Everything you need to know about the importance of business communication. We must understand that communication is as essential to business as blood is to the human body. 

Importance of Business Communication 

In this age of competition, communication is the number one problem of management. Competition, complex methods of production, large scale operations, and specialisation in production functions have increased the importance of communication. Without effective communication, a manager cannot perform his duties well. 

Communication is as essential to business as blood is to the human body. Success of the communication system affects the success of business.

The following points will prove its importance in business: 

(i) Avoids Illusion: 

While passing through various stages, information may be distorted by tongue-twisters, interested parties, and may create illusion and misunderstanding among persons. Illusion is the great enemy of communication. 


An efficient system of communication aims at removing illusions and misunderstanding by communicating facts and figures. Thus, communication cements an organisation. 

(ii) Prompt Decision and Its Implementation: 

In order to make prompt decisions, a fact collecting process is necessary. Information must be received before reaching on any meaningful decision and, for this purpose, communication is a primary requirement. 

Again, to implement the decision effectively, its communication to subordinates concerned is essential. Thus, decision-making and its implementation require an effective system of communication. 

(iii) Building Human Relations: 

Man is the most active and effective factor of production and good human relations are the basis of cooperation and industrial peace that requires good working conditions and work- environment. Communication is a two-way traffic which helps promote cooperation and mutual understanding between the two partners of an organisation. 


Efficient downward communication helps the management to tell the subordinates what the organisation wants and how it can be performed. On the other hand, upward communication helps the workers in putting their grievances, and suggestions and reactions to the policies, before the management. Thus, an efficient communication system builds human relations. 

(iv) Job Satisfaction and Good Morale:

Morale is the human element that motivates a man to work in the right spirit. Good communication removes the possibility of misunderstanding among the parties concerned. 

Workers know what they have to do and how it creates a sense of co-operation among them. It increases the morale of the workers and each worker will have job satisfaction. 

(v) Smooth Working of a Business Firm: 

Communication is necessary for the successful, smooth and unrestricted working of an enterprise. All organisational interaction depends upon communication. 


The manager co-ordinates the human and the physical elements of an organisation into an efficient and working unit that achieves common objectives. Be it an activity of purchase, or sale, or production, or finance, it is the process of communication that makes cooperative action possible. 

The internal and external communication process of an organisation decides the various activities to be done and various objectives to be achieved. “Communication is essential to an organisation’s existence from the birth of the organisation through its continuing life—when communication stops, organised activity ceases to exist.” 

(vi) Basis of Managerial Functions: 

Communication plays an important role in discharging the various functions of management. No function of management is possible without the communication process. Its importance in performing the various functions is as follows: 

(a) Planning: 

Planning, the most important among the functions of management, requires extensive communication among the executives and the other personnel. Communication is important in executing a planned programme and then controlling the activities of the personnel with the help of feedback information. 

It is also necessary in evaluating the performance of the personnel in the light of planned objectives. 

(b) Organisation. 

Organisation is the second important function of management which decides the various activities of an organisation, divides them into workable units, and delegates authority to perform them. 


For this purpose, communication is a must because different persons, departments and groups come to know their powers and jurisdiction only through an effective means of communication. In the words of George R. Terry, “Communication is the means by which the act of delegation is accomplished.” 

(c) Direction and Leadership. 

Direction and effective leadership requires an efficient system of communication in an organisation. A good leader can direct or lead his subordinates only when an efficient system of communication is present. It brings both — the leader and the subordinates — in close contact with each other and removes misunderstanding, if any. 

It promotes co-operation and helps in getting the work done in the desired direction. A leader can make his orders and directives most useful by inviting opinions, suggestions, etc. from his subordinates, and it requires communication. 


(d) Motivation. 

An efficient system of communication enables management to change the attitude of the subordinates and to motivate, influence, and satisfy them. Most of the conflicts in business are not basic but are caused by misunderstood motives and ignorance of facts. 

Proper and timely communication between the interested parties reduces the points of friction and minimises those that inevitably arise. Good communication assists the workers in their adjustments with the physical and social aspects of work. It is the basis of participative and democratic patterns of management. 

(e) Co-ordination. 


The present-day big organisation, designed on the basis of specialisation and division of labour, are constituted of a large number of persons. In order to achieve the desired objectives, it is very necessary to co-ordinate the efforts of labour engaged in the various activities of production and the organisation. 

Co-ordination requires mutual understanding about the organisational goals and the mode of their accomplishment; and, the interrelationship between the works being performed by various individuals. This can all be achieved only through effective communication. According to William H. Newman, “Good communication aids in co-ordinating activities.” 

(f) Control. 

Communication aids in controlling the activities of the individuals, departments, and groups. The facts, standards, and information are communicated to the concerned parties and they perform their respective obligations according to the standards set forth in the plan. The management evaluates their performance in the light of the standards fixed in the document. In all, it requires proper communication. 

