A beginner’s guide to business communication
Business communication is the basis for the success of any organization regardless of its size, industry, or business model it operates in. In other words, communication is the key factor driving virtually any business activity. From internal collaboration and planning to customer relationship building, every process starts and ends with effective business communication.
In this guide, we will cover every aspect of business communication including:
- The definition and examples of effective business communication,
- The importance of effective business communication and the problems it solves,
- The types and methods of business communication,
- The tips and techniques on how to improve communication in business.
Table of Contents
What is business communication?
Before we get into a more detailed analysis of the factors that make up effective business communication, let’s first define the term and its key elements.
Business communication is the exchange of information between two or more people inside and outside an organization.
Ricks and Gow — authors of Business Communication: Systems and Applications — define business communication as “a system that affects the change within the total organization.”
Essentially, any time we witness any type of interaction between different business subjects — internally or externally — we can categorize it as business communication.
The key five elements of business communication include:
- Sender(s) — or the source, is the person or a group initiating the communication (employee, manager, customers, agencies, suppliers, contractors, etc.).
- Business information — the piece of information the sender wants to communicate to others (message, memo, email, document, report, etc.).
- Channel(s) — the medium the sender uses to transmit the information (phone, email, letter, chat message, etc.).
- Receiver(s) — or the audience, are the recipients of the business information.
- Feedback — or the response, refers to the reply conveyed by the receiver of the message. Feedback is an integral part of the business communication process as it determines whether the business information (the message) is successfully sent and interpreted.
What is effective business communication?
Effective business communication refers to any type of exchange of information inside and outside an organization oriented towards achieving business goals. Essentially, the goal of effective business communication is to improve internal processes, minimize mistakes and meet organizational goals.
Effective business communication examples
To get a better understanding of effective business communication, let’s go over a couple of best practice examples using the business messaging app Pumble to illustrate the examples.
🔸 An example of effective business communication meant to improve processes
Neil is a team leader in a development department. He uses the dedicated channel in Pumble to discuss the tech the team will use for the upcoming project. Neil starts the conversation by introducing the topic to make sure everyone on the team is on the same page. He proceeds to outline previous discussions and conclusions regarding the tech they should use.
James is a team member. He joins the conversation and provides the pros and cons of the two types of tech suggested. James concludes his message by suggesting a final choice based on factual evidence and research.
Neil responds by agreeing with James’ choice.
🔸 An example of effective business communication meant to minimize mistakes
Jack is a sales specialist. He received a technical question from a customer and he needs more information from the development team to be able to give an accurate answer. Jack explains the issue in the dedicated channel in Pumble asking someone from the development team to join the call with the customer.
James, a developer, volunteers to jump on a call.
Jack thanks his colleague and then continues with another technical question, to make sure no mistakes and no false promises to the customers are made. He mentions Neil, a team leader in the development department, to request an official response from him.
Neil responds by confirming Jack’s assumption.
Why is effective business communication important?
Business communication is the tie that binds all processes, workflows, and people within an organization into a coherent and productive unit. In addition to affecting larger organizational processes, effective business communication is also integral to crafting proposals and plans, reaching agreements, conducting constructive meetings, and improving sales.
Let’s get a more in-depth analysis of how business communication impacts different internal and external processes.
Effective business communication facilitates the preparation of plans and proposals
Effective business communication is critical to crafting plans and proposals.
Managers possessing strong communication skills are more likely to engage a large team around a project and successfully implement vital tasks without any delays or losses. At the same time, poor communication fails to communicate tasks clearly and, almost by default, reduces the chances of project success.
In fact, a study by PMI reveals that ineffective communication can cause a loss of $75 million out of every $1 billion spent on a project.
Every step in the process requires constructive communication to be properly implemented. From research and information sourcing to the actual writing, communication is the key component of any proposal preparation.
Although most of us would automatically associate proposal preparation with written communication exclusively, there’s also plenty of information sourcing, discussions, and brainstorming sessions that are conducted verbally.
Strong business communication skills secure the success of project or business proposals and plans.
Effective business communication helps present and discuss ideas
Similarly to the previous point, effective business communication determines how new business ideas are communicated, perceived, and accepted. Effective business communication enhances brainstorming, facilitates constructive dialogue, and supports transparency and understanding. Specific communication techniques and skills largely determine how successfully people will get their ideas across.
