COMMUNICATIONS IN BUSINESS

Communication, stated simply, is the act of conveying a
message, through a channel, from one person to another;
that is, connecting or sharing thoughts, opinions, emotions,
and intelligence. Communication is a mechanism
for all types of interaction and connectivity: communication
can instantaneously bring people together, link ideas
and things, deliver news and facts, and impart knowledge.
Because communication can be expressed as words, letters,
pictures, gestures, signals, colors, and so forth, it is
credited with being the single element that has brought
the world closer together.
People communicate for one of four reasons: to
inform, influence, persuade, or entertain. In business,
effective communication will influence outcomes and it is
the critical backbone of an organization’s ability to operate
internally and externally as well as nationally and
internationally.
COMMUNICATION BASICS
Communication, in its most basic definition, involves a
sender (encoder) and a receiver (decoder). The sender
encodes a message, deciding what content and relationship
codes to use, and sends it via a communication channel
such as face to face (verbal and nonverbal) and written
(frequently using electronic technology). The receiver
takes the message and, in the decoding process, attempts
to understand its content and relationship meaning. After
decoding, the receiver then may respond, via a communication
channel, to the sender with a new message based on
the receiver’s perception of what the message imparted in
terms of information and the relationship with the sender.
It is at this point that one-way communication becomes
two-way communication.
To be most effective, the feedback loop (the receiver’s
decoded interpretation of the original message) should go
forward; that is, the receiver should respond to the sender.
The feedback loop provides the sender with two vital
pieces of information: (1) if the original message was correctly
understood as sent and (2) the new message. The
feedback loop allows for early correction of incorrectly
decoded messages. The decoding, encoding, and feedback
loop continue as the parties communicate.
In the decoding of a message, miscommunication
and/or missed communication can occur. In the feedback
loop, the receiver must clarify how that message was perceived.
The greater the number of people involved in the
message exchange process and the greater their differences
in values, beliefs, attitudes, and knowledge of the subject
matter, the greater are the chances that the message will be
decoded improperly and a communication breakdown
will occur.
Communication is most successful when it is understood
by all persons involved in the process. That is, good
communication is free from social colloquialisms, cultural
mores, and gender biases. Because communication may be
conveyed in many forms, it is frequently described in two
general categories: verbal and nonverbal. Nonverbal communication
includes body language, gestures, and signals.
In general, successful communication depends on how
well a sender conveys a message to a receiver relying on the
six senses (seeing, speaking/hearing, intuition, smelling,
touching, and tasting) and feedback.
COMMUNICATION RULES
Several rules facilitate successful communication. The following
checklist provides a guide to creating successful
communication:
• Make messages clear, correct, comprehensive, and
concise
• In messages that require a response, include an
action step with a deadline
• Select correct channels of communication based on
message content and relationship components
• Structure the message so as not to overload the
receiver with information
• Develop sensitivity to the receiver’s communication
style and create the message accordingly
• Be aware of how cultural patterns affect communication
style and take this into consideration when
sending and receiving messages
• Be aware that people operating in a second language
may still encode/decode messages based on their
first culture’s communication patterns

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 127
Communications in Business
• Enhance listening skills as an aspect of effective use
of the feedback loop
• Recognize that a positive attitude enhances the
effectiveness of the communication process
COMMUNICATION TRANSMISSION
MODES
Technology-mediated communication has become the
norm in today’s worldwide business environment. Messages
are communicated regularly via easy access to a wide
variety of sophisticated electronic technologies, including
electronic mail (e-mail), fax, and phones. People still meet
face to face, but they also use express mail and courier
services, messaging and paging systems, caller identification
and transfer/forwarding telephony systems, and
many other combinations of message transfer and delivery
methods. Signaling, biometrics, scanning, imagery, and
holography also have a place in business communication.
Additionally, many professionals work in virtual
groups using satellite uplink/downlinks, video streaming,
videoconferencing, and computer groupware. In using
these technologies, one should recognize the limits of the
channel of communication selected. For example, e-mail
is efficient but does not convey the nuances of a message
that can be gained from facial expressions, gestures, or
tone of voice. The use of multiple channels of communication
may be critical if the content is quite complex;
thus, an oral message may not be sufficient.
The importance of using the feedback loop becomes
more critical as the content and/or relational aspects of the
messages expand. Also, as more workgroups operate globally
in a virtual medium, cultural patterns must be considered
in the quest for clear and effective communication.
The expansion of global business, combined with
advances in technology, has created more cross-cultural
opportunities. When working in a cross-cultural, multinational/
multicultural environment, it is necessary to understand
that culture influences people’s behavior as well as
their attitudes and beliefs. People encode and decode messages
with perceptions learned from their cultural filters.
In intercultural situations, the professional must use the
feedback loop to clarify understanding of the received
message. Just because a message has been received rapidly
or with use of high-level technology does not mean that
the receiver has decoded it properly.
TYPES OF COMMUNICATION
Written communication usually takes such forms as letters,
memos, e-mails, reports, manuscripts, notes, forms,
applications, résumés, and legal and medical documents.
Spoken communication includes presentations, oral
exchanges (e.g., one on one or to a group), and voice messaging.
Speaking distinctly, with appropriate speed, as well
as paying attention to voice inflection, tone, resonation,
pitch clarity, and volume are important to the way a spoken
message is received. Frequently, the way a spoken
message is delivered is as important or even more important
than the content of the message (a good example is a
joke that has perfect timing). More than 90 percent of
what a message conveys may actually be based on nonverbal
elements; communicating a positive attitude also is
helpful.
Nonverbal communication includes body language
(e.g., facial expression, eye contact, posture, standing or
sitting position, distance between sender and receiver, and
gesturing), which can send signals to the receiver that may
be much stronger than the message itself. If a picture truly
speaks louder than a thousand words, communication by
means other than the spoken and written word—such as
clothing, signals or mannerisms reflecting personality or
preferences, and gesturing—can make a big difference in
the message that is conveyed.
COMMUNICATION CHANNELS
Communication in a society, whether it is personal or
business communication, is essential. Individuals and
organizations depend on it to function. Most businesses
need both internal and external communication to be
productive. Internal communication is communication
that is exchanged within an organization. Usually it is less
formal than communication that goes to those outside the
business. Informal communication may range from chats
in the hallway and lunchroom, team and group meetings,
casual conversations over the phone or e-mail, and memos
and preliminary reports to teleconferencing, brainstorming
idea sessions, department or division meetings, and
drafting documents. Informal communication also
includes gossip, which relies on people passing on messages
to coworkers, friends, and others outside of the organizational
hierarchy.
External communication usually refers to messages
that extend beyond the business organization. Because it
reflects the organization’s image, external communication
is usually more formal. External communication is an
extension of the organization and can be an important
channel for marketing the company’s image, mission,
products, and/or services.
COMMUNICATION PARAMETERS
The selection or type of business communication takes
many factors into consideration, including (1) the nature
of the business (e.g., government, commerce, industry,
private or public organization, manufacturing or marketing
firm); (2) the mission and the philosophy of the

