What’s the Relationship Between Communication and Organizational Performance?

What is the relationship between organizational communication and organizational performance?

In this article we will answer that question, and we will learn:

  • What organizational communication is
  • What organizational performance is
  • How to improve organizational performance by improving communication

To start with, we will briefly introduce the two terms.

What Is Organizational Communication?

Organizational communication is communication that takes place within an organization.

It occurs at every level and is multi-directional, flowing:

  • Upward from employees to superiors
  • Downward from superiors to subordinates
  • Horizontally between workers at the same level

Communication within a company can be either formal or informal.

Formal communication mechanisms are those instituted by the organization itself, such as meetings, email newsletters, and telephone contact.

Informal communication often refers to social contact between employees.

Organizations can influence and improve both of these areas, through, for instance, internal communications strategies or cultural change programs.

What Is Organizational Performance?

Organizational performance refers to how effective an organization is.

Usually the concept of organization performance focuses on how well an organization achieves its stated goals.

An organization that meets its targets effectively and cost-efficiently, for example, would be considered effective.

An organization that fails to meet its objectives – or meets its targets inefficiently – would not be.

There are many frameworks and models that can be used to measure organizational performance.

When an organization wants to improve organizational performance, then business leaders and specialists will often follow a number of steps, such as:

  • Using a change effectiveness model to assess and measure organizational performance
  • Developing strategies for tackling problems and raising performance levels
  • Implementing and managing organizational changes in order to enhance performance

Organizational change is complex and success is not guaranteed.

For that reason, businesses often follow change management principles and best practices.

The Link Between Organizational Communication and Organizational Performance

Organizational communication affects employees significantly on several levels.

Communication can affect areas such as:

  • Employees’ sentiments towards their jobs and their company. Good communication helps foster good relationships between coworkers, managers and subordinates, leaders and the workforce, and so forth. Poor communication, however, can breed misunderstanding.
  • Employee turnover rates. Good communication helps to build a positive work environment. The more satisfied workers are, the more likely they are to stay with a company. However, poor communication can have the opposite effect and increase turnover. 
  • Worker productivity and performance levels. Because sentiment and engagement levels affect employee productivity, organizational communication also affect workers’ performance. And that performance directly affects an organization’s output and performance.

Impacts such as these, in turn, can affect organizational performance.

Poor communication, for example, and employee metrics can result in:

  • Higher HR costs. If poor communication results in lower employee satisfaction, then organizations can expect higher HR costs. High turnover rates, for instance, can increase costs associated with recruitment and training. It also decreases teams’ overall productivity levels.
  • Decreased business process efficiency. Poor communication can increase error rates, the number of miscommunications, and more. Problems such as these have costs, such as increasing the amount of wasted effort or increasing costs.
  • Negative effects on the work environment. Bad communication systems can negatively affect attitudes, the workplace culture, and the atmosphere of a company. In worst case scenarios, it can breed mistrust and create hostile or toxic work environments.
  • Ineffective accountability systems. Communication also plays an important role in the management of business processes and initiatives. Ineffective communication prevents the effective flow of information, which is necessary for healthy, streamlined business processes.

In contrast, good organizational communication offers a number of benefits, such as:

  • Better accountability and process management. The more efficiently information can flow, the easier it is to control and manage business processes. Real-time, fast communication means that superiors will be able to react and manage activities more quickly.
  • A better atmosphere and corporate climate. Above, we saw how ineffective communication can increase error rates, miscommunications, and dissatisfaction. The opposite is also true – good organizational communication can improve the workplace and keep teams happier.
  • Improved employee motivation. Better workplace atmospheres help improve employees attitudes and morale. And the more that they enjoy the workplace, the more productive and engaged they are.

Clearly, an organization should do its best to improve its communication and the best way to do this is by approaching communications strategically.

How to Improve Organizational Communication and Performance

If an organization wants to improve its communication, it should approach the problem systematically and strategically.

A good communications strategy will have:

  • Systems and mechanisms for formal communication. Formal communication mechanisms extend beyond meetings and conferences. They can also include procedures and protocols for, for instance, employee feedback and grievances.
  • An approach to improving informal communication. Naturally, a business cannot have complete control over how employees communicate informally. But there are ways to influence the atmosphere of the workplace, which can affect informal communication. Cultural change initiatives, for instance, can affect attitudes and behaviors, which will influence how people interact.
  • Goals that are specific, clear, and measurable. A communications strategy should have a specific purpose. And its purpose should be achievable and measurable. 

There is no single solution that can transform organizational communication overnight.

However, if organizations take an approach that tackles both formal and informal communication, then it can expect to see substantial performance improvements.

Chris is the Lead Author & Editor of Change Blog. Chris established the Change blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Change Management.