Lecture15 Internal and External Communication

TOPICS COVERED Channels, Flow, Internal, External, Diagonal

OBJECTIVES Upon completion of this Lesson, you should be able to: Demerits of Upward Communication Internal communication Requirements for effective internal communication External communication Types of external communication a. Shareholders communication b. General public communication c. Customer communication d. Government communication e. Dealer communication f. Inter organization communication g. Complaints communication Scalar communication

INTERNAL AND EXTERNAL COMMUNICATION Communication may broadly by classified into two types. They are (1) Internal communication (2) external communication 1. Internal Communication: Internal communication may be defined as an exchange of facts ideas, opinions that individuals or departments of an organisation relating to purely inside matters. Information transmission of various pieces concerning what happens

within an organisation rather than its relationship with the others outside an organisation. This implies the concept of internal communication. Thus internal or inside communication is concerned which implies transmission and reception of information clearly, accurately and speedily. As generally used inside communication meant given and receiving information by all hierarchical levels. It includes vertical communication covering downward communication, upward communication, horizontal communication and diagonal communication. It includes communication flowing at any intermediate level as well as at operating level, or top management level, because internal communication is indeed required by all who work together in an organisation to accomplish common goal. A type of communication is purely of official matters moving with files. It is a communication of indoor management. The outside people or external to the organisation are not concerned with it. In corporate management there is Doctrine of Indoor Management. This allows all those external parties who deal with the company to assume that the employees of the company have observed the provisions of articles in the management of affairs and communication. In other words they are not bound to enquire into the regularity of internal matters. An outsider or external is not expected to see that the company carries out its internal affairs of management. In the conduct of office work internal communication between one person or another is within the premises of the organisation. In a very small organisation as well as large sized organisation internal communication does exist as a routine. But in smal1 organisations internal communication poses no serious problem, for small group in the office can easily with little efforts communicate with each other effectively. Whereas in a modern complex large size business organisation with a large group of people, achieving effective communication is a difficult task. But in those cases the need for better and effective internal communication cannot be overlooked. Effective internal communication is a real problem compels a certain amount of care and scientific way of communication with the increase in the size of organisation the problem becomes complicated. Internal communication may either be oral or written. Oral or verbal communication may be face to face conversion; telephones, meetings, conferences, group discussions, personal instructions, lecturers, interviews; counselling, public address system, grapevine, gossip tumour social affairs etc. Written internal communication may be through orders, memos, letters, house organs, bulletin boards, posters, information racks, manuals, handbooks, annual reports, grievance, union publications. The main methods of internal communication available in a modern office are messenger service, internal mail service, and mechanical devices. Leffin Well and Robinson have suggested three general forms of inter-communication. They are (1) Notices that certain things have been done. (2) Orders to do certain things, requests for advice and information, notice of happening. (3) Reports of progress on different phases of work.

UPWARD

HORIZONTAL

INTERNAL COMMUNICATION

HORIZONTAL

DIAGONAL

DOWNWARD

DIAGONAL

An organisational is a complex organ composed of group of individuals. The individuals and groups that communicate and interact within the organisation. It is the responsibility of top management to provide effective internal communication network. In so far as inside is concerned the managers communicate with employees and employees with management. Managers also interact with managers. The communication internally should change the behaviour and attitude of the employees and to influence productive activities by keeping them effectively informed. Organisation is very complex with individuals and group of individuals. Communication is concerned to change the behaviour of them in a desired line. In brief internal communication is information exchanged among the employees. Within the organisation top management communicates middle-level management composed of several functional executives and in turn middle level management communicates operating level or lower level subordinates. The process permits communication from lower level to top management. Feedback or interaction is a continuous process. Middle level management called as tactical-management interacts with tactical managers. Lower level employees called as operating workers communicate with themselves. Information exchange flow can be seen diagonally. Informal communication takes place hours together between the people, which arise on account of their social relationship, personal contact, and other background factors. Information flows downward about the policies, objectives, operations, products etc., which they are bound to know. The organisation structure shows officially designated positions, which indicates described path through which the internal communication should flow. Requirements for Effective Internal Communication Lynn Townsend, set forth the following eight requirements for effective internal communication. 1. Internal communication must be recognized as an essential tool of management. It is a way to achieve corporate objectives, build teamwork, and motive: It can make

2. 3.

