Chapter-2.

1
CHANNELS OF COMMUNICATION

Introduction:
Communication is the backbone of business organization. The business activities cannot
be carried out without communication. To carry out its activities, it employs people
who work at different levels with certain duties, authorities and power assigned to
them. They are placed as per the ability and qualifications at different levels, positions
or ladders at which people work within an organization is known as ‘Line of Authority’
or ‘Hierarchy’.

The businessmen are concerned with two types of communication:

1) Internal Communication:
It is communication that takes place within an organization among Managers,
Employees and others.
2) External Communication:
This is the communication with the outside world, i.e. with Customers,
Shareholders, Suppliers, Banks, Insurance companies, Government departments,
Mass media etc.

CHANNELS OF COMMUNICATION

Internal Comm External Comm

(With Outsiders)

Formal Comm Informal Comm

Grapevine Comm

Vertical Horizontal Diagonal

Upward Downward
INTERNAL COMMUNICATION:
The Internal communication is of two types: Formal or Official and Informal Channel.
1) Formal Channel:
Formal Channel communication takes place within the Line of Authority. This
Communication may move either vertically or horizontally.
Formal channel is of three types: Vertical, Horizontal and Diagonal
Communication.

a) Vertical Communication:
Vertical Communication takes place among people working on different levels of
the line of authority. The line of authority becomes the line of communication.
Vertical communication is essential in every organization. It flows Up-and-Down
the ladder of the organization. It is the communication where information or
messages flows within the top level and bottom level of the organizational
structure. Vertical communication helps in building trust between the
management and the employees and it is an investment for an organization.

MERITS & DEMERITS OF VERTICAL COMMUNICATION:

MERITS DEMERITS
1. Enables internal It is a time consuming process.
communication.
2. Upper level management can It does not permit flexibility and
convey information to the unable to cope with the changed
subordinates. situation.

3. Superiors can collect authentic There is no scope for creativity in

and dependable information employees as they function in a
from subordinates easily. mechanical manner.
4. It facilitates job assignment and Loss of information takes place if
job evaluation of the employees. superiors neglect to send messages to
their subordinates.
5. Proper providing and Subordinates may lose respect for
implementing of official policies seniors due to the senior’s inability to
& procedures to subordinates deal demanding situations.
can take place.

i) Upward Communication:
Upward communication is also called as ‘Up Stream Communication’. Upward
Communication involves flow of communication from Subordinates to Superiors.
It is vital for any organization to survive and succeed in this competitive business
world.
The upward communication involves:
 Employees communicating to lower level managers and even top level
managers.
 Lower level managers communicating to middle level managers and even
top-level managers.
 Middle level managers communicating to top level managers.
Essentials of Upward Communication:
1. The chain of communication should be kept as short as possible.
2. Managers should develop a positive attitude towards upward communication
and encourage subordinates to talk to their superiors.
3. Suggestions provided by the employees need to looked into and rewarded
appropriately.
4. Complaints & Grievances needed to be sorted out as early as possible.
5. Managers should develop good listening skills to listen to the complaints &
suggestions of the subordinates.

Methods of Upward Communication:

The methods used to develop upward communication are:
 Open-door Policy:
Employees are given the freedom to enter the cabin of the superior and talk
without any hesitation of any problem or issue.
 Social Gatherings:
Employees get an opportunity to talk informally with their superior
regarding their problems or some other issues. Superiors may initiate such
informal talks at social gatherings.
 Suggestion Schemes:
Employees are free to suggest improvements in the plans, policies and
working of the organization. Valued suggestions are often rewarded publicly.
 Complaint Boxes:
Employees may write down their complaints or problems and deposit the
same in such boxes.
 Direct Correspondence:
Employees would write about problems or issues to their superiors at their
own initiative or at the initiative of the superior.
 Reports:
Employees provide reports of progress or performance of their work to the
superiors.
 Counseling:
In some organizations, workers are encouraged to seek the advice from their
superiors on their problems through counseling sessions. The management
can come to know about the individual problems of the workers.
 Reviews & Opinion Surveys:
Employees may be asked to do a review or to express their opinions on the
plans, policies and programs of the organization. Such reviews and opinions
help to correct weaknesses in such plans and policies.
Advantages:
1) Feedback:
The management can get feedback from the employees in respect of the plans
and policies of the organization and check whether the workers have
understood the directions given to them. The employees can also provide
reports on performance of the organization.
2) Complaints and Grievances:
Upward communication helps the employees to express their complaints and
grievances to higher authorities, who may solve the same immediately. It
helps the management to be aware of the genuine problems faced by the
employees of the organization. Employees feel satisfied even when a delayed
solution is provided for their problems.
3) Suggestions:
The employees are closer to the job than the management, so they can give
better suggestions which must be encouraged and rewarded by the
management. In India, suggestions rarely come because of lack of proper
environment to give suggestions.
4) Schemes:
The management can introduce various schemes on the basis of the
suggestions given by the employees. They may easily accept such schemes as
they play an important role in the decision-making process. If they have any
objection to such schemes, they can easily communicate the same to the
management with the help of upward communication.
5) Harmony:
Upward communication brings harmony in the organization. The
management and employees work as a team and work for the success of the
organization.

Disadvantages:
1) Distortion:
Employees may report only good things. They are afraid to admit their
mistakes or give some suggestions to their boss. This leads to distortion of
messages.
2) Affects Superior-Subordinate Relations:
When the subordinate reports directly to the higher authorities, it affects the
relations between the superior and subordinate. This problem can be solved
through “Attitude Shift”, where the superiors should accept the fact that
subordinates have freedom to express their views to the top authorities
which would benefit the organization as a whole.
3) Reluctance on the part of Subordinates:
Sometimes the subordinates are reluctant to complain or suggest to
superiors as these may reflect their inefficiency. This problem can be solved
by creating a favourable environment in the organization for providing
suggestions and complaints.
4) Resistance from Traditional Managers:
Upward communication is resisted by traditional managers. They do not
encourage upward communication in their organization. They do not like to
accept suggestions and complaints of their subordinates. This problem can be
solved through the development of professional attitude or approach in the
managers.
ii) Downward Communication:
Downward communication is also called as “Down Stream Communication”.
Downward communication flows from the Superiors to Subordinates. Business
managers often need to be very skilled at downward communication in order to
properly motivate the staff working under them at their company.
The downward communication involves:
 Top-level managers communicating to the middle level managers and even
lower level managers.
 The middle level managers communicating to the lower level managers and
even to employees.
 The lower level managers communicating to their subordinates.

Essentials of Downward Communication:

1. The chain of communication must be kept as short as possible to avoid loss of
information.
2. Management should convey the right information to the subordinates at the
right time so as to improve the working of the organization.
3. Employees should be kept informed of the latest changes or plans and
policies of the organization.
4. The management need not always follow strictly the chain of command in the
case of urgent and important matters.
5. There should be a provision of feedback in order to make the communication
more effective in the organization.

Advantages:
1) Provides Directions:
Downward communication helps managers to provide directions to lower
level employees through formal channels. Proper directions help the
employees to understand their activities efficiently and effectively.
2) Control of Activities:
The superiors can control the activities of the subordinates. Through a review
of performance, the superiors can know of the shortfalls or deviations take
proper measure to correct and control their deviations.
3) Motivate Employees:
Downward communication can be used to motivate the employees to
perform better. The superiors can undertake performance appraisal
(review), know and correct the weaknesses of the employees and can
motivate the employees to perform better through downward
communication.
4) Clarifications:
At times, employees may seek clarifications on plans and policies of the
organization. Through effective downward communication, the management
can clarify the doubts of the employees on the plans and policies of the
organization.
5) Employer-Employee Relations:
Through effective downward communication, management can develop good
relations with their employees through effective downward communication.
In hard times, management can explain the problems faced by the
organization to the employees.
6) Discipline:
Through downward communication, the management can inform about the
rules and regulations of the organization and maintain the discipline of the
employees.
 Disadvantages:
1) Delay:
When downward communication flows through the line of authority, there is
a possibility of delay in communication. To avoid this problem, certain firms
provide information directly to the person concerned.
2) Distortion:
When there is a long chain of communication, the communication gets
affected or distorted and altogether a different message may be conveyed to
the receiver. The original communication is distorted, and a different
meaning is conveyed than what was intended by the sender.
3) Filtering:
Sometimes Managers may withhold sensitive or valuable information from
the employees. This filtering of information may affect the relationship
between the management and the employees.
4) Superiority may be imposed:
Through downward communication, superiors may try to impose their
authority on the subordinates. Some subordinates may resent such
deliberate imposition of authority on them by the superiors.
5) Problem of over-emphasis:
When too much of emphasis is placed on downward communication, it
affects the working of the organization. This problem can be solved by giving
proper emphasis on upward communication.
6) Problem of under and over communication:
At times, the superiors may provide too little or too much of information
more than necessary what is actually required by the subordinates, which
may affect the working of the organization.

