generally only suited for employees and not external stakeholders such as customers and partners.
About External Communication
External communication contains messages that are specifically for people outside of the organization, like customers, prospects, partners, the media, competitors or regulating bodies such as the government. Businesses take time to carefully construct messaging that is for external audiences so that the business is seen in a positive light. Most external communication is formal and structured and sent through specific channels so that the audience receives the message.
For example, sales promotions to prospects may be sent through a targeted email campaign, while news about the appointment of a new CEO may be sent to the media and the government through a press release.
Communication and Promotional Methods
External communication is often used to persuade an audience, while internal communication is usually meant to inform. Businesses often utilize promotional methods as part of external communication. This enables organizations to ensure that the message reaches the audience.
In order to select the right promotional vehicle, businesses need to conduct research to better understand the audience. Examples of promotional media include:
- Advertising online, on TV and radio and in newspapers and magazines
- Public relations activities, such as news conferences and press releases
- Social media channels including Twitter, Facebook, LinkedIn, YouTube and Instagram
- Email marketing with nurture campaigns
- Search engine marketing using keywords
Using Oral Communication
Basic forms of organizational business communication can be either oral or written. Oral communication can take place between two people, within small groups of people or even among the entire company, such as at an annual meeting.
While oral communication may seem more informal, it can often be structured and prepared. For example, a business owner speaking with potential investors at a charity dinner may have carefully researched the investors so that she can lead the conversation by speaking to their interests.
Using Written Communication
Written communication is an essential part of running a business. Even before starting a business, many business owners have to prepare lengthy and complex business plans. They may also take part in creating contracts and financial documents. This kind of business communication is formal and often requires subject matter experts, such as lawyers and accountants.
Not all written communication in business is formal. Day-to-day communication between employees, such as horizontal communication, can be informal. Colleagues may write each other quick emails to ask a question.
It’s commonplace for businesses to use instant messaging programs such as Skype or collaboration tools such as Slack to expedite written communication. This enables colleagues to receive and reply to messages right away, ensuring that time-sensitive business activities can proceed as planned.
Communicating Effectively in Business
Regardless of what kind of communication you are using, it’s important to use proper sentence structure, grammar and punctuation in business communication. This shows professionalism and credibility and also ensures the recipient of the message can understand it correctly.
In order to communicate effectively in business, be sure to use the right type of communication for the scenario at hand. For example, when speaking to a customer, it may be best to use formal language rather than informal. When asking a colleague a quick business question, an instant message or email may be the best form of communication.
- Grace College: Types of Organizational Communication
- Your Article Library: Essential Types of Organizational Communication (With Diagram)
- Purely Branded: The Four Ps of Marketing
- Management Study HQ: Types of Communication in Organization
- Status: 4 Main Types of Organizational Communication [Pros and Cons]
Anam Ahmed is a Toronto-based writer and editor with over a decade of experience helping small businesses and entrepreneurs reach new heights. She has experience ghostwriting and editing business books, especially those in the "For Dummies" series, in addition to writing and editing web content for the brand. Anam works as a marketing strategist and copywriter, collaborating with everyone from Fortune 500 companies to start-ups, lifestyle bloggers to professional athletes. As a small business owner herself, she is well-versed in what it takes to run and market a small business. Anam earned an M.A. from the University of Toronto and a B.A.H. from Queen's University. Learn more at www.anamahmed.ca.