Thursday, December 23, 2010

Communication is the key to organizational success

The late Peter Drucker, the well respected management consultant, said that communication is one of the most fundamental and pervasive of all management activities. “The most important thing in communication is hearing what isn’t said,” Drucker said. He also said that communication is what the listener does.

One of the most important skills in leading any organization is crafting a strategic vision that achieves your organization’s goals and enhances its effectiveness. Turning this aspiration into a reality means creating and sustaining a unifying sense of purpose on the part of all people within your organization and communicating this vision to your outside audiences.

Organizational communication can be divided into two components: internal communication and external communication. Internal communication is between employees within the organization itself. External communication is from the organization to its external audiences.

Internal communication 
The most effective leaders and managers are those individuals who spend a great deal of  time communicating in their organizations to create meaning, share visions, and build a common focus for all members of the organization. Research shows that improving internal communication brings significant benefits to an organization.

One study found that good interpersonal relationships between managers and staff was three times more powerful in predicting profitability in 40 major companies over a five-year period than the four next most powerful variables combined -- market share, capital intensity, firm size, and sales growth rate.

Another study concluded that the benefits of quality internal communications include:
   ·  improved productivity;
·  reduced absenteeism;
·  high quality (of services and products);
·  fewer strikes; and
·  reduced costs.

Many organizational problems are the product of poor communication policies. For example, employees may seek jobs in another organization if they believe they will have a better opportunity to be heard and contribute ideas there. In addition, levels of organizational innovation may be low because key players in different departments poorly communicate with one another, or worse yet, fail to communicate at all.

External communications

Good relationships and communication with customers and stakeholders is essential to business or organizational success. Good communication plays an important role in maintaining customer loyalty, which brings good will to organizations and increased profits for businesses.
Customers welcome information from the businesses with which they deal, leading to “relationship marketing,” where the primary importance is creating quality of relationships between customers and companies.

Reputation is a vital barometer of the health of an organization. One study that looked at the impact of bad news about an organization found that perceived levels of trustworthiness is the first and biggest casualty of negative publicity. Like money, trust is hard to acquire but easily squandered.

Research suggests that most businesses underestimate the importance of evaluating their communications with customers. One study found that U.S. companies lose 50 percent of their customers every five years and that most of them make little effort to find out why. Additional research shows that it costs six times more to get a new customer than to keep an existing one.

So, effective external communications with an organization's outside audiences -- whether it is the form of marketing, branding, public relations, or some other communication vehicle -- is of utmost importance for an organization's success. 

Communication assessments

So, how does an organization determine what it needs to do to improve its communication efforts? The most effective way is through communication assessments, also known as communication audits.

Communication assessments are used to identify communication issues within an organization and reward good communication practices, prepare for storms sooner rather than later, and improve business and organizational performance. Communication assessments also can help identify symptoms of discontent, before these symptoms lead to a loss of employees and customers, and they help achieve the organization's strategic goals.

In my next blog, I  will discuss with more depth the way that communication assessments can help organizations become more effective.


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  3. Why do you think communication is vital to the success of every business Organization?