Why Good Communication Is Good Business

Why is communication important to business? 

Couldn’t we just produce graduates skilled at 

crunching numbers?

Good communication matters because business 

organizations are made up of people. As Robert Kent, former 

dean of Harvard Business School has said, “In business, 

communication is everything.”

Research spanning several decades has consistently ranked communication skills as crucial for managers. Typically, managers spend 75 to 80 percent of their time engaged in some form of written or oral communication. Although often termed a “soft” skill, communication in a business organization provides the critical link between core functions. Let’s examine three reasons why good communication is important to individuals and their organizations.

Reason 1. Ineffective communication is very expensive

The National Commission on Writing estimates that American businesses spend $3.1 billion annually just training people to write. The Commission surveyed 120 human resource directors in companies affiliated with the Business Roundtable, an association of chief executive officers from U.S. corporations.

According to the report of the National Commission on Writing:

• People who cannot write and communicate clearly will not be hired, and if already working, are unlikely to last long enough to be considered for promotion.
• Eighty percent or more of the companies in the services and the finance, insurance and real estate sectors—the corporations with greatest employment growth potential—assess writing during hiring.
• Two-thirds of salaried employees in large American companies have some writing responsibility.
• More than 40 percent of responding firms offer or require training for salaried employees with writing deficiencies.In a New York Times article about the Commission’s findings, Bob Kerrey, president of New School University in New York and chair of the National Commission on Writing, put it this way: “Writing is both a ‘marker’ of high-skill, high-wage, professional work and a ‘gatekeeper’ with clear equity implications. People unable to express themselves clearly in writing limit their opportunities for professional, salaried employment.” The ability to communicate was rated as the most important factor in making a manager “promotable” by subscribers to Harvard Business Review.

Reason 2. The changing environment and increasing complexity of the 21st century workplace make communication even more important.

Flatter organizations, a more diverse employee base and greater use of teams have all made communication essential to organizational success. Flatter organizations mean managers must communicate with many people over whom they may have no formal control. Even with their own employees, the days when a manager can just order people around are finished. The autocratic management model of past generations is increasingly being replaced by participatory management in which communication is the key to build trust, promote understanding and empower and motivate others.

Because the domestic workforce is growing more diverse, an organization can no longer assume its employee constituencies are homogeneous. Employees reflect differences in age, ethnic heritage, race, physical abilities, gender and sexual orientation. Diversity is not just a matter of social responsibility; it is also an economic issue. Companies are realizing the advantage of making full use of the creativity, talents, experiences and perspectives of a diverse employee base.

Teams are the modus operandi in the 21st century workplace. In a recent survey of Fortune 1000 companies, 83 percent reported that their firms use teams; teams are all about communication. The collaboration that allows organizations to capitalize on the creative potential of a diverse workforce depends on communication.

Reason 3. The world’s economy is becoming increasingly global.

By the end of the 20th century, 80 percent of U.S. products were competing in international markets. The direct investment of foreign-based companies grew from $9 trillion in 1966 to more than $300 trillion in 2002. Many products we assume are American, such as Purina Dog Chow and KitKat candy bars, are made overseas. Brands we may think are international, Grey Poupon mustard, Michelin tires and Evian water, are made in the United States.For managers, having international experience is rapidly moving from “desirable” to “essential.” A study by the Columbia University School of Business reported that successful executives must have multi-environment and multinational experience to become CEOs in the 21st century. The ability to compete in the global economy is the single greatest challenge facing business today. Organizations will want to negotiate, buy and sell overseas, consider joint ventures, market and adapt products for an international market and improve their expatriates’ success rate. All of this involves communication.

Products have failed overseas sometimes simply because a name may take on unanticipated meanings in translation: the Olympic copier Roto in Chile (roto in Spanish means ‘broken’); the Chevy Nova in Puerto Rico (no va means ‘doesn’t go’); the Randan in Japan (randan means ‘idiot’); Parker Pen’s Jotter pen (‘jockstrap’ in some Latin American markets). This type of mishap is not an American monopoly: A successful European chocolate and fruit product was introduced into the U.S. with the unfortunate name “Zit.”

Naming a product is communication at its simplest level. The overall implications of intercultural communication for global business are enormous. Take the case of EuroDisney, later renamed Disneyland Paris. For the year 1993, the theme park lost approximately US $1 billion. Losses were still at US $1 million a day in 1994-95. There were many reasons for this, including a recession in Europe, but intercultural insensitivity was also a very important factor. No attention was paid to the European context or to cultural differences in management practice, labor relations, or even such simple matters as preferred dining hours or availability of alcohol and tobacco. EuroDisney signals the danger for business practitioners immersed in financial forecasting, market studies and management models when they overlook how culture affects behavior. Few things are more important to conducting business on a global scale than skill in intercultural communication