128 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION
Communications in Business
organization (open versus limited or closed communication
patterns); (3) the way the business is organized (small
or large company, branch offices, subsidiaries); (4) the
leadership styles of the organization’s managers and supervisors
(democratic, authoritarian, dictatorial, pragmatic);
(5) the number and types of personnel as well as the levels
of employees (hierarchy or status of positions, managerial
or laborers, supervisors or team leaders); (6) the
proximity of work units (closeness of departments, divisions,
or groups that depend on information from each
other); and (7) the need for communication (who needs
to know what, when, why, where, and how for informed
decision making to take place.
COMMUNICATION SYSTEMS
Every group (whether it is formal or informal, and regardless
of its size) has a communication system or network.
Some are very effective and efficient while others are just
the opposite. Even if communication appears to be (or is)
dysfunctional within an organization or group, the group
has a communication system. That is, poor or dysfunctional
communication still conveys a message. When dysfunctional
communication is taking place, there is a lack
of exchange of information or messages within the group.
COMMUNICATION STYLES
Without realizing it, most people communicate with others
(verbally as well as nonverbally) according to a dominant
style. Essentially, people communicate in one of four
basic styles: (1) directly or authoritatively (an in-charge
person or one who is a driving force to get things done);
(2) analytically or as a fact finder (a person who plans,
researches, and analyzes the facts and weighs the alternatives
carefully); (3) amiably or as a coach (a supportive
team builder who gets people to work together toward a
common goal); or (4) expressively or flamboyantly (a
cheerleader with a positive attitude who has an abundance
of ideas and motivates others toward taking action).
Communication styles are developed over time and
with practice, and they can be influenced by many environmental
factors. They also may reflect cultural norms. It
is important to understand one’s own preferred communication
style as well as those of others in order to maximize
one’s communication interactions.
BARRIERS TO COMMUNICATION
Effective communication relies in part on eliminating as
many communication barriers as possible. Some ways to
avoid common barriers to communication include the following:
• Stay focused on the topic
• Adhere to the deadline, when timing is important
• Be willing to use a communication strategy appropriate
to the situation; listen, negotiate, compromise,
modify, and learn from feedback
• Avoid relying on the grapevine as a source of facts,
even though it may have been an accurate communication
channel in the past
• Be sincere, empathetic, and sensitive to others’ feelings;
one’s voice, confidence, actions, and other
nonverbal cues speak loudly
• Seek out information about unknowns, especially
when cultural and gender differences are involved
• Be tactful, polite, clear, prepared, and, above all,
strive to display a positive attitude with all communication
COMMUNICATION LEGISLATION
Professional communicators should review federal legislation
that provides strict parameters for direct-marketing
campaigns using unsolicited faxes, e-mail, and telephone
calls. The Junk Fax Prevention Act, the Can Spam Act,
and the Federal Trade Commission’s Do Not Call Lists are
all examples of such legislation. While direct marketing
continues to be an effective sales tool, some consumers
demand privacy protection from unwanted solicitors.
Federal legislation of privacy protection also extends to
employees who use company phones, computers, and
Internet capabilities.
Businesses must be clear and upfront about how
employees’ internal and external communications are
monitored. Equally, employees must realize that their email
correspondence, phone conversations, and other
communications may be used as evidence in a court of
law, pending legal action that involves their employer.
SEE ALSO Communication Channels; Electronic Mail;
Videoconferencing; Voice Messaging; Writing Skills in
Business