Corporate Communication: Meaning, Types with Characteristics, advantages and disadvantages

Meaning of Corporate Communication

Corporate communication is broadly defined as a corporation's attempt to inform the public, including all its consumers, private investors and the media. Corporate communication represents the very voice with which corporate institutions interact with the outside world and is inclusive of communications regarding investor relations, government relations, labor relations and employee development. Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. It is concerned with internal communications management from the standpoint of sharing knowledge and decisions from the enterprise with employees, suppliers, investors and partners.

In the words of William Scott,” Administrative communication is a process which involves the transmission and accurate replication of ideas ensured by feedback for the purpose of eliciting actions which will accomplish organizational goals‖.”

Types of Corporate Communication/Communication Channels/ Communication Networks

It is basically of two types:

1.       Formal Communication

2.       Informal Communication

Formal Communication: Communication takes place through the formal channels of the organization structure along the lines of authority established by the management is called Formal Communication. It is that route of communication which is institutionally determined and is associated with status or position of the receiver and sender. The formal channels are deliberately related to ensure that accurate information flows smoothly and timely. Such communications are generally in writing and may take any of the forms; policy; manuals: procedures and rule books; memoranda; official meetings; reports, etc.

Characteristics: Following are the chief characteristics of the formal communication

(1) Written and Oral: Formal communication can both be written and oral. Daily works are handled through oral communication, while the policy matters require written communication.

(2) Formal Relations: This communication is adopted among those employees where formal relations have been established by the organisation. The sender and the receiver have some sort of organisational relations.

(3) Prescribed Path: The communication has to pass through a definite channel while moving from one person to another. For example, to convey the feelings of a worker to the manager, the foreman’s help has to be sought.

(4) Organisational Message: This channel is concerned with the authorised organisational messages only and the personal messages are out of its jurisdiction.

(5) Deliberate Effort: This channel of communication is not established automatically but effort has to be made for its creation. It is decided keeping in view the objectives of the organisation.

Advantages of Formal Communication

Formal communication is required for any organization because it provides a list of below advantages:

1. Smooth Communication System: Formal communication moves through pre-determined channel and therefore everyone is aware for where and how to send the message. So, it does not face any problem to flow.

2. Increase in Efficiency: Such Communication increase overall efficiency of the management as organizational rules and procedures are required to be followed always.

3. Permanent Record: All formal communication like letters, report & memos are kept permanently. So it is helpful in future decision making.

4. Discipline: This communication creates the discipline in the mind of employees in any organization.

5. Less Errors and Mistakes: It maintains all formalities of communication for which there is less chance of errors and mistakes.

6. Co-ordination of Work: Formal communication provides the scope of co-ordination among various functions and departments of an organization.

7.  Reliability: Formal communication is more credible and more reliable for sending important issues like objectives, orders and directions etc.

Disadvantages of Formal Communication

In formal communication, there exists a set of rules and regulation which must be maintained. And for this, there are grown some disadvantages of Formal communication too. In spite of enjoying some advantages of formal communication, it suffers from the following limitations:

1. Authoritarian System: Formal communication states clear relationship between upper level management and lower level management. When there is a downward communication, there is an authoritarian tone to dominate lower level employees.

2. Inflexibility: It is a rigid form of communication as make up or change cannot be considered easily when required.

3. Costly: This sort of communication maintains all formalities of communication for which it involves more cost.

4.  Wastage of Time: Formal communication process passes through various stages or levels of an organization and therefore requires more time to reach to its destination. This is ultimately wastage of time.

5. Delay in Decision Making: Everyone has to maintain specific framework of communication in case of formal communication. Therefore management requires more time which delays decision making process.

6. Lack of Initiative: In such communication there is no option to select any other system which is the best one compared to the prescribed system. As a result creative ideas are ignored here.

7. Lack of Cordiality: In formal communication, established rules are strictly observed. More emphasis is given to the formalities rather than human side; As a result, there is no scope to develop cordial relationship between the sender and receiver.

Informal Communication: Communication arising out of all those channels of communication that fall outside the formal channels is known as informal communication. Informal communication does not flow lines of authority as is the case of formal communication. It arises due to the personal needs of the members of an organization. At times, in informal communication, it is difficult to fix responsibility about accuracy of information. Such communication is usually oral and may be covered even by simple glance, gesture or smile or silence.

Informal communication is known as grapevine. Grapevine arises because of the desire of the people to communicate without following the formal channel of communication. It follows no setlines, nor any definite rules, but spreads like grapevine, in any direction anywhere.

Informal or grapevine communication has the following characteristics:

(1) Formation through Social Relations: This communication is born out of social relations who mean that it is beyond the restrictions of the organisation. No superior-subordinate relationship figures therein. A more sociable superior can gather much information through this channel.

(2) Two types of Information: Through this communication, information about the work and the individual can be collected.

(3) Uncertain Path: Since it is beyond the restrictions of the organisation, it follows no definite channel. Like a grapevine, it moves in a zigzag manner.

(4) Possibility of Rumour and Distortion: Responsibility for the true or false nature of communication does not lie on any individual and, therefore, not much attention is paid to its meaning while communicating. Consequently, the rumours keep floating.

(5) Quick Relay: Informal communication makes news spread like wildfire. Not only this, people start adding something of their own which sometimes changes the real meaning of the communication.