(vii) Maximum Production at Minimum Cost: 

Every organisation aims at getting the maximum output at the minimum cost and for this purpose, it requires an effective internal and external communication system. 

In the external field, an efficient communication system helps in improving public opinion, having contacts with government departments and getting market information in order to achieve the primary goals. It can seek cooperation of the workers by telling them the goals of the organisation and the ways to achieve them. 

(viii) Contacts with External Parties: 


Communication is essential not only for the internal management of the organisation but it also helps contact with the outside world. Contacts with outside agencies such as customers, associations, other manufacturers, advertisers, suppliers, trade-unions, research councils and institutions, etc. are necessary for furthering the interests of the organisation. 

It increases the goodwill of the firm and helps in creating a favourable public attitude towards the organisation. Thus, communication contributes towards maintaining good relations with the outside world. Chester I. Bernard very aptly remarked, “The first executive function is to develop and maintain a system of communication.” 

Importance of Communication in Business Organisation

1.  Every action of any executive must include planning for communication as well as for the other details. An executive must determine to whom, how, what and when information has to be communicated. 

2. A manager with good communication can convince his team about the goals to achieve and subordinates will be able to follow clear instructions and reach their objectives. 

3. An employee with good communication will be able to convince his superiors with his new and radical ideas. 

4. The most difficult thing in communication is to determine who will be affected by an event and, therefore, who should be communicated. If one person in a department or in a unit is told, all who are equally in need of the information must be told. People who are forgotten and bound to be resentful. 


5. If it is decided to inform people about any event, the informing should take place well in advance of rumors, gossip and conjectures and soon enough I will be useful to individuals whom it was intended to benefit. 

6. All announcements should be timed so that the reasons given for them do not have any chance of conflicting with other information fresh in employees’ minds.

7. Top management level executives must know the value and importance of communication.

Importance of Business Communication with Examples

Information is the lifeblood of an organization. To effectively convey information, communication is necessary. Communication is conveyed in several forms, including verbal and written methods. 

It is important that the method used to convey the information is understandable by its intended recipient Otherwise the communication is wasted and a business could suffer.

Internal Communication Channels:


Internal communication channels include face-to-face meetings, internal emails, newsletters and memos, communications between managers and employees, and communications between peers.

External Communication Channels:

External communication is any communication between a business and the outside world. Public relations statements, press releases, marketing materials, commercials, and articles and books written by or about the business are all examples of external communication.


Effective communication across both channels is necessary for a business to thrive. Internal communication keeps a business viable. Without communication between all levels of the business, directives cannot be completed, slowing the growth of the business.

External communication is the lifeblood of a business. Without clear communication of a company’s products to customers, a business will not grow.


Communication Breakdown:

Effective communication in both channels must be clear and convey the correct message. A lack of communication internally, such as misunderstood directives between management and associate-level employees, can lead to a breakdown of business processes. 

A cloudy external message can lead to decreased sales and a negative effect upon a business’ bottom line.

Body Language:

Communicators must be careful that what they are saying is not contradicted by the method of delivery. A face-to-face meeting between a manager and employee can be completely derailed if the deliverer of the message’s body language states the opposite of what is intended. 

For example, a manager who listens to his employee’s concerns with his arms folded and shoulders raised is indicating he is not open to what is being presented to him, even if he truly is concerned. His body language is undermining his actual message.

Clouding the Message:

External communication should be as clear and concise as possible and not clouded with ambiguity or vagueness. When authoring sales materials, keep in mind that potential customers do not want to be sold to or told how great your product is; they want to be moved to buy and will determine the greatness of the product themselves. 

Your message should portray how the product or service can make life easier for them. For public relations and press announcements, this concept also applies- ensure the message conveyed explains how your company’s product can help the audience.

Cultural Considerations:

Cultural differences also must be taken into consideration. What means nothing to one culture speaks volumes in another. For example, in some Asian cultures, it is considered disrespectful to look a supervisor in the eye. 

However, in American culture, not looking directly at someone while speaking to them conveys either insecurity or untruthfulness. It is important to know your audience and to adapt your message to fit it.

Importance of Effective Communication in Business

There are a multitude of problems in business that are caused by ineffective communication. Misunderstandings, conflict, giving your company a negative image, lower productivity. Communication skill is the life blood of successful business enterprise and it takes many forms; internal and external, in writing, on the phone and in person.

Effective communication within a company between departments and individual colleagues is essential for a productive working environment. Just as clear and professional communication with clients is imperative to secure and maximize business opportunities. This article deals with the fundamental principles of effective business communication skills.

There are many elements that constitute effective communication. One of the primary considerations is the selection of the most appropriate method or medium. If you are communicating something which requires traceability then an email or letter can be best, while other conversations are much better face-to-face and can appear impersonal and lackadaisical if carried out in writing.