Effective business communication eradicates team silos
According to a 2016 survey by McKinsey, executives consider silo mentality as the number one issue hindering a functional digital culture.
With limited communication as one of the main causes for the origin of team silos, understandably, effective company-wide communication can prevent the issue from developing in the first place.
Transparent, assertive, and collaboration-based communication reduces the chances of developing the silo mentality and generates more opportunities for company-wide trust-building.
Effective business communication facilitates better decision making and execution
Business communication is instrumental to decision making and it also largely determines how the decisions will be applied. Effective communication facilities a constructive decision-making process by reducing the risk of information overload and excessive data.
Clear, concise, and structured information shared via effective business communication leaves more cognitive capacity for decision making rather than processing excessive information.
Moreover, effective business communication plays an important role in how the decisions will be perceived, and ultimately, realized. According to organizational communication literature, effective strategic communication is considered vital in communicating “the contents of company strategy and important corporate decisions to key stakeholders, both internal and external.”
Effective business communication improves talent retention
Effective communication systems improve talent retention by 450% according to a Work Institute retention report. Unsurprisingly, employees are more likely to stay longer at organizations that cultivate effective internal and external communication practices. This is especially true for teams nurturing effective internal team communication built on trust and joint collaborative effort.
Effective business communication increases productivity
Clearly communicating to employees how their work impacts the larger goal can lead to 10% higher performance, Gartner reports. Moreover, Gartner also shares that more informed employees are more likely to outperform their less-informed peers by a staggering 77%. By installing effective business communication plans — that prioritize streamlined communication and collaboration — organizations are more likely to experience immense productivity returns.
Effective business communication facilitates more constructive meetings
According to an HBR study, 71% of senior managers believe meetings are unproductive and inefficient. These numbers are potentially even larger nowadays due to the prevalence of remote communication which often lacks verbal and non-verbal cues. Remote communication, especially when it relies on written and audio methods, can lead to potential misunderstandings and miscommunication which largely affect the meeting’s effectiveness. As one of the key factors affecting the atmosphere and the outcomes of meetings, a change in communication practices can create more productive meeting scenarios.
Effective business communication improves sales
Effective communication is the key driver of sales success. As revealed by a study on the role of communication skills for salesforce, clear task communication in teams and optimally developed presentation skills largely impact the success in reaching sales targets.
Communication still plays a major role in sales, even in a digital environment that dictates different interactions, another study on Salesperson communication effectiveness in a digital sales interaction reveals.
Effective business communication builds trust
According to Lexicon, over 80% of Americans cite effective communication as the key factor in building trust with their employers. At the same time, organizations lacking transparent and honest communication strategies are more likely to experience misunderstanding and mistrust and overall low employee morale that harms company culture. According to one Accountemps survey, 33% of HR managers link ineffective business communication to low employee morale, while 38% believe proper communication strategies are the most powerful means to tackle this problem.
🎓 Pumble Pro Tip
For more on how to promote transparent communication in your organization, visit our blog post:
What are the types of business communication?
There are four main types of business communication in a typical organization:
- Internal upward communication
- Internal downward communication
- Internal lateral communication
- External communication
⬆️ Internal upward communication
Internal upward communication follows a bottom-up direction of communication. In other words, internal upward communication takes place each time a lower-level employee initiates a conversation with their superior.
🔸 Example of internal upward communication
Christopher has recently started a new job as a remote video designer. He is experiencing some challenges in his work and decides to DM his team leader, Stella, and ask for more frequent check-ins. Stella responds by agreeing to Christopher’s request and suggests a video meeting to discuss the matter in more detail. Christopher agrees and thanks Stella.
⬇️ Internal downward communication
Internal downward communication is a top-down communication flow that starts with the person at the highest hierarchical level and ends when the message reaches the lowest level employees. Downward communication is directive, instructional, and usually more immediate than internal upward communication.
🔸 Example of internal downward communication
Lena is a product manager at a software development company. After receiving a complaint from a client about a system malfunction, she notifies the team in a dedicated channel in Pumble. Neil, a development team leader, assigns Mari and Amelia (developers) to investigate and fix the problem. He mentions the two team members to make sure they get notified immediately. Mari replies to let everyone know they have received the message and are working on fixing the issue.
