Effective communication is essential within any organisation. We communicate to instruct, inform, suggest, consult and negotiate. Without communication between managers and employees, employees are unaware as to what they are supposed to be doing or how they are expected to do it. Similarly, managers may find that they are unaware of any problems occurring in the business, how the business is performing and how well their employees are working. Communication ensures that everyone is working towards a goal and it enables feedback to be made to both the employee and the manager.

By communicating effectively management is likely to have a much more focused and committed workforce, as employees will feel motivated. If managers communicate with their workers then it will improve the decision-making within the company. Employees will willingly put their ideas forward if they know that their managers will listen to what they have to say. Communicating externally is just as important as communicating internally. Managers need to communicate effectively with suppliers, customers and investors.

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By communicating with external groups the manager will be able to monitor the company's success and learn how to improve the quality they provide. Managers need to make sure that any messages they need to send has the correct medium and that if it is a letter then it is not of an ambiguous nature, this way employees are able to do exactly what the manager wants. Mintzberg states that 50 - 80% of managers' time is in conversation. 41% of the time was spent with managers communicating with subordinates. 12% of the time was time spent with superiors and 47% of the time was time spent with other people.

In an effective organisation, communication flows in different directions. Downwards communication flows from people at higher levels to people at lower levels in the organisational hierarchy. Management communicates policies, plans, information and instructions downwards. The downward communication is achieved by means of the management chain. There are problems with downward communication. The manager assumes that employees are not interested; therefore, employees will fail to communicate with their managers.

Individuals in the company are unskilled in communicating. There is a fear of people undermining authority from their managers. However, ways to improve downward communication could be to establish systems for regular downward communication. The company could train and encourage managers to communicate with employees. Another way of improving downward communication could be to establish communication value in organisation culture. Employees communicate ideas, suggestions and complaints upwards. There are problems with upward communication too.

Subordinates think that managers are not interested and too busy to listen to them. There is a fear of rejection because any ideas put forward by subordinates may be dismissed. Having regular non-negotiating meetings with employee representatives could result in improving upward communication. Team meetings could be held and suggestion schemes to help generate ideas and get rid of the employees feel of rejection. Having an 'open door' management means that employees could freely speak to their manager as and when they need to.

Horizontal communication is communication between people on the same or similar organisational levels. Problems with horizontal communication are that there would be rivalry over authority or expertise as the people are on the same organisational level. Another problem would be that line managers resist expert authority of functional managers. There would also be conflict between groups. However, to improve horizontal communication the company could develop interdepartmental teams, or job rotation. The conflict between groups could be resolved with resolution counselling.