Session 25

Communication Within
Business

FOCUS
This session covers the following content from the ACCA Study Guide.

E. Personal Effectiveness and Communication

in Business
5. Communicating in business
a) Describe methods of communication used in the organisation and how
they are used.
d) Explain a simple communication model: sender, message, receiver,
feedback, noise.
e) Explain formal and informal communication and their importance in
the workplace.
f) Identify the consequences of ineffective communication.
g) Describe the attributes of effective communication.
h) Describe the barriers to effective communication and identify practical
steps that may be taken to overcome them.
i) Identify the main patterns of communication.

Session 25 Guidance
Appreciate that communication contributes to the success of any organisation by describing who is
doing what and how. As you use communication every day, most of this session should be familiar,
although you may not recognise its context.
Read through the whole session a number of times until you have placed the specifics into life context.
Also realise that some communication applications (e.g. recruitment and selection) have already been
covered in other sessions.

(continued on next page)

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VISUAL OVERVIEW
Objective: To describe communication and the skills of effective communication.

EFFECTIVE COMMUNICATION
• Communication Process
• Importance
• Attributes
• Barriers
• Flow and Direction

COMMUNICATION MEDIA PRESENTATION

• Written Methods • Methods
• Oral Methods • Formal Report
• Non-verbal Behaviour • Letters and Memoranda
• Communication Skills • Oral Presentations

COMMUNICATION
PATTERNS
• Circle
• Chain
• "Y"
• Wheel
• All-Channel

Session 25 Guidance
Understand the difference between qualities of information (Session 24) and attributes of
effective communication (s.1.3).
Know the media which facilitate communication (s.2) and the appropriate methods for
various media (s.3).
Recognise that communication patterns (s.4) can easily be examined in the form of a
short scenario.

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Session 25 • Communication Within Business F1 Accountant in Business

1 Effective Communication
1.1 Communication Process
Communication—
 Communication involves encoding and transmitting an idea sending and receiving
through a communication channel which will be received and information between
decoded at the other end of the communication channel.* different parties
 The communication channel may be subject to various types through written,
oral and non-verbal
of external influences, called "noise", which can interfere with
mediums.
the transmission.

SENDER

IDEA ENCODE TRANSMIT

N N
*"Idea"—may be an
attitude or desired
O O action.

I COMMUNICATION I
CHANNEL
S S

E E
RECEIVER

RECEIVE DECODE IDEA

 Encoding may be oral, written or non-verbal.

 The communication channel (or medium) transmits the
message from sender to receiver (e.g. e-mail, telephone
conversation, letter).
 Distortion─in the coding and decoding stages, it may result
from the language or medium used (e.g. part of a Cyrillic
message can be lost in an e-mail).
 Noise hinders communication and may render it ineffective.
"Noise" may be:
 physical─air traffic;
 lost─in the post;
 social─personality "clashes" or cultural difference;
 psychological─due to anger, frustration or fatigue; or
 poor quality─a bad communications line or speaking "in
jargon" unintelligible to the receiver.
 As communication is a two-way process, the sender will need
feedback to determine whether a message has been received
and understood.

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F1 Accountant in Business Session 25 • Communication Within Business

1.2 Importance
1.2.1 In Organisations
 Providing information:
 for
budgetary planning and control;
 for
decision-making; and
 about the environment.
 Exchanging information with suppliers and customers.
 Encouraging participation and motivating individuals.
 Inter-departmental coordination.
 Communicating decisions.
 Maintaining interpersonal skills and relationships.
1.2.2 To Managers
 Announcing plans or strategies.
 Giving instructions and providing information.
 Receiving information.
 Exchanging ideas.
 Comparing actual results against a plan.
 Prescribing rules or procedures.
 Communicating job functions.
1.3 Attributes of Effective Communication—the 7 Cs
 Not to be confused with the attributes of good-quality information
(see Session 24), the 7 Cs are:
1. Completeness
2. Conciseness
3. Consideration
4. Concreteness
5. Clarity
6. Courtesy
7. Correctness.

1.3.1 Completeness
 A message is complete when it contains all the facts needed by
the receiver for the response desired by the sender.
1.3.2 Conciseness
 Conciseness is getting the message through in the fewest
possible words, keeping in mind all the other qualities of effective
communication. A concise message is complete without being
wordy and is only repeated to reinforce.
1.3.3 Consideration
 Keeping the receiver in mind while preparing the message defines
the quality of consideration. Put oneself in the place of the
receiver (empathy); apply integrity and ethics.
1.3.4 Concreteness
 Being concrete is being vivid, definite and specific rather than
obscure, vague and general. Use specific and accurate words,
facts and figures.