b) Horizontal Communication:
The communication between people on the same level in the managerial
hierarchy of an organization is called Horizontal or Lateral Communication.
According to Ricky W. Griffin, “Horizontal communication involves colleagues and
peers at the same level of the organization.”
It forms a very important element in an organizational communication system
which develops co-ordination and co-operation among the different
departments. Lack of horizontal communication can lead to chaos in an
organization. It makes use of both oral and written methods of communication.
Thus the formal horizontal channels need to be built into the structure of the
organization.

Advantages:
1) Horizontal communication improves understanding and co-ordination
among various people, departments and improves quality of team work.
2) It eliminates misunderstandings, jealousies, ego clashes etc among people of
equal status.
3) It ensures greater efficiency and better results.
4) It eliminates chances of misunderstanding and provides immediate feedback.
5) It is time saving device because people of equal status meet, discuss and sort
out problems which helps in the smooth functioning of the organization.
 Disadvantages:
1) Sometimes conflict arises when vertical communication tends to replace
Horizontal communication.
2) Too much use of Horizontal communication disturbs the organizational
hierarchy.
3) Horizontal communication suffers if the relationships among people of equal
status have jealousy and rivalry.
4) The people of equal status do not communicate properly when there is lack of
motivation.
5) It may make the employees too friendly and they may waste time in
gossiping.

c) Diagonal Communication:
It is a channel of communication that encourages a combination of vertical and
horizontal communication. Diagonal communication is also called as ‘Consensus’
communication. Consensus is a common agreement of opinion which is arrived
at after mutual consultations or discussions. It means that the majority of people
in the organization subscribe to a particular view which all members are ready
to accept in the interest of the organization.
Diagonal communication may be defined as “the sharing of information among
different structural levels within a business.” It is a most direct method of
communication and be both formal and informal. It is used in strategic situations
which require the quick transfer of information or advice.

Advantages:
1) It is one of the fastest methods of communication which enables building of
cross-departmental teams.
2) There is a willingness to accept and obey the decision taken because it is
taken through consultation.
3) Consensus builds managerial skills and encourages friendliness and
informality among employees of different levels.
4) It helps to create unity and harmony in the organization because it avoids
unnecessary and undesirable conflicts.
5) The employee develops confidence in their superiors and their morale is
raised.

Disadvantages:
1) It can destroy lines of authority and formal chains of command.
2) In Consensus, majority opinion is thrust upon the members. Some members
are forced to accept a view which they do not support.
3) There is conspiracy in the name of consensus when one keeps quiet in the
interest of another.
4) The subordinates may feel that their superiors are incapable of taking
independent decisions.
5) Consensus is a time-consuming process because stronger the differences,
greater the delay in taking decisions.
2) Informal Channel:
Along with formal communication in an organization, there exists a secondary
network of communication, which is referred as informal communication. The
informal channel of communication is called ‘Grapevine’ Communication. There
is no line of authority for informal communication.

Grapevine Communication:
Grapevine is the plant or creeper on which grapes grow. The grapevine may
grow or move in any direction with the support of its tendrils. In the same way
informal communication may move in any direction with the support of the
informal groups. It effectively spreads rumours in an organization.