↔️ Internal lateral communication
Internal lateral communication refers to any type of interaction between individuals or groups belonging to the same hierarchical level in an organization. As opposed to the other two internal communication types, lateral communication is usually more immediate and less formal.
🔸 Example of internal lateral communication
Steve, Fiona, and Harry are part of the design team working on a new product series. They are using Pumble group chat to make quick plans.
➡️ External communication
External communication refers to communication with third parties, outside of the organization. Third parties, in this case, can include the general public, clients, suppliers, partners, vendors, and consultants.
🔸 Example of external communication
Neil is a marketing manager in a team that uses Pumble as a default communication channel. Helen is a marketing analyst working as an outside consultant on the current marketing project. She communicates and collaborates with the in-house team using the guest role access in Pumble.
What are the methods of business communication?
In a larger sense, business communication can be categorized into two main methods. In other words, every business communication takes place either in verbal or written form.
In addition, depending on the business model an organization is currently operating in, we can make further categorization of both main methods into in-person and remote verbal or written communication.
When it comes to the effectiveness of each method of business communication, there are no universally applicable rules. It is largely determined by the specifics of each organization and the model in which it operates.
However, there are several more commonly used methods of business communication. Let’s get a more in-depth analysis of each to help you determine the specific communication method your team needs.
👩💼 👨💼 In-person meetings
Historically, in-person meetings have been the most common form of business communication. According to a Forbes survey, they are still considered the most favorable option. Namely, 84% of executives prefer in-person meetings, citing stronger relationship building and the ability to read non-verbal cues as the main reasons for their choice.
Moreover, a more recent study by the Journal of Experimental Social Psychology reveals in-person communication is perceived as more reliable and trustworthy than communication over email.
Although effective, face-to-face communication in meetings is not exactly feasible, especially in the largely remote-oriented business environment. Remote and hybrid organizations need to rely on other methods of business communication to keep their team connected and their operations flowing smoothly.
👩💻 Video conferencing
As the closest equivalent to in-person meetings, video conferencing is another commonly used method of business communication. From remote-first to fully in-office organizations, every business carries out the majority of their business meetings over video conferencing systems. While on-site teams would resort to video for client and other third-party meetings, remote teams use video by default to facilitate more transparent and efficient communication and to strengthen team connection.
☎️ Phone and audio conferencing
Telephone and audio facilitate more productive meetings in remote and fast-paced business environments. Despite the lessened non-verbal content when compared to video, audio meetings still provide more accuracy than written business communication. During a phone conversation, for example, participants are given more opportunities to decipher the tone of voice of other participants and thus reach a better understanding and faster agreement than over traditional, written communication.
📲 Web-based communication
Online channels such as email and business messaging apps like Pumble have enabled more immediate and faster business communication and collaboration. This is especially beneficial for remote and teams operating across time zones that rely on asynchronous communication and collaboration to meet their business objectives. Email and instant messaging enable distributed teams to more effectively share information and files over private, one-on-one conversations, or with entire organizations or groups simultaneously.
📂 Written communication over shared files
Presentations, official documents, and reports present an important method of (written) business communication applicable to virtually any business. Teams collaborate over shared files, comment on official documents, and use them as a reference for specific processes and activities. In addition, employees share reports and presentations during meetings or specific discussions.
Written business communication methods allow organizations to document processes, collaborate more tightly, share ideas, and have more transparent and clear communication. As mentioned above, remote and teams working across time zones in particular benefit from keeping vital business information in writing.
📝 Internal and external surveys
Although commonly associated with external, customer feedback, surveys are also an important asset in internal communication. Employee surveys are generally carried out in the form of anonymous online questionnaires. Internal surveys are most commonly used to gather employee feedback on company policies and processes, but they also provide beneficial methods of assessing employee engagement, morale, and achievements.
Conversely, external surveys serve to evaluate customer needs, satisfaction, engagement, or to perform market research. As SurveyMonkey finds, analyzing customer feedback improves a company’s chance of regarding themselves as successful by 33%.