4. 5. 6. 7. 8.

managers become better leaders. This requirement recognises that, employee attitudes and resulting performance are improved by effective communication. Employees must be well informed concerning their mutual interests in company success. Management's position on issues needs to be known and employees should be persuaded to take actions that will best serve mutual interests and goals. Individual managers must actively support the corporate communication efforts; Managers must develop teamwork among them and work cooperatively with the corporate office. Management has responsibilities to create a climate conducive to communication and to maintain a flow through open channels. Great emphasis must be placed on communication and measurement Communication cannot be left to chance. There must be a plan who communicates that how to whom, for what purpose and to what effect. Top management must establish a communication climate other divisions and departments will reflect this climate. A long-term investment in professional talent and communication programming must be made Programming and qualified people cost money, but it is well spent. Management must recognise its responsibility 'to listen as well as to speak. If the boss is not a good listener, those who report to him will soon stop trying to communicate. Management must recognise the desire of employees to help their company and the power of communication to tap this great potential. Employees are willing to help and communication can turn this desire into action.

External communication: Channels of communication consist of vertical internal communication like downward communication upward communication, horizontal communication, diagonal communication, are all relating to matters within the organisation. There is no denying the fact that every organisation irrespective of its nature of functioning has to have communication links or network outside the organisation or outside the organisation structure. The bigger the enterprise is the more elaborate the external communication system must be the such organisations, the greater is the likelihood of expensive and time wasting, 'mistakes called through lack of external' communication. It would not be out of way to emphasise that the above channels of communication work within the organisation. But in real world situation, every organisation is also _inked with the outside parties in the form of suppliers, customers, government, departments, financial institutions, holding and, subsidiary companies creditors, debenture holders, registrar of companies and other body corporates etc. Under all circumstances, it should be kept in mind that for the effective running of the organisation an uninterrupted communication channel external to the organisation be maintained to keep the organisation alive and active. External communication is equally important as internal communication to provide a link between the employees and the shareholders and other third parties. As a matter of fact, external communication is considered as lifeblood of the modern business. External communication can be arranged by oral or verbal communication as well as through written media. Telex, television, telephone, tele-printer, transmitters, STD, ISD, and other modern sophisticated communication technologies can be used for external communication. Written media like letters, circulars, Jl1emos, notices, legal notices,

newspapers, magazines, manuals, periodical reports, pamphlets etc., are also used towards external communication. External correspondence is mostly in written form except in extraordinary circumstances resorting to telecommunication services. Communication is characterised as two way process, continuing process and is a social process. Two or more people are involved in the process. In internal communication the process is among the employees, may be upward communication downward communication. A modern business organisation is a complex organisation not only of individuals or group of individuals within the organisation but to interact with outside individuals and groups. An efficient management need to become aware of the importance of external communication, information exchange and use of feedback. Most problems associated with outside matters are due to lack of adequate communication.. Adequate external communication shall be recognised, sought, and used. Problems of pollution, technological unemployment, problem of congestion, housing, medical, crime, family planning, problem of population, natural resources, dangerous effects of industrial wastes, fumes, dust, effects of chemical fertilizers on human health, ecological balance, and a host of many other subject matters, fall within the orbit of external matters of social responsibility. A very important function of the management is to have multi-media approach to 'communicate with various cross sections of the society, by maintaining an. effective and honest information exchange. Within the organisation employees communicate in different directions. Outside the organisation a system of communication should keep several people informed. It is utmost necessary to build. attitudes, develop rapport, create confidence, win goodwill, morale support and influence, mutual understanding by keeping them well informed. There are many broad areas outside the organisation about which information should be communicated. Externally an organisation has to communicate with customers, shareholders, sistercorporations, dealers, government and its department general public and entertaining complaints, suggestions, enquiries etc. A brief description about external communication broadly classified into seven categories has been presented under the following paragraphs. 1. Stock holders Communication The owners of the company arc share holders with whom the company has to communicate always about the matters. Most companies use personal visit, telephone calls, mailing and supplementary reports to keep shareholders informed, interested and satisfied. The communication with them may include reports, matters on corporate meetings, dividend enclosures, magazines, special mailings, notices, resolutions, minutes, periodic correspondence, financial, press release etc. Communication with the shareholders may cover many subject matters such as: 1. Issue of share certificate, 2. Share transfer application and procedure, 3. Certificate of transfer. 4. To mobilise funds, pay divided, in1erest on fixed deposits received.

GOVERNMENT PUBLIC DEALER

CUSTOMER COMPLAINTS
EXTERNAL COMMUNICATION

INTERCORPORATE

SHAREHOLDER

5. To issue dividend warrant, proxy form, dividend coupon. 6. To issue notices, agenda of the various meetings, 7. To respond to correspondence received from them, 8. Correspondence relating 10 calls, forfeiture, transmission, 9. Communication on matters relating to statutory requirements etc. 10. Describing organisational problems and objectives of the company in terms of special current developments in the company's folder and other stockholder communication. 11. Drafting and circulating to all stockholders a transcript or highlights of the annual progress at the company's annual meetings. 12. Giving response to each stockholder's inquiry, which must be prompt to create goodwill.

13. Informing by way of circulating or distributing to all shareholders occasional reprints dealing with developments vital to them. 2. General Public Communication It is with effective communication and appropriate media that a company contacts with public. It is the means to create and build goodwill. It also helps as a driving force to reach the public and brings the company and public together, linking with society in general. External communication facilities through several media of verbal and written contacts with the public in general. It is not possible to built a satisfactory public image for the company. The public should be informed about the various products and their uses; comparative advantages, price differentials, product, after sale services and changes must be communicated promptly. A qualitative communication ensures to promote a positive favourable atmosphere, develops friendly and confident feelings towards the company and its product. . Audio-visual, direct mail, sales promotion, advertisemen4 news bulletins, annual reports, posters, hoardings & pamphlets are a few of the many media used to reach public. Public information consist: (a) Preparing and distributing news releases concerning company to create public interest. . (b) Public meetings, press conferences between the company and representatives of press, radio and television. (c) To have a regular and prompt press information service and to answer enquiries from press and radio. (d) Releasing periodic advertisement in mass media circulating throughout the country and in respect of certain commodities, information to customers directly. (e) General public communication covers personalised mass mailings, to the editors of newspapers, magazines, radio and television directors, educational institutions religious institutions, public relation offices and officials and other local opinion leaders. (f) Motion picture is another important medium for public communication, which portrays the company's operations and high lighting the economic advantages of the company's are of operation. Mass media is the gateway of the company for communication with the pubHc.1'he public relations department of the company is mainly responsible to promote goodwill among the outside public. 3. Customer Communication An effective system of communication should provide opportunities for customer information. Customer is the ultimate object whose satisfaction and goodwill arc utmost important for the success of an organisation. In carrying out the sales function of planning, management must communicate with customers. There were limes when the customer was not a central figure. But today customer is the kingpin and sovereign of the market whose needs a satisfaction and winning their goodwill are prime important in these days of competitive set-up. They must be communicated promptly. It is the communication, which establish the contacts with the customers. Customer

communication helps to establish a relationship with customers who buy and source of products. The media used-for advertisement can be used effectively to reach the customers. It is the responsibility of the communication: To prepare welcome letters, personally addressed signed by the chief executive officer to all old as well as to the new customers. Customer information should include helpful and desirable information concerning prices uses after sale facilities etc. Media like pamphlets booklets printed in attractive manner summarising about the company's product etc., are the purposes of communication. Enclosing handouts, progress reports to each, bit or to each correspondence mailed to customers. It acts as repetitive reminder to the customer about the company. Prompt, response to all enquiries made by the customer promotes and builds confidence and goodwill. Effective written' communication promotes a friendly understanding of company policies Preparing brochures and other informative folders directed to specific customer group like fanners, small business, women, and other special users. 4. Government Communication Communication with government and its departments is another important dimension of external communication. Business communication with Government covers several dealings touching many Government departments. A corporate enterprise has to communicate with the Registrar of the Companies, Controller of Capital issue, finance department, industrial department labour department The relation of a company with Government is many sided. Correspondence with government may cover export-import matters, foreign exchange, dealings, licensing, registration, and taxation matter also. A company has to file a number of documents to various departments of the Government. Feeling of annual returns, tax returns are regular activities. Under the India companies act 1956, a corporate enterprise has to take the consent of the government in a number of managerial activities Government issues directions, guidelines and other policy matters by way of notification in official Gazette periodically. Business houses have to consider the national objectives, national priorities of economic development as indicated in Five year plans and other policy statement and resolutions. There is always a routine communication between the Government and the business on several other matters like wage policy price policy, foreign policy industrial policy etc. Government communicates national objectives, priorities, achievements, programmes through mass media like television, radio, film and through print media like newspapers magazines, Five Year Plans, budgets, annual reports, special economic survey report, statistical bulletins, handbooks, etc. A firm has to deal with all correspondence in which it is concerned and interested. 5. Dealer Communication A communication network should not overlook the importance of dealer communication. Dealer is a trader who carries on the business of buying and other business dealings. A dealer effects substantial turnover involving in buying, selling, supplying or distributing goods directly or indirectly for cash or deferred payment. or for commission. Dealer is an

important, party in external communication. The relation of the company with, its dealers like these of other outside is said to be dealer communication. A quality of the product the trading policy, practice, procedure and the image the dealers have to promote are the fundamental factors, which must be given major consideration in the subject matter of communication. The way of communicating with the dealer will vary depending upon the nature of product, distribution and media of communication. Communication with a dealer is 'quite different when the distribution is made through agents. Conferences and meetings with the dealers are the usual media of oral communication. Written communication through-letters is often the common method. Another medium to maintain close contact with the dealers is in providing all" the dealers with regular copies of an external house journal or newssheet. It carries relevant information from the business house to the dealers, wholesalers, stockists, agents etc. The journal may generally contain messages on display, promotions, uses, benefits, comparative superiority of the product and covering all such matters calculated to improve the dealer turnover and consequently mutual profits., Direct mail is also used to nave direct contact with the dealers. The public relations officer of the company gives guidance and help' to promote sales. He is a liaison between external parties and. the company. 6. Inter Organisation Communications No business organisation can exist in isolation without the connections and dealings with other sister business organisations. Inter corporate communication implies process of information exchange between companies. A company of a particular industry may have links directly or indirectly. Inter-corporate loans, inter company investment, inter locking directorship, and inter corporate dividends, inter-corporate holdings inter-corporate transactions etc. are all examples of existence of inter-corporate communication. Information exchange between companies may take place on many matters like cost process of production, methods of productions new methods of production etc. It has been observed that simply a firm cannot exist, survive unless it is related with other firms in the industry. Inter industry intra industry-information exchange is necessary to make comparison and to run on smooth and competitive lines. Business houses do much inter company communication to bridge up the communication gap between the organisation and outside entities. Very often one may notice that companies resort to inter-corporate and inter-institutional communication. Companies also involved in information exchange to know the various sophisticated techniques adopted, handling of production method, appraise, people about the organisations march arid social responsibilities discharged and get their employees informed about the movement of the employees in comparable organisation. In present day competitive structure a firm is expected to catch up to the efficiency attained by the competitors and take efforts to reach and exceed them. Communication between the organisations on various functional performances highlights the points of strength and weakness in individual company performance. The inter firm information exchange facilitates inter-firm comparison which provides an objective and realistic measurement of comparable efficiency of the firms inter se. The inter firm messages on operating performance, financial results, product cost structure, sales trend, market potential etc., in relation to their firms of similar size, capacity, nature, industry or trade show vivid picture of comparative strong points and weak points. The firms can improve

accordingly their activities. In this firms, supply information reports on their activities in the form of ratios, figures etc. 7. Complaints Communication Public relation firmly believes in openness and honest communication. Public complaints and suggestions and response constitute complaint communication system. An organisation with its effective communication talent has to establish and maintain mutual understanding between an organisation and its public. Complaints made by the public arc to be attended to and suggestions offered should be considered. A complaint is really a favour to the company. Correspondence with them is a good means of communication particularly face-to-face conversation is still effective. Acknowledging any complaint and giving decision without delay promotes goodwill. It is the social responsibility of the business as a way of activities to, entertain and responsive to complaints and suggestions. Social responsibility of a business means obligations, which a business owes to the society. Communication sets in all spheres of enquiries, complaints and suggestions. Scalar Communication Three-phase communication is referred to as scalar level communication. This is another way of approach to communication. Thus industrial communication has three phases, namely, (1) Inter scalar, (2) Intra-scalar and (3) Extra-organisational. Inter-scalar communication: Inter-scalar communication is nothing but a two-way communication. It implies information flow between different levels of authority. It includes upward communication and 'downward' communication. Management transmits messages to the lower level through middle level management. Upward movement travels from bottom to top management through middle level. 1. Intra-scalar communication: Also called as cross contact communication or horizontal communication. When information travels between two departmental dangers or any two or more persons having equal relationship bound to one another it is termed as intra-scalar communication. According to S. Khandwale intra-scalar communication increases understanding, accentuates group unity, speeds action, aids morale and provides supplementary information. However, if it is over emphasised and perverted to serve interests of a particular management level rather than the general interest, it tends to weaken the organisation. 2. Extra-organisational Communication: A communication that takes place with outside people. When information exchange takes place between outside or extra company agencies and the employees within the company it is termed as extra organisational communication. It is a way of communication to the workers or the management through union or the workers' families. The union or workers or workers' families arc the extra organisational agencies. The figure given below illustrates the three-phase communication.