Communication in Organizations - Literature review Example

Organizational communication has grown in response to needs of the business. Communication in organizations goes far beyond training managers to be effective speakers or to have good interpersonal skills. Communication in organizations can be formal or informal and internal or external. It is now a new academic discipline and includes in its fold innovation, organizational learning, knowledge management, conflict management, diversity, and communication technologies. Organizational communication today is important for the overall functioning and success of the organization. Myers and Myers (1982) define organizational communication as “the central binding force that permits coordination among people and thus allows for organized behavior,” while Rogers and Rogers (1976) contend that “the behavior of individuals in organizations is best understood from a communication point of view” (cited by Baker, 2002). Today workplace is complex and poses many challenges to the employees. Changes confronting the organizations and the associated changes in organizational forms have made organizational communication important to overall organization functioning. This paper will discuss two key changes to workplace – globalization and the growth of the service economy – and their effect on organizational communication. Liberalization, privatization, shorter product life cycles, increased competition, globalization and free trade, mergers and acquisitions, shortage of skilled workers, and breakdown between the internal and external boundaries of an organization are some of the factors that are common to most organizations (Balmer & Gray, 2000). All these situations require either strategic or operational changes, which needs to be communicated effectively at all levels. Effective communication implies that managers must be aware of what employees must know, should know and could know. This poses a challenge to most organizations. Internal communication is important for the simple reason that employees are internal stakeholders and much is dependent on how they project the firm to the external world. Taking advantage of globalization requires significant amount of investment in developing and communicating in the new region. High levels of mergers, acquisitions and divestitures have altered the business profiles of many companies. Communication is the core process of organizing and organizations do not exist independently of communication system. Organizations have to adapt to economic pressures by changing their internal structures, processes and relationships to their markets. Continual changes denote that communications processes are also changing to create and to reflect new structures and processes. New organizational forms have emerged due to continual restructuring via communication. These new forms include the global network organizations. These new forms are neither vertically organized hierarchies nor unorganized marker places governed by demand and supply. They are built on generalized communication network structures that people and knowledge in all parts of the organization to each other, wherever they may be located in the world. This network simultaneously ties them to a multiple external network organizations worldwide. Organizations today use internet, fax machines, video conferencing for different purposes like mobilizing people to save the environment, oppose tyranny and improve health conditions. These new forms are knowledge-intensive and constantly evolving. The evolving constantly changing form is the organization. If the network is taken away the organization ceases to exist. Communication audits need to be carried out within firms to ascertain the quality of their organization’s internal communication system (Lloyd & Varey, 2003). The existing processes, activities and artefacts of communication need to be compiled which can give a subjective evaluation of their consistency and impact. The human element of the communication audit is assessing the employees’ emotions and feelings. Staff attitude surveys assist in designing the right organization structure. Communication should be a two-way process and even the subordinates should be encouraged to participate actively. Daly, Teague and Kitchen (2003) point out that seventy percent of the change programs fail and the reason is poor internal communications. Employees are crucial to any organization and the message that they portray or the positive or negative image that they communicate to the public through newspapers, bulletins or through community members is how the organization is perceived. Thus if employees have been aggrieved or have lost faith in the management, it is an uphill task for that organization. Corporate reputation affects the employee retention, customer satisfaction and customer loyalty. Good reputation attracts investors and shareholders and correlates with superior overall returns (Chun, 2005). Hence corporate reputation is a valuable intangible asset from the accounting perspective. This dimension has gained importance after cases like Enron. In the case of cross-border mergers and acquisitions, Larsson and Lubatkin (2001) contend that acculturation is best achieved when the buying firms rely on social control. If the buying firms conduct introduction programs, training, cross-visits, retreats, celebrations and similar socialization rituals, a joint organizational culture emerges regardless of the expectation of the synergies, and the differences in the nationalities and cultures. The authors conclude that clashes do not occur just because their cultures different and a jointly determined culture can be formed as long as there is high level of information control. Mutual trust can lead to cultural integration according to Bijlsma-Frankema (2001). The cultural change process is dependent on legitimization of changes, clarification of goals and what is expected of the members, and monitoring and guidance. This is line with the opinion of Larsson and Lubatkin who contend that information control is essential to ensure cultural integration. Yet another dimension is presented by Buono, Bowditch and Lewis (1985) who stress that people normally resist change but they will support the change effort if they understand the need for it. This again gives importance to the information and communication factor that has been emphasized in smooth running of firms post-merger. Globalization has resulted in relentless change. Change could involve a process, technology or public process. Organizational change management requires processes and tools for managing the people side of the change at an organizational level. The management needs to first detect the trends in the macro and micro environment. Change in an organization can be due to downsizing, redundancy, change of management through mergers and acquisition, change due to expansion, and most important due to the advancements in technology. A study by Patterson et al., (1997) confirmed that management of people was more important than the combined effect of