Every small piece of communication that comes from a company speaks volumes and makes an impact, whether it is good or bad, hence attention to detail is a major communication skill. Many organizations take for granted the ability to communicate effectively in writing or on the phone, however many employees might not have received specialist training in these disciplines.

Communication skills training is essential as it provides a safe environment in which to review how a company and individuals within that company communicate, using expert guidance to develop those skills. 

Communication skills such as building a non-intrusive relationship swiftly on the phone, expressing oneself clearly and professionally in an email, or presenting in public with confidence can be improved by applying practical techniques and strategies. 

One of the best starting points for the process of developing communication skills is to examine your existing style, exploring how it affects others and might be improved.

Although being direct and strong can be a good quality in some business situations it is essential to know who you are communicating with and be able to adapt your style to match theirs, it can have a disproportionate effect on a more sensitive member of the team or client. 

Equally, someone who appreciates a direct approach may not respond well to somebody being fluffy or giving lots of detail. Your chances of winning new business are hugely affected by the communication skills of you and your team. 

Proposal writing is an essential skill that can increase your client base and revenue if executed correctly, or lose you business if done incorrectly.

The key is communicating your core values, products and services in a clear, convincing and persuasive way that meets the requirements of the potential client and is relevant to them. 

Similarly, a live sales pitch must be delivered with impact, confidence and clarity while being very focused on the needs of the client and what you can do to respond to their requirements. 

The only way to uncover a potential client’s requirement is to establish a strong relationship by taking a genuine interest in their company and building rapport.

You can then demonstrate more effectively how your proposal will benefit their structure, systems and procedures. Communication skills need to be developed on an ongoing basis: especially in a turbulent economic climate. 

By outsourcing this to an external consultancy you can build strong foundations of effective internal and external communication that achieves lasting results.

Clarity and Impact in Effective Business Communication:

There is no doubt that lack of communication remains the biggest reason for misunderstandings amongst people leading to untrustworthiness and fights. The importance of communication among the people even if it is only between two individuals, communication is the key to them living harmoniously with each other. 

Similar is the case with business, where the audience waiting for your communication lies everywhere in the globe. Thus, there is no way the importance of business communications can be neglected.

The Importance of Clarity in Business Communication
Clarity is one of the most important components of business communication. You cannot understand the reactions of the person while writing a letter as you can’t see the person physically and thus, you must assume what your audience may expect from your letter and thus, your letter should be able to answer all their questions as well. 

The clarity in your message holds great importance and if you can completely explain your reason for writing the letter or the e-mail then it bodes well with the person whom you are communicating with.

Importance of Communication in Business

1. Why Effective Communication is Important:

People often underestimate the importance of communicating effectively, in life and in the workplace. Communicating effectively at work means more productivity, fewer problems, and better relationships with your coworkers. 

Employers and managers appreciate people who can communicate effectively. If you want to improve your career and quality of life, you should strive to improve your business communication.

As stated before, with better communication you can minimize problems, create a more productive environment, and improve your relationship with the people you work with. The next few paragraphs will focus on these ideas and hopefully motivate you to improve your communication skills.

2. Minimize Mistakes and Problems:

One thing effective business communication skills will do for you is create less problems in your life, at home and at work. Have you ever sent an email that was received differently than you intended, or given an instruction to someone who did not do as instructed because they misunderstood? Did this create a problem for you?

This happens very often in the workplace and when the sender goes back to read the original email they can usually see how their wording could have been interpreted differently. Improving your communication skills can prevent misunderstanding like this from happening and save you time and trouble.

Can you think of a time when you asked someone to do something and they did the wrong thing? This is another example of miscommunication that can be prevented. Effective business communication involves removing any ambiguity and ensuring the receiver understands your message. 

This same concept can be applied to your communication at home. Taking time to work on your communication skills and improve your speaking ability will help minimize misunderstandings with your spouse or other family members.

3. Increase Productivity:

More productivity is the number one goal for employers, and for obvious reasons. The more productive you are, the more money the company makes. Companies will do everything in their power to make you, as an employee, be more productive. 

Improving communication is a great place to start. There is nothing complicated or confusing about this concept, the better you can communicate with the people you work with, the more productive you can be.

Companies and managers understand this, but sometimes individual employees at the lower levels of the organization do not. There are workers who simply want to collect a paycheck at the end of the week. 

This is often where communication and productivity are lacking. If employees can communicate with each other and work as a team, your numbers have the potential to go through the roof.

4. Improve Relationships:

A better relationship with the people you work with every day means a more effective and efficient workplace. In other words, you have to communicate with your co-workers to get things done, and the better relationship you have, the better you can communicate. More productivity is one goal of improving your relationship with co-workers; however, it is not the only one.

Obviously, if you are going to be working with these people every day, you want to enjoy being around them. Therefore, improving your relationship with them will not only make for a more productive environment, but also a more enjoyable one.