What is business communication, and why is it important?

Human language is unique. We exchange specific information and express our thoughts in full, complex sentences. Yet, effective communication depends on more than a common language and the ability to speak. 

If you've ever misinterpreted a conversation, you know mistakes are common with verbal and nonverbal communication.

Communication is only effective when the parties walk away from an interaction with the same understanding. This outcome is necessary for successful relationships and to work toward a common goal.

In business, successful communication builds relationships between coworkers and drives the ability to reach organizational goals.

Clear communication from everyone promotes collaboration, builds morale and limits conflicts and misunderstandings.

Like in all relationships, successful business communication can be challenging. Still, you can succeed with a little effort and a deeper understanding of communication nuances.

Keep reading to learn more about business communication, including benefits, barriers and examples.

What is business communication?

Business communication is any exchange of information between people to achieve business objectives. You can find it in meetings, emails and many other channels.

Companies depend on multiple forms of communication for internal business operations and customer interactions. 

Business communication occurs within the company between management and employees, coworkers on a team and employees from different departments. 

These communications may include stakeholders, vendors, and customers outside the company. When any of these communications are unclear, misunderstandings and errors can occur. 

Business communication vs. organizational communication

Organizational and business communication sound similar, but they're not identical. 

Organizational communication is information between company representatives that marketing and other teams promote to outside parties. It generally includes big-picture information like the company’s mission and long-term goals.

Meanwhile, company representatives communicate with external parties, like customers, vendors and third parties for daily business interactions. This is business communication.

While organizational communication is a type of business communication, not all business communications are organizational communications. 

Business communication vs. marketing communication

Marketing communication is a type of business communication that focuses solely on selling. The marketing department aims to engage customers to entice them to buy products. 

They may also collaborate with other teams to improve products, work on a marketing campaign or clarify product information. 

The importance of business communication

Effective business communication is essential for any company to succeed. It's how information travels between management and employees, coworkers and shareholders. 

It's also how you convey your company's mission to customers and tell them why they need your product. 

Your business communication sets the tone for how your company works and creates lasting customer relationships. 

Here are five unexpected benefits of quality business communication:

Creates a positive company culture

Every business has a company culture. This develops through workplace experiences, attitudes and the working environment. 

A positive company culture increases employee engagement and satisfaction by building trust and respect. Employees want to work in an environment with open communication, collaboration and constructive feedback. 

Employees with a strong understanding of company affairs are more likely to be engaged in their roles and loyal to the company. 

Breeds innovation

Business innovation comes from sharing ideas. Yet, in many companies, employees feel uncomfortable sharing ideas with coworkers or managers. 

According to PwC, while 56% of managers think they encourage dissent and debate, only 33% of employees agree. As a result, only 52% of employees bring innovative ideas to the table. 

Solid communication between employees at all levels is essential to promote an environment of continuous improvement. 

When employees feel comfortable sharing new ideas, meetings are more productive, and companies can evolve to meet changing consumer needs. 

Improves business operations

Effective top-down communication is essential for sharing company goals and initiatives. 

According to Infragistics, a quarter of employees can't access the data they need to do their work and make decisions effectively. Clear communication and organization from management improves employee access to data and critical information.

Keeping communication channels open empowers workers to seek guidance and provides feedback on how limited communication affects workflows. 

Increases employee satisfaction

Employee satisfaction is a critical factor in employee retention. 

Gartner says 82% of employees want their organization to see them as people, not just employees, but only 45% of employees believe their organization sees them this way.

Some of the biggest factors in job satisfaction include respect, trust in management, receiving actionable feedback, appreciation, and purpose in work.

Effective communication can improve these elements of workplace culture. Open and top-down communication channels share company information and empower management to show respect and appreciation for employees. 

Clear information and personalized communication help employees care about meeting business goals as they know the company values their contributions. 

Promotes customer satisfaction

Responsive, consistent communication throughout the customer journey improves satisfaction and promotes loyalty. 

Customer-facing business communication: 

  • begins with engagement, 
  • offers information during the decision-making process, 
  • carries through a successful sale and 
  • follows up with post-purchase customer satisfaction inquiries. 

The importance of nonverbal business communication

In the digital age, we have more ways to communicate than ever. Most business communications are through email, texts, collaborative task boards and document sharing.

While this can improve convenience, it's essential to use all types of communication effectively for the most clarity. 

Nonverbal communication enhances our understanding and builds trust. Examples include:

  • eye contact
  • facial expressions
  • hand gestures
  • body language

However, relying on it heavily can lead to misunderstandings and tension. 

If someone asks you where something is and you wave your hand in a general direction, they could end up in the wrong place. Too much eye contact can be awkward. And hand gestures mean different things across cultures, so use nonverbal body language wisely.

Consider your plans for effective nonverbal communication when setting up a business communication system.

Body language is a key part of effective communication. For important matters, in-person meetings and Zoom calls are often better than phone calls and emails.

Barriers to business communication

Poor business communication can lead to mistrust, misunderstandings that cause conflict, and unintentional misrepresentation of your company or products. 

Watch out for these barriers to communicating effectively:

Lack of clarity

Technical terms and unclear language can make communications difficult to understand.