strategy, product, service quality, or even the manufacturing technology or the expenditure on R&D (cited by Gollan, 2006). There is a definite relationship between employee performance and their attitude. Communicating organizational aims and objectives are important. Difficult issues can be resolved through discussions. Honesty, trust, openness, employee participation, all helps to achieve high motivation among staff. Recognition of staff through promotional material also helped to keep them motivated. Apart from the effects of globalization and liberalization, the service economy has also brought changes which demand effective communication. Retail banking, telecommunications, healthcare, education, insurance, data processing, and tourism are the core areas where service has become important to both the provider and the receiver. Services are intangible, invariable, perishable and inseparable (Long & Schiffman, 2000). As banking regulations loosen up across the globe, universal banking is gaining attention and attraction. Banks opt for long-term relationship with industrial firms or individuals. Banking services are now considered as products to be sold and aggressive marketing takes place. Gummesson (1995) held the view that relationship marketing/management is more often focussed on one-to one relationships and less on mass marketing and that its core is based on what is mutually beneficial where supplier and buyer remain satisfied. Customers are increasingly using technology for using banking services, and hence the bank-customer relationship have become of great importance. To stimulate the improvement in the quality of service from the banks, deregulation brought in a range of suppliers in the financial services (Durkin & Howcroft, 2003). Because of the pressure on the bank margins from new competitors, banks have had to reengineer their internal and external delivery process to make profits. Technology is used to increase market share and reduce costs. Banks have been forced to consider this because in the new and emerging delivery channels the bank-customer interactions do not involve face to face communication. Technology has driven customers to seek services through low-cost channels like ATM, internet IVR call centers (Ferguson & Hlavinka, 2007). Internet provides one-to-one marketing and nurtures loyalty (Durkin & Howcorft, 2003). It provides scope for establishing enduring relationships with customers and a wider network of contacts. Firms are able to alter the products and services catering to individual requirements because of information revolution. Hence communication has become technology-driven and information that is provided has to real-time. The airline industry has become highly competitive and service-intensive. The customer looks for service at competitive prices. British Airways adopts, alters and changes its communications mix as the market demands. It keeps introducing new products from time to time as innovation today is a necessity rather than a strategic option in the turbulent market with shorter product life cycles. There is a shift in the marketing communication targeting only the customers. Communication should reach a range of stakeholders and other players peripheral to the target market and which influence the business success (Clulow, 2006). Benefits and pitfalls of stakeholder responses should be anticipated and used to advantage. BA claims to provide “service that matters to people who value how they fly”. While BA in its philosophy serves the clients who value service, according to Long & Schiffman (2000), there are many who give importance to financial values. Personal values influence consumer decision making. Thus, different segments of consumers may perceive different kinds of benefits and have differing degrees of commitment to different programs. Corporate communications in an airline must have certain differential features to influence travelers and establish brand image (Driver, 1999). In the service sector it is not enough to listen to the customer, it is essential to understand the customer (Olorunniwo, Hsu & Udo). Consumers retain images of their experience with an airline or any service and this personal experience becomes the key driver for future purchases (FitzGerald & Arnott, 1999). Consumers are known to retain that brand in memory and if satisfied, it becomes their preferred choice. The attributes related to the image of the airline are only partially related to direct operational and flight factors. Relationship marketing emphasizes the need for firms to establish lasting relationships with customers, suppliers, employees and stakeholders through trust, relationship commitment and co-operation (Chenet, Tynan & Money, 2000). BA ensures that visitors to the website have a smooth experience because they know that the first experience counts in not only a repeat customer but also referred customers. It helps to build a strong personal relationship with the direct customers without the intermediaries. Ryanair entered the market as pioneers in the budget airline industry and adopted a classical airline business model focusing on customer service. They were distinctive as they offered air route for the Irish immigrants working in England whose status was elevated from ferrying across to air travel (Bhagavan Ertekin, Geijerman & Kuznetsov, 2003). Hence they created a market segment for themselves. They did not concentrating on enhancing business communications and as a result suffered from their poor employee and volatile customer relations. People and stakeholders are an equally important part of the value chain and effective communications with each of them is essential. A close relationship with the competitor can also represent a strategic asset (O’Toole, 2003) but Ryanair has antagonistic relationship with their competitors. Ryanair has the competitive power and the bargaining resources but has been unable to maximize the utility mainly due to lack of effective communication. Hence, definite changes have taken place in the way communications take place due to globalization. Globalization has led to strategic changes in the organizational structures, enhanced free trade and cross-border mergers. These in turn have increased diversity of workforce and integration is vital for the success. Communication is a vital tool that smoothens the process of integration. Proper information flow is critical to the success of any organization. Enhancement of the service economy too has changed the way organizations need to communicate. This is reflected the in financial services sector, the aviation industry, and the health sector. Increased competition has forced the service sector to rethink the way they communicate with all the stakeholders. Effective communication can help the organizations overcome the complex changes that have been taking place. Total word count: 2031 Bibliography Balmer, J. M. T., & Gray, E. R., (2000), Corporate identity and corporate communications: creating a competitive advantage, Industrial and Commercial Training, Volume 32 . 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