The Importance of Good Communication (Edexcel IGCSE Business): Revision Note

Benefits of effective communication

• Effective communication means that the information or message being sent is received, understood and acted upon in the way intended

• Effective communication should be

  • Clear and unambiguous

  • Appropriate to the context and to the sender

  • Sent to the correct receiver in an accessible format

  • Timely and contain only the required amount of detail

• Effective communication is important to any business as it affects many key stakeholders including employees, managers, suppliers and customers

• Overall, effective communication helps a business meet it's objectives by making it easier to control and coordinate business activity 

  • As poor communication leads to higher costs, demotivated workers and a lack of cooperation, it is essential businesses  establish effective communication channels

The importance of good communication

Increased worker motivation

• Improved employee involvement in decision-making can significantly boost motivation

  • When workers feel their voices are heard, they are more likely to be engaged and committed

  • It enables feedback among employees, creating a collaborative environment

  • E.g. UK bus company Stagecoach introduced Blink, an instant messaging and a reward system, which improved communication across the company - employee satisfaction rose by 32% and staff turnover decreased by 26%

Improves efficiency

• Clear and complete communication supports better decision-making, as decisions are based on more accurate information

• Employees who understand their roles and tasks thoroughly can work more efficiently and productively

  • E.g. TED, known for its brief and impactful talks, limits meetings to just 18 minutes as research has shown that longer meetings reduce attention and productivity

Encourages innovation

• Open communication encourages employees to ask questions, share ideas, and seek help when needed

  • This openness promotes creativity and can lead to innovative solutions within the business

  • E.g. at 3M, employees are encouraged to spend 15% of their time collaborating with colleagues. This policy fosters a culture of idea-sharing and innovation

Builds a positive company culture

• Good communication helps individuals understand their roles and responsibilities

• It also encourages teamwork and cooperation, contributing to a supportive workplace atmosphere

  • E.g. Zappos keeps employees informed with timely updates, demonstrating transparency. This honest communication fosters a positive culture, as employees value openness from management.

Reduces costs

• Effective communication minimises errors, which in turn reduces costs

  • Communication tools such as email or messaging platforms are often low-cost and easy to implement

  • E.g. Starbucks views employees as brand ambassadors and emphasises communication between staff and management. This approach reduces turnover and boosts product quality, helping to lower operational costs

Promotes customer satisfaction

• Maintaining regular and meaningful communication with customers helps build strong relationships, which can lead to increased sales and brand loyalty

  • E.g. Lidl Ireland supports Women’s Gaelic Football as part of its PR strategy

  • This initiative demonstrates a commitment to Irish culture, helping the company connect with and retain customers in Ireland

Problems of ineffective communication

• Ineffective communication occurs if communication is not received or understood properly

  • This may reduce business efficiency and increase mistakes or wastage

• Ineffective communication may also confuse customers or stop them receiving a message

  • This can negatively impact a business’ sales and profitability

• Many businesses invest heavily in trying to improve communication in and outside of the business to experience all of the benefits that good communication provides

  • E.g. more motivated employees

The effects of poor communication