In a business context, all communication can be divided into

two categories namely, External Communication and

Internal Communication.

External Communication
An organization, when it communicates with Governmental
agencies, oth organizations, customers, clients and Public it
is called external communication The media employed may
be written media like letters, reports, proposals or visual
media like posters, advertisements video tapes or electronic
media like faxes, telegrams, e-mails, telexes. The
communication might also be through teleconferences, face-
to-face meetings, panel discussions or presentations,
exhibitions and such events.
Advantages of External Communication
External communication helps an organization to keep its
outsourcing agencies like distributors, wholesalers, retailers
and clientele well informed about the company’s products,
services, progress and goals. The information gets
continuously updated and accurate. All organizations have
to maintain cordial relationships with government agencies,
licensing authorities, suppliers of raw materials, ancillary
industries and financial institutions. Continual and updated
information without any communication gap is essential for
business houses.
Internal Communication
Every organization has the necessity to maintain
appropriate communication with its branches, staff and
employees. This is generally called internal communication.
Internal communication is an essential feature of an
organization’s administrative structure. In modern times,
the Human Resource Department plays an important role in
maintaining internal communication.
In the new millennium, particularly in the context of
globalization, business has become highly competitive.
Business houses have the need to maintain good channels of
internal communication. The central organization or
corporate office should keep its branches well informed of
new policies and policy changes. The growth in business, the
future projections for business, increased specializations
make a great demand on the central office to maintain an
uninterrupted flow of internal communication. Employees
need to be motivated and exposed to the business objectives
and ethical ideas of a company so that they get an
involvement in the work they do. Employees on production
line should be aware of the targets so that they overcome
obstacles. Even the shifting of the canteen and a re-
adjustment of the lunch-breaks and tea-breaks have to be
informed well in advance to the employees. In turn,
employees should be able to tell people at higher levels their
grievances, expectations and difficulties. Effective internal
communication forges a strong bond between the employees
and management, promotes co-operation among different
sections in an establishment. It remove’s misunderstanding
and aids the growth of the organization at a desirable and
optimum level. Internal communication in short, ensures
involvement of all the people without alienating any section.
Directions of Communication
In olden days communication was unidirectional. The boss
gave the order and the employees executed it. In fact, uni-
directional communication has its origin in the feudal
system. The lord directed the vassal (a slave or bondman) to
carry out a job. Business and industry continued the age old
tradition of the feudal system even after the industrial
revolution. But soon areas of conflict got promoted by
sectarian interests (of homogenous groups) within an
organization. The barrier between the management and
employees became an iron curtain. It has been discovered
that a multidirectional communication system demolishes
the barriers and removes friction. Business depends on such
anew communication paradigm (pattern or model) to ensure
the success of business and the realization of even difficult
objectives.
Downward Communication
Downward communication means the flow of
communication from the top echelon (level or rank) of an
organisation to the lower levels of employees. Downward
communication not only recognizes and accepts a
hierarchical structure but also is based on the assumption
that people at the higher level have the ability and authority
to direct the employees on all do’s and dont’s. Downward
communication has its own shortcomings, if it is not
complemented by other directional communications. The
shortcomings will be pronounced if an organization adopts
only unidirectional communication namely downward
communication. Downward communication, if practised
without complementing it with upward communication, will
fail because it accepts the premise ” The boss is always
right”. Moreover, it may get delayed or distorted as it goes
down through the various levels of the hierarchical set up as
all decisions are taken without any proper feedback. But it
helps in creating an awareness among employees of the
objectives, targets and goals. It also helps in establishing a
certain authority in the organization and discipline. In the
armed forces and police department, mostly, only downward
communication exists.