💬 Customer management
Communication related to customer management activities is another important method of business communication largely applicable in a modern business environment. From live chat support and customer reviews to customer relationship management systems (CRMs), there are plenty of ways businesses are communicating with customers in an effort to enhance their experience. It’s safe to say that customer satisfaction is directly related to the effectiveness and the quality of your customer management communication.
What methods of business communication does your team need?
When tasked with choosing the right communication methods for their team, organizations need to consider their unique needs and circumstances. There’s no single, universal solution that works for all business models and sizes.
Depending on the industry and the business model you’re operating in, you can find some less popular methods perfectly suited for your team, while others, generally more common may not be very effective.
For example, video conferencing and email, although generally applicable, may not necessarily be the best fit for your remote team that relies on quick exchange and fast collaboration. Or, you may invest in a high-end CRM system, only to realize the majority of your customer management activities are carried out via phone or live chats.
That being said, there’s still at least one universally applicable communication method the vast majority of organizations will find great use in. Web-based communication can be used across various business models and sizes both for internal and external communication, while other methods largely depend on the unique needs and models specific businesses operate in.
Consider outlining your specific communication needs, preferences, as well as priorities and objectives, and measure them against the list of communication methods listed above to make sure you are making a well-informed decision.
How to improve communication in business?
Improving your business communication brings immense rewards to your internal and external operations.
So, how do you create a successful business communication strategy in your organization?
Let’s break down some most effective tips on how to improve communication in business.
🔍 Assess the current state of your business communication and set goals
To successfully implement new communication plans and strategies, consider starting from the analysis of the current state of your business communication. This will help you identify any weak links and blocks to improve upon. It will also serve as a great basis for setting the right goals for your future business communication.
The assessment may be time-consuming, but it will most certainly pay off in the long run, as it will help to guide your plan of action.
For example, you may notice that your internal communication took a hit due to a transition to remote work. As a result, it may lack direction and transparency which are crucial for productive teamwork and overall team connectedness.
Once you are able to identify the issues, you can start crafting a plan that addresses those exact pain points. In this case, the goal may include setting clear guidelines on the volume and quality of internal communication in addition to actionable points on how to put these into practice.
🗣️ Identify key groups and analyze how they communicate with each other
Once you’ve analyzed the potential issues hindering your business communication as a whole, it’s time to take a more in-depth assessment of how core groups in your organization communicate.
This step can help you identify more specific issues and thus, set more relevant goals and action plans.
To get started, try to first define the key groups whose operations rely on efficient communication and information sharing. You can categorize these into different levels, including:
- Horizontal groups — teams, units, or departments, e.g. marketing, design, sales, finance, human resources, etc.
- Vertical groups — executives, managers, team leaders, team members.
- External groups — clients, partners, vendors, consultants, etc.
Once you identify key groups, analyze their interaction using relevant parameters such as feedback, reporting, frequency of communication, crisis communication, irrelevant conversations, and meetings, etc.
For horizontal groups, you can assess which people, teams, and groups rely on regular communication to support daily, weekly, or monthly operations.
When it comes to vertical level communication, consider analyzing the quality and frequency of feedback, reporting, progress tracking, and approval.
Similarly, external level communication can be analyzed by frequency and quality of customer and partner communication.
The insight gained through this analysis can help you determine the optimum volume of communication needed to better support different processes and teams. Moreover, it can help you make more informed decisions when it comes to choosing the right communication channels and tools.
📞 Define relevant methods of communication
As we mentioned earlier, there are several commonly used communication methods. However, not all of them are necessarily relevant to every business. The choice largely depends on the type and the size of the business, along with the specific business communication goals you’re aiming to achieve.
For example, if your goal is to improve your cross-department communication and collaboration, you could set a web-based method as a default one for quick exchange of information, files, and feedback between teams.
At the same time, the communication methods also largely depend on the size and the business model organizations are operating in. In line with this, a small in-office team would opt for in-person internal meetings, and they would use web-based messaging for collaboration and external communication. However, a large, fully remote organization would have to rely on video conferencing as an alternative to face-to-face meetings, in addition to the web-based asynchronous collaboration.