Factors Responsible for Informal Communication:

1. Informal Relations:
In any organization, people like to develop informal relations with other
people in the department or other departments. Informal communication
helps to develop informal relations, which in turn gives way to further
informal communication.
2. Problem of Superiors:
At times, superiors are autocratic in nature. They do not encourage upward
communication. They only order the subordinates and are reluctant to accept
suggestions and opinions from the subordinates. In such a situation,
subordinates seek comfort from each other through informal communication.
3. Natural Tendency:
There is a natural tendency to gossip and to talk about others, to share
personal problems with others and so on. Such natural tendency gets
strengthened with the help of informal communication.
4. Lack of Self-confidence:
Employees may feel insecurity or lack of self-confidence and as such they
may form informal groups to do away with insecurity and lack of self-
confidence.

Grapevine Chain of Operations:

Keith Davis classifies grapevine into four basic types:
1. Single Strand Chain:
In this chain, the information is passed from one person to another
person and then to another person and so on.
For instance, A tells B, B tells C, C tells D and so on.
2. Gossip Chain:
In this chain, one person obtains information and then transmits to others
in the organization.
3. Probability Chain:
In this chain, the information is passed on random or selective basis.
For instance, A may inform other person on random basis, who in turn
may inform other persons on random basis and so on.
4. Cluster Chain:
In this chain, one person informs to a few selected persons, who in turn
may pass on the information to other selected persons. Most of the
informal communication takes place through this chain.
Advantages:
1) Quick transmission:
Informal communication such as rumours spread like wild fire. It moves
faster than the formal communication. It does not take much time to spread
informal messages.
2) Feedback:
Management should not discourage informal communication. This
communication provides vital feedback to the management regarding the
functioning of the organization.
3) Supports formal channels:
Grapevine acts as a supplement to formal channels. When sensitive
information cannot be passed through formal channels, Grapevine
communication helps the management to pass the same through informal
channel.
4) Promotes team spirit:
Informal communication may promote team spirit among the members of the
organization. Through informal communication, people come together as a
cohesive team, which can positively affect the organization.
5) Informal relations:
Grapevine communication develops informal relations not only within a
department but also among people of various departments who get involved
in informal channel.

Disadvantages:
1) Distortion:
There is a great deal of distortion in informal communication. At times, there
may not be a single grain of truth in informal communication.
2) Lacks credibility:
Informal communication lacks credibility. It cannot be relied upon anyone in
the organization. This is because; one may not know the source of
information.
3) Lacks responsibility:
It is difficult to hold someone responsible for rumours or such other
information.
4) Incomplete information:
The informal communication is usually incomplete in nature. There is every
possibility of misunderstanding as the informal channel is incomplete and
inaccurate.
5) Affects Corporate Image:
Informal communication such as spreading of rumours lowers the morale of
the workers. This may spoil the name and goodwill of the business
organization before the management takes remedial measures to rectify the
situation.

Guidelines for Effective Use of Grapevine Communication:

 The management should identify the group leaders of grapevine
communication so that harmful rumours can be stopped before
spreading.
 Management may use official channels to counter the false rumours.
 The management can obtain feedback through informal communication
about the functioning of the organization.
 Managers should develop the listening skills to listen and understand the
problems of the employees which would reduce negative information in
the organization.
 Management should develop good labour relations which would enable
the organization to work effectively and efficiently to achieve the
objectives of the organization.

Difference between Formal and Informal Channel of Communication:

Formal Channel Informal Channel

1. It follows the line of It does not follow the line of

authority. authority.

2. It is official in nature. It is unofficial in nature.

3. It takes place in the form of It takes place in the form of

Vertical, Horizontal and Grapevine communication.
Diagonal Communication.

4. There is documentary There is no documentary

evidence. evidence.

5. Secrecy can be maintained. Secrecy cannot be maintained.

Difference between Upward and Downward Communication:

Upward Communication Downward Communication

1. It flows from subordinates It flows from superiors to

to superiors. subordinates.

2. It is found in democratic It is found in authoritarian

environment. environment.

3. It includes suggestions, It includes orders, warnings

complaints etc. instructions, motivation etc.

4. It serves the purpose of It serves the purpose to supply

giving feedback to the information to the subordinates.
superiors.

5. Messages are distorted in Messages are not distorted in

upward communication. downward communication.