Upward Communication
Communication maintained from lower level of employees to
higher-ups is called upward communication. Upward
communication gives scope for the employees to offer their
suggestions, opinions, make complaints and seek redressal of
their grievances. Upward communication helps an
organization to receive and reset its objectives at realistic
levels. Upward communication may cause ego problems to
persons in higher hierarchial positions. It may also lead to
meaningless criticisms of the policies by disgruntled
employees. But on the whole, modern management
recognises the need for healthy upward communication to
make the organization responsive to suggestions and ideas.
Some organizations invite the opinions of personnel at the
lower level. Jhs personnel department, the HRD section and
the Swedish type of ‘Ombudsman Office’ (Official appointed
by a government to investigate and report on complaints
made by citizens on Public authorities) take steps to see that
a healthy and acceptable upward communication system is
adopted by organizations.
Horizontal / Lateral Communication
The interaction among peer groups is called horizontal
communication. Inter departmental communication is also
horizontal communication. Sales department, production
department, quality control department and the stores
department have to constantly interact and coordinate
among themselves. Horizontal communication leads to a
better understanding among individuals and departments,
cooperation and coordination.
Diagonal or multi-directional Communication
Diagonal communication means the use of upward,
downward and horizontal communication. It is a healthy
practice not to depend on any one mode. Diagonal
communication leads to better feedback at all levels. It
promotes understanding, motivates employees and gives a
sense of belonging and involvement to all people at all levels.
But such communication should not be allowed to
degenerate to a meaningless criss-cross communication
which will lead to chaos and confusion. All modes have to be
maintained at the appropriate and optimum level.
Formal and Informal Channels of Communication
Every business organization adopts some formal channels of
communication which may be upward, downward, or
horizontal or all the three. They are usually in the form of
notices, announcements, reports, official or demi-official
letters, advertisements, etc. Formal channels are officially
recognised and organised. They make the working of the
organisation transparent. They motivate the employees.
They provide the necessary feedback. But formal channels
operate with some limitations. A continuous maintenance of
a formal channel is time and resource consuming. At
ordinary times, they exist for their own sake without any
objective, as a formality and routine. Sometimes, free flow of
information gets affected by personal factors.
Grapevine
Large organizations, where there are a large number of
people working closely, generate certain informal or
unofficial channels of communication. These channels exist
with or without official patronage. Even if they are officially
and secretly patronised, they are not authentic. This type of
communication is generally called “Grapevine”
communication. Grapevine communication is an informal,
unofficial, horizontal channel of communication because
generally peer groups participate in it.
Types of Grapevine Communication

Grapevine communication is of four different types. It can

seep from individual to individual in a strictly linear fashion.
Information takes time to spread in this fashion. It is called
Single Strand Chain.
In some situations, an individual goes around
communicating the message / information he thinks he has
obtained. This is called Gossip Chain. The listeners are a
chosen few only. In some other situation, an individual
passes an information without any restriction to all those
with whom he comes into contact. This is called Probability
Chain and the information / message passed on may be
interesting but not important.
In yet another situation, one person communicates to a few
chosen associates who in turn communicate the same to yet
another group. This is called Cluster Chain
Advantages of Grapevine Communication
Grapevine communication brings about a strong bond
among peer groups. It develops because of the involvement
of the persons connected with an organization. It gives
mental satisfaction to the participants and gradually reduces
emotional outbursts and reactions. It keeps the employees
anticipating and acts as a buffer against Shockwaves. It is
fast and can supplement formal channels. It provides
informal feedback on the changes contemplated by the
Management.
Disadvantages of Grapevine Communication
Grapevine, is definitely dangerous to the health of an
organization if allowed to grow without monitoring.
Grapevine channel distorts or exaggerates the content of a
message. It has the potential to spread unnecessary gossip. It
may result in character assassination and personal
vilification of individuals. It may provoke sudden unwanted
and unexpected reactions from emotionally unstable people.
Grapevine channels can be moderated but not eliminated. A
transparent administration policy, employee-friendly
attitude, fruitful peer group meetings, inter-action sessions,
parties and outings where all those connected with the
organisation participate are some of the strategies to
monitor grapevine and use it to the advantage of the
organization. Business houses and industries adopt one or
several of these strategies to keep grapevine under
reasonable control so that it does not degenerate into a
rumour mill and promote unwanted gossip sessions among
the employees.