Advantages of Formal Communication

Informal communication is free from maintaining rules and regulations, procedures and others. Such communication bears low cost than formal communication. Although informal communication does not follow any set rules or principle but it offers some advantages which are as follows:

1. Alternative System: There are some messages which cannot be sent through formal way and therefore requires some alternative. Such alternative can be informal communication. 

2. Interpretation: Message sent to subordinates requires explanation or interpretation and informal communication is the valuable means here. 

3. To Present Grievances: Employees can't make any complaints to superiors through formal communication. But informal communication gives the employees a better opportunity to raise their complaints, grievances or claim. Sometimes, in this way, as an informal communication system, grapevine affects much. 

4. Increase Efficiency: Employees can freely exchange their opinions in terms of informal communication. They can ask any question without any hesitation. Thus a cordial communication environment is created to increase the efficiency of employees. 

5. Improving Relations: Any created between management and the labor can be settled through informal communication. Co-operation and co-ordination can be established through harmonious relationship between management and labor. Such relationship is only possible through informal communication.

6. Providing Recommendations: Subordinates feel free to provide management with their suggestions and recommendations on different job related issues like work methods, procedures and conditions etc.

7. Measuring Reaction: Before releasing any new information, management wants to know the reaction of employees. In such a case, informal communication can be valuable in measuring the reaction of employees before any information is conveyed through formal channels.

8. Solution to Problems: With the help of informal communication, the management is able to know problems, conflicts and complaints and the like. Therefore management can take necessary action timely and effectively.

Disadvantages of Formal Communication

Although informal communication creates so many advantages but they are not free from drawbacks or limitations. Some significant demerits or disadvantages of informal communication system are as follows:

1. Distortion: Informal communication networks do not follow any set of rules, definite liners or ways. So it can transmit any kind of information to any person without any respect or fear. It may spread wrong or distorted news which may sometimes prove harmful even to the employees. So, it is the one of most considerable disadvantages of informal communication.

2. Lack of Secrecy: In informal communication, everybody can freely interact as there are no restrictions or rules. Any secret matter is likely to be flashed without any problem or hesitation. This may cause a huge damage to any organization.

3. Incomplete Information: Information released from such communication network is usually incomplete. So, There is each and every chance of it to be misunderstood or misinterpreted.

4. Non-Co-Operation: Sometimes, confusion develops among the persons involved in informal communication. As a result, they may remain separate without any co-operation. 

5. Lack of Resistance: As informal communication does not follow any established system, it is beyond any control. Organization has no mechanism to resist its movement.

6. Huge Rumor: Most of the time, informal communication fabricates the real facts and makes some rosy picture. This really damages the working environment of any organization.

7. Misunderstanding: Lack of conduct, decency, decorum and rules cause misunderstanding in informal communication. As a result there may be conflict between employees.

8. Committing Mistakes: This sort of communication are subject to errors and mistakes because no official’s rules or regulation operate in this case of informal communication.

Factors responsible for Grapevine

According to Keith Davis Grapevine is a product of situation. It steadily takes place when:-

1. Workmen in the organization are faced with uncertainties like promotional chances, increments, job insecurities, etc.

2. When there are possibilities of certain changes in an organization like change in policy, adoption of new technology, etc.

3. When workmen are physically situated closes enough to influence and trust each other.

How can the Grapevine be used effectively?

Grapevine is quite powerful and influential. It can cause considerable damage. Hence management tries to crush it completely. But Grapevine cannot be completely eliminated. The Grapevine can be used effectively in the following way:-

1. The manager should adopt an open door policy and should keep each one well versed about plans, prospects policy matters or any other changes in the organization.

2. The manager should identify the leader and try to win his confidence. The manager should involve the leaders in the decision making.

3. The manger should listen to every gossip or rumours and analyse it to get to the nerve of the feelings of employees.

4. The manager should maintain a cordial relationship with his subordinates so as to reduce the possibility of grapevine.

5. As far as possible the manager should work towards providing healthy atmosphere at the workplace. One cannot stop rumours or curb grapevine altogether but efforts should be taken to check these as far as possible.

Difference between Formal and Informal Communication Channel

Basis	Formal Communication	Informal Communication
01. Rules	In Formal communication, Organizational rules are strictly followed.	It does not generally follow the rules of organization
02. Recognition	Such communication requires official’s recognition.	In informal communication, It does not require any official’s recognition.
03. Flexibility	It is inflexible in nature as it cannot be changed when desired.	Being flexible, It can be changed easily.
04. Secrecy	Such Communication is not free and open to all. So, Secrecy is maintained here.	It is free and open to all, So it is very difficult to maintain secrecy here. i.e. Grapevine communication which spread informally.
05. Time & Cost	It follows various rules of organization. So, It requires much time and cost.	Informal communication does not bother for the formalities of organization and therefore it requires less time and cost.
06. Record Keeping	This type of communication involves written procedure, So record can be kept in formal communication.	Permanent record is impossible here because almost nothing is written here.
07. Errors or Mistakes	Very careful attention is given here in encoding the message and sending the message through formal way. Due to this seriousness, there is less chance of placing mistakes or errors.	It is personal in nature and therefore less attention is involved which can cause many errors or mistakes.
08. Compulsion	It is bound to follow the formal rules of communication.	There is no pressure here to follow any rules.
09. Necessity	Formal communication is necessary to achieve organizational goal.	Informal communication is necessary to improve personal relation.
10. Delegation or Authority	Authority can be delegated through formal communication.	Authority cannot be delegated through such communication.