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1.3.5 Clarity
 Clarity means getting the message through in an accurate
manner understandable to the listener.
 Choose short, familiar, conversational words.
 Construct effective sentences and paragraphs.
 Achieve appropriate readability (through headings and
transitions) and "listenability".
 Include examples, illustrations and other visual aids
when desirable.
1.3.6 Courtesy
 Courtesy means to think about the receiver's reaction and
feelings. It involves respect and concern for others which
leads to the polite use of words and gestures.
 Be sincerely tactful, thoughtful and appreciative.
 Omit expressions which will irritate, hurt or belittle the receiver.
1.3.7 Correctness
 The correct use of grammar, spelling and punctuation.
 Use the right level of language and presentation.
 Maintain acceptable writing mechanics.
 Choose non-discriminatory expressions.

1.4 Barriers to Effective Communication*

 Individual bias and selectivity.
 Differences (e.g. higher regard to a manager's view).
 Emotional barriers.
 Language barriers (e.g. use of technical jargon or colloquialism). *Communication
 Inappropriate method of communication (formal or informal). problems arise
from three main
 Technical faults in the communication media. sources─the
 Poor listening skills. transmission
 Poor timing (e.g. too late to be of use). mechanism,
interpersonal issues
 Contradiction of verbal and non-verbal signs (mixed message).
and misunderstanding.
 Suspicion or lack of trust.
 Information overload.
 Selective reporting or withholding of information.
 "Edited highlights".
 Location.*

*Many of the above can result in misunderstanding—which in itself

can cause communications to break down.

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F1 Accountant in Business Session 25 • Communication Within Business

1.5 Flow/Direction of Communication

 Vertical:
 Management communicates policies, plans, information
and instructions down the chain of communication.
 Employees communicate ideas, suggestions, comments
and complaints up the chain of communication.
 Horizontal (or lateral):
 Inter-departmental meetings and cooperation between
similar groups (e.g. managers).
Can be:
 Formal (e.g. to coordinate work in a group); or
 Informal (e.g. to provide emotional/social support).

 Diagonal:
 Inter-departmental communication by people of different
ranks (e.g. between IS managers and production
department shop-floor engineers).

2 Communication Media

2.1 Written Methods

2.1.1 Examples*
 Minutes of a meeting *The choice of
 Letters/memos/faxes medium used in
 Post-it (repositionable) notes communication
 Bulletins/circulars/newsletters depends on factors
 Notice board such as urgency,
permanency,
 Brochures
complexity,
 E-mail sensitivity and cost.
 Budgets.
2.1.2 Skills Required
 Correct spelling
 Suitable vocabulary
 Correct grammar/syntax
 Good writing, word processing
 Suitable style.
2.1.3 Advantages and Disadvantages

Advantages─more Disadvantages─may be
permanent, less liable slow, less timely feedback.
to misinterpretation, aid
memory, duplicable, a
source of reference.

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2.2 Oral Methods

2.2.1 Examples
 Telephone/teleconferencing/videoconferencing
 Conversations
 Interviews/meetings
 Public meetings
 Intercom
 Recorded messages/answer phone/voicemail.
2.2.2 Skills Required
 Clear pronunciation
 Suitable vocabulary
 Correct grammar/syntax
 Fluency
 Body language when "face to face" (e.g. videoconference)
 Expressive delivery.
2.2.3 Advantages and Disadvantages

Advantages─more Disadvantages─noise,
immediate (usually). Often informality, less
enhanced by non-verbal permanence, no ability
behaviour. Also feedback to reference (unless
and flexibility. recorded).

2.3 Non-verbal Behaviour

 Examples include:
 Actions
 Body language─mannerisms and gestures
 Dress
 Facial expression
 Gesture
 Tone of voice
 Proximity

 Non-verbal behaviour (e.g. body language) can be used to *We speak with
create a desired impression. It will confirm or reinforce a verbal our voice but
message or even contradict it. As body language can be difficult communicate with
to control, it can often betray the real intentions of individuals.* our body.

2.4 Communication Skills

2.4.1 In Sending Messages
 Selecting and organising material, collecting thoughts,
constructing sentences, arguments, etc.
 Judging the effect of the message on