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Sep 10, 2019

Approx. 8 min. read

11 Reasons Why Business Communication is Critical to Your Company's Success

                Business communication involves constant flow of information within and outside a company. 










Business communication involves constant flow of information within and outside a company. 

Corporations with large number of people and various levels of hierarchy often struggle to manage business communications effectively. Therefore, there should be effective and continuous communication between superiors and subordinates in an organization, between organizations and society at large. 

💡Download our eBook "10 Principles of Modern Employee Communications" and learn how to communicate with the modern employee in today's digital age. 

Effective business communication is essential for success and growth of every organization. Unlike everyday communications, business communication is always goal oriented.

For an enterprise company to operate successfully, all the rules, core company values, regulations and policies of the company have to be communicated to people within and outside the organization. 

Types of Business Communication

There are 4 main types of business communications.


1. Internal upward communication

Internal upward business communication is communication that comes from a subordinate to a manager or an individual up the organizational hierarchy. Every leader should enable information to flow upwards in order to have a true understanding of the company’s operations.

Internal upward communications usually include surveys, feedback, forms and reports that employees deliver to their managers or team leaders. 

For example, a marketing report may include statistics such as total website visitors, social media engagement or total leads generated. 

2. Internal downward communication

Internal downward communication flows from a superior to one or more subordinates. This type of communication might be in the form of a letter, a memo or a verbal directive.

When communicating with employees, leaders should keep communication professional and clear. An example of this type of communication may include a memo regarding a new company operations procedure such as safety requirements and new regulations.

3. Internal lateral communication

Internal lateral business communication happens among employees in the workplace. Today, there are many different ways employees can communicate: chats, messaging, email, employees communication software solutions

This type of communication can be within or among departments and it happens more regularly than other types of business communication. Moreover, frequent communication among employees play a crucial role for employee engagement and productivity. 

4. External communication

External business communication is any communication that happens with external parties such as customers, prospects, vendors or partners. 

Unlike all the internal business communications types, external communications happen on a less regular basis. 

11 Reasons Why Effective Business Communication is so Powerful

Here are the top 11 reasons why business communications is so important for every company's success: 


1. Improves employee engagement

Ragan’s research on employee engagement shows that leadership communication is the top internal communication factor that statistically correlates to how engaged employees are. Internal communication teams have a significant role in supporting, coaching and reminding leaders of communication’s importance.

To understand the importance of employee engagement, here are a few useful stats. 

2. Eliminates email overload

Within companies, email is used for everything from information requests, employee communications and feedback, status reports, task assignments, communications with customers and suppliers, meeting invites, document distribution, notices from HR on various team activities, benefits and birthday wishes. 

Radicati reported that the average corporate worker spends 25% of the workday on various email-related tasks.

However, only a small fraction of the emails that hit our inbox deserves our immediate attention. We filter out the important emails by sender or subject. Moreover, many emails we receive are not relevant to us at all. 

Internal business communications that use modern tools for employee engagement and communications have eliminated this problem of email overload. 

3. Eliminates communication silos

Too much irrelevant content often results in information silos. Meaning, information that is actually important to an employee can easily get lost. Ask yourself why information gets lost in your organization. 

Proper internal business communications and and the use of the right communications tools is crucial for eliminating this challenge.  

4. Increases employee productivity

4 in 5 employees believe that effective internal business communications helps their job performance.

With the information overload, employees often spend too much information searching for content that they need to do their job. 

Moreover, an average employee spends 2.5 hours every day searching for information needed. Monthly, this results in the entire week of time lost to find something that should be at employees fingertips. 

Here are just a few ways how internal business communications improve employee productivity.

business communication and employee productivity

5. Improves interdepartmental communications

Without a proper communications strategy, it is very hard to keep an effective interdepartmental communications within companies. 

In order for employees to be more productive, they need to be able to communicate and collaborate easily.

For example, your research department needs to be on the same page as your marketing team, and your business office has to be in sync with the IT department.

Besides communication itself, here are a few more tips for improving interdepartmental team collaboration

6. Improves communication with remote workers

Remote teams are the future of work. The Global Mobile Workforce Forecast Update has estimated that over 40% of the world’s working population will be mobile by 2022. Moreover, in developed countries such as the US, the figures could soon reach 75%.

This means a new kind of communications, leadership and management approach is required. Coordinating across time zones, information silos and overcoming language and cultural barriers are just a few communication challenges remote teams face. In addition, distance often makes it harder for team members to feel like a team.

Better internal business communications can have a significant positive impact on how remote teams collaborate and feel. 

7. Reduces employee turnover

Companies with more engaged and satisfied employees enjoy much lower turnover rates. In order to attract and keep Millennials and younger generations in the workplace, employers have to make sure to keep their employees informed about what’s relevant to their jobs. 

On the other side, too much irrelevant information often leads to  stress, disengagement, frustration and, with that, lower employee retention. 

8. Improves knowledge sharing efforts

One of the main goals companies are trying to achieve by investing in internal communications is to improve knowledge sharing best practices

In the world where employees are constantly growing and learning new things, employers need to enable easy knowledge sharing within their organizations. 

Without a well set internal business communications strategy, knowledge sharing and organizational knowledge suffer. 

9. Increases employee advocacy

When employers know how to communicate with their employees effectively, they are much more successful in turning their employees into brand ambassadors

Brand ambassadorship is not so hard to achieve as many companies believe. In fact, happy employees would love to contribute in brand ambassadorship programs. 

There are 4 main ways how brand ambassadorship and employee advocacy can help company's operations:

  • Increase brand awareness
  • Improve employer brand and attract high-quality candidates
  • Boost marketing efforts
  • Increase sales

10. Improves customer satisfaction and retention

Better business communication also means better customer satisfaction. If there’s poor communication within an organization, two things happen when it comes to customer service and satisfaction. 

First, employees in customer-facing roles won’t have the information they need. Second, customers will sense the low employee morale and have a negative experience.

In fact, one study found that employee attitude has a significant impact on customer satisfaction, which then results in an increase in revenue.

11. Builds a better company culture

Finally, a proper business communications strategy is crucial for building a better company culture and workplace environment. 

Companies that communicate in a transparent and open way have much healthier work atmosphere, employee motivation and satisfaction. 

On the other side, organizations that neglect business communications as a mean for improving the workplace culture, suffer from low engagement, high turnover rates and low employee and customer satisfaction rates. 

How Technology Can Help You Improve Business Communications

In the world of digital transformation, companies must be ready to adopt new technologies to improve their organizational efforts. 

As employee communications and engagement have become extremely important, new tools in this field have evolved. 

As mentioned earlier, emails, intranets and other outdated employee communications solutions are not enough anymore. 

Today, we see new software solutions that enable companies to improve both internal and external business communications

With Smarp, our employee communications solution, companies across the world have managed to:

  • Increase employee engagement
  • Boost employee productivity
  • Eliminate information silos
  • Increase employee advocacy
  • Boost marketing and sales efforts
  • Improve employer brand awareness
  • Attract more high-quality talent

The Future of Employee Communications

To see how and why employee communications will change dramatically in the future, check out and register for our latest webinar on this topic. 


What's next? Download the eBook “10 Principles of Modern Employee Communications” where we share tips & best practices for successfully communicating with your employees in today's digital age.


Written by

Kristina Martic

Kristina Martic

Digital Marketing and Employer Branding

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