Solution: Where possible, avoid or explain acronyms. This is especially important when communicating vital tasks or speaking to customers. Ensure your communications are clear, so avoid jargon and overly technical language. 

Not knowing your audience

Adapt your communications to resonate with the intended audience to increase engagement and understanding.

Solution: Conduct customer research to understand your audience and what they want. What’s suitable for a teen audience likely won’t land with other generations.

An example is marketing channels. If you’re using TikTok for a mobility aid product with an older audience, you’re unlikely to reach them. A television or newspaper advert might be better.

Inconsistent messaging

Mixed messages lead your audience to question what you stand for, building mistrust.

Solution: Perfecting your brand messaging is key to consistency. Maybe that’s creating a style guide for blogs to ensure a constant tone of voice or taking an ethical stance. Clear, consistent messaging ensures customers and employees know what to expect from your business. 

Failure to listen

Listening is an essential part of communication. Not listening leads to missing information, which can cause frustration and conflict.

Solution: Practice active listening. This involves ignoring distractions and truly listening to what your communication partner is saying. Ask clarifying questions, show you’re listening with nods, and use the same phrases.  

Uncoordinated communication channels

Without a well-defined communication system, you can miss messages.

Solution: If your company's communication is all over the place, focus on bringing everyone together on one channel. Whether email or Slack, choose a better option than checking 18 channels for potential messages. 

Assumptions

Assuming others know what you're thinking or understand your point can lead to chaotic communication that frequently causes conflict.

Solution: Ensure you’re fully communicating what you need. Don’t leave people to guess. Providing full instructions and not expecting people to read your mind reduces the risk of issues and conflict. Ensure you’re using clear phrasing rather than acting like a living thesaurus. 

The 4 types of business communication

Your business depends on communications between organizational members and outside parties for success. There are four basic types of business communication:

Upward communication

Communication traveling up the chain of command is upward communication. The most common type of upward communication is between employees and their direct supervisors.

Other examples include manager interactions with directors or high-level executives and employee satisfaction surveys.

Downward communication

Downward communication comes from a person with a higher level of authority than the recipient. 

Examples include metrics communications from an executive to a manager and performance reports from a supervisor to a direct report. 

Companies should carefully balance downward and upward communication to ensure employees feel valued. 

Lateral communication

Lateral communication occurs between individuals of the same status within an organization. Examples include manager-to-manager and coworker interactions. 

Lateral communication can include teamwork on a project, executive meetings, or peer-to-peer training. 

External communication

Information exchanges from the company to outside parties are external business communications. The most common example is customer-facing communication. 

Examples include interactions with other organizations (like vendors and partners) or recruitment content for potential employees. 

Business communication channels

Business communication depends on various channels to exchange information within an organization and with external stakeholders, including customers. 

Common methods of business communication include:

  • Phone calls
  • Video calls
  • Web-based communication
  • Presentations
  • Reports and official documents
  • Forums and FAQs
  • Surveys
  • Customer management activities

Examples of effective business communications

People communicate within an organization to spread information, share ideas, solve issues and express feelings. When communications fail, errors and conflicts are likely to arise. 

These examples share how verbal and nonverbal communication can improve business interactions:

Nonverbal communication through body language

Your body language helps your audience interpret your message during face-to-face interactions.

Turning toward the person you're interacting with and maintaining eye contact shows you're listening attentively. Actions like nodding in agreement can also indicate your interest. 

Providing easily accessible information

Company documents, safety information, mission statements, etc., are essential to business communications. 

Creating a centralized hub for information distribution gives employees access to the information they need to complete daily tasks. 

It can also uphold company knowledge as new employees can access it. 

Recognition of employee achievements with feedback

Supervisors can provide routine feedback in many ways. While performance reviews supply measurable data, they don’t recognize individual achievements. 

You can supply personal feedback in several ways, including:

  • Sending a message through email
  • Providing kudos during a meeting
  • A face-to-face conversation with a simple "well done" or "thank you"
  • Social media recognition
  • A public message board where all employees can see employee achievements

Engaging and effective meetings

Meetings with a clear focus and goal can educate attendees and increase engagement.

Ditch scheduled meetings for purposeful gatherings that unite employees and upper management to meet shared goals. 

When planning a meeting, create an environment that supports psychological safety and develop a defined plan. Psychological safety sounds like another buzzword, but it ensures employees feel safe enough to:

  • point out errors
  • disagree with supervisors
  • share new ideas, even if they’re unsuccessful
  • make mistakes

This supportive environment can boost trust and innovation.

It’s also wise to set time aside at the end of the meeting to record results and answer questions. 

Email communications

Personalized emails to customers and employees work for various situations, whether that’s instructions for an employee or marketing to a customer. 

Here are examples of the types of email communications in a business environment:

  • Sending instructions for a new project
  • Team members collaborating on a shared goal
  • Personalizing emails to customers for an upcoming sale
  • A manager thanking an employee for going the extra mile
  • Connecting with a third-party vendor for product materials

Your business is successful because of people with feelings, ideas and goals. 

Effective business communication supports the people who work within your organization, helping them achieve optimal performance, productivity and creativity. 

As a result, you're more likely to achieve your organizational goals.

Interested in learning more about improving business communication in your organization? Check out these blogs:

Team building activities to bring your team together

How to choose the right retrospective for your team


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