The Importance of Good Communication (Edexcel IGCSE Business)

Factor

Explanation

Real World Example

Increased worker motivation

• May lead to improved employee involvement in the decision-making process, which motivates workers
  
  
• Allows for effective feedback from employees to each other 

• The UK-based bus company Stagecoach has implemented an app called Blink, which uses instant messaging and a reward and recognition system to improve communication
  • As a result, there was a 32% increase in employee satisfaction and a 26% reduction in staff turnover

Improves efficiency

• Makes successful decision-making easier as decisions are based on more complete and accurate information
  
  
• Employees will be more productive when they fully understand tasks and processes

• TED, famous for their signature talks, ensures all meetings take 18 minutes or less
  • Research shows that long meetings are counterproductive and workers pay less attention, reducing productivity

Encourages innovation

• Open communication encourages workers to ask for help and suggest improvements
  • This could lead to greater creativity and innovation within the business

• At the US company 3M, workers spend 15% of their day in collaboration with colleagues allowing for open communication and idea generation

Builds a positive company culture

• Supports everyone involved in a business to understand their role and know what is expected of them
• Encourages teamwork and co-operation between employees

• Zappos updates workers as soon as possible about new pieces of information
  • This transparency builds a positive culture as workers appreciate the honesty from management

Reduces costs

• Good communication allows managers and employees to minimise mistakes, which reduces costs
  
  
• Many forms of effective communication are cheap and easy to use, such as email or social media messaging

• Starbucks has invested in the idea of employees as brand ambassadors and highlights the need for good communication between employees and management
  • Workers are more likely to stay with the company and  produce higher-quality goods and services, reducing costs

Promotes customer satisfaction

• Better and regular communication with customers will increase sales as customers build a relationship with the brand 

• Lidl Ireland practices good PR through its sponsorship of Women's Gaelic Football
  • This shows their appreciation and support for Irish culture, helping to maintain and grow a relationship with customers in Ireland

Less Motivated Employees

Increasing Costs

• If workers feel less informed about their role or tasks, they may feel less motivated
  • This can cause a decrease in productivityand lack of morale
  • In the longer term, labour absenteeism and labour turnover may increase

• Delayed projects, increasing defects and a lack of co-operation amongst staff are all examples of factors that can cause rising costs for a business
  • Ineffective communication can have a significant impact on costs, lowering profits and effecting overall business performance

Inefficiency & poor Business Performance

Inaccuracy & Mistakes

• If messages are delayed or not sent to the right receiver, decision making and processes will slow down
  • This can lead to a rise in costs and potentially missed opportunities for the business
    • E.g. a business may be too late to secure a deal with a new supplier due to poor communication

• Inaccurate information can lead to mistakes being made such as products of a poorer quality or a compromise to customer safety
  • E.g. miscommunications between colleagues may lead to some safety checks for a new toy being missed or rushed