🔧 Apply the right tools
There’s no one-size-fits-all solution when it comes to choosing the right tools to facilitate business communication. It takes defining your unique needs and measuring them against the available tools to find the solution that perfectly aligns with your business communication strategy and objectives.
That being said, there are still several generally applicable functionalities to look for in a communication tool regardless of your business size, work model, or unique preferences. User-friendly interface, maximum security, and features enabling productive collaboration are some of the features universally relevant to every organization looking to optimize and streamline their business communication.
Here are some rules to follow when choosing and adopting the right business communication tools:
- Use a centralized platform for emails and calendars to automatically sync availability and better manage communication and collaboration across your organization. Whichever your preference is in the battle of Google vs Outlook is completely fine as long as you make it universal for both calendar and emails.
- Store vital information and documents in the cloud with automatic backup to prevent losing critical data.
- Define some ground rules to have a consistent brand voice, tone, and chat etiquette across all communication channels. This will prevent potential misunderstandings and conflict from taking place, and ensure all teams are applying the principles of respectful communication in the workplace.
- Use a single business messaging tool company-wide. It’s very easy to fall into the miscommunication trap when one department uses Gmail Hangouts, while others are communicating over Pumble, for example.
- Look for multi-functional tools that facilitate streamlined collaboration. Features like file sharing, versatile messaging options, member availability, smart notifications, and seamless navigation provide more efficient communication and collaboration experience.
👩🏫 Identify and cultivate relevant business communication skills
In addition to fostering individual professional achievements and career advancement, business communication skills are equally beneficial in a larger, organizational sense. Companies that invest time and resources in improving communication skills in their workforce are more likely to experience higher employee performance, according to one TalentLMS survey. Understandably, higher employee performance and productivity lead to better overall business success.
To help you better identify and perfect relevant business communication skills in your organization, let’s get a closer look at all the vital skills for effective business communication.
Effective teamwork relies on effective communication between team members. To effectively collaborate, team members need to master the art of asking better questions at work, as well as learn how to solicit and give constructive feedback. Moreover, strong collaboration skills include being open to and considering different perspectives, along with providing support and encouragement to teammates. Creating space for the development of collaboration skills allows teams to work together more effectively and discover more efficient ways to reach organizational goals.
Diplomacy skills are a vital component that makes up effective business communication regardless of the industry your business operates in. From conflict resolution and problem-solving to communicating empathy and compassion, diplomacy skills are integral in managing professional interactions both internally and externally. Strong diplomatic skills facilitate better relationship-building in the workplace, improve job performance, and conflict resolution.
At the same time, professionals with highly developed diplomacy skills are more successful in customer management and other public-facing roles.
Well-developed diplomatic skills allow sales representatives and customer support professionals to better understand customer perspectives and needs and thus provide better solutions and support.
Individually, professionals can seek more feedback and look for opportunities to practice their soft skills during regular workplace communication and collaboration.
On a larger, organizational level, teams can organize workshops and enroll in courses that focus on developing emotional intelligence, analytical thinking, and conflict resolution to build a better diplomacy skill set.
Although generally associated with winning new clients or business partners, negotiation skills are integral to several other business activities. Employees and managers are applying negotiation skills when discussing salaries or promotions, for example, while business owners rely on negotiation skills when communicating with investors.
Subskills you can practice when building your negotiation communication skills include:
- active listening
- expectation management
Unsurprisingly, the majority of the business communication skills are directly correlated which allows professionals and organizations to maximize their learning efforts.
The ability to capture the audience’s attention and convince them to consider your ideas or viewpoint is another important business skill that largely relies on effective communication. Strong presentation skills are instrumental in crafting and delivering captivating presentations to different business audiences. In addition to managers and executives that usually have more opportunities to practice their presentation skills, team members also require solid presentation skills to communicate their ideas to their team effectively.
Mastering the presentation skills includes learning how to harness the power of verbal and nonverbal communication and present ideas using various visual and audio methods to make a strong impression on the audience.
Presenting the information in a clear and engaging way is a skill worth developing as it affects plenty of business activities and processes starting from effective collaboration to acquiring clients and making sales.
Public speaking skills
Similarly to the previous business communication skill, public speaking requires professionals to have a strong command of their verbal and non-verbal communication. A professional business environment demands a certain level of public speaking proficiency almost by default. From the moment we step into the professional environment and do our first job interview to delivering presentations and speaking at industry conferences, addressing investors or communities, most professionals are required to engage in some form of public speaking throughout their career. Strong public skills reflect in the ability to captivate the audience’s attention and create a connection through storytelling.
Active listening skills
Another very important business communication skill that ties in with several others is the active listening skill. Active listeners are characterized by the ability to be patient and present in communication while paying close attention to details and nuances to avoid misunderstandings and reach a better understanding. This business communication skill supports better work relationships and fosters more productive collaboration, in addition to being one of the key components of negotiation.
Business writing skills
The largest portion of modern business communication is carried out in writing. Even before the global transition to the remote work model, the effectiveness of business communication has been largely dependent on the business writing skills of the participants to get the right message across via emails, company memos, business messaging platforms, website copy, or social media posts.
Organizations and individuals alike need to commit to improving their business writing skills to reduce misunderstandings, improve collaboration, ensure clear task communication, and facilitate better work relationships.
🎓 Pumble Pro Tip
To learn more about enhancing your business writing skills, be sure to read our blog post:
Conflict resolution skills
The ability to communicate your way out of a crisis, conflicts, and stressful situations in general, showcases strong conflict resolution skills. Naturally, managers and team leaders are more interested in developing these particular skills. However, other team members can also largely benefit from learning how to manage stressful situations and communicate to find creative solutions for the issues at hand.
As one of the business communication skills commonly related to leadership roles, good decision-making skills are key to successful goal-reaching both in terms of individual and organizational objectives. The ability to take an objective stand in critical conversations and quickly weigh out all the pros and cons and measure them against the main organizational goals and priorities is a skill that characterizes successful managers and leaders. The key to acquiring strong decision-making skills lies in applying a process that includes the following steps:
- Defining the situation or the issue.
- Identifying potential solutions or plans of action.
- Outlining all the pros and cons of each plan.
- Making the decision that best aligns with the previous steps and the overall goal.
🎓 Pumble Pro Tip
To get a better insight on how to make better decisions remotely, be sure to check out our blog post:
Nonverbal communication skills
Although the popular myth on the immense importance of nonverbal communication has been debunked by the more recent research on the basis of misinterpretation of the original research, nonverbal communication is still an important part of everyday and business communication. Nonverbal communication skills include specific body language cues we are using (intentionally or not) to convey our message. This includes everything from eye contact and facial expressions to our posture.
Professionals who mastered the skill of nonverbal communication have more success in getting the right message across in conversations with clients, team meetings, or industry conferences. Understanding nonverbal communication principles allows communicators to better read and understand the feelings and opinions of other participants in the conversation by observing their body language and facial expressions.
Feedback and input communication skills
Teams that foster constructive feedback in workplace communication are more likely to experience substantial benefits in organizational performance and commitment, a study finds.
Moreover, constructive feedback is equally valuable to employees on a more individual level as it supports faster career advancement. In fact, according to a Harvard Business Report Study, 57% of employees prefer receiving constructive feedback over praise.
To build strong feedback and input skills that drive collaboration and performance, organizations and individuals can consider working on trust-building, along with practicing honest, and respectful action-oriented feedback communication.
🎓 Pumble Pro Tip
You can read more on how to improve your constructive feedback communication, on our blog:
Organizational management and leadership depend on strong delegation skills to effectively organize workload and strategically assign tasks for maximum productivity. However, delegation does not necessarily end with proper task assignments. Skillful delegators understand the importance of effectively communicating support and delivering relevant resources throughout the process.
📄 Document and share your business communication processes
While working to institute more effective business communication practices, organizations need to ensure everyone is getting access to strategies, procedures, resources, tools, and learning materials. Consider documenting your business communication processes and materials into one shared knowledge hub to serve as a checklist for new and existing employees to reference. Finally, share the document in a company-wide email, or pin it in a #general channel in your company team messaging app to make sure it stays accessible and top of mind with the entire organization.
Wrapping up: The success of your organization depends on effective business communication
Effective business communication drives collaboration, boosts productivity, and employee engagement. Ultimately, as the fuel behind all internal and external organizational activities, effective business communication is the cornerstone of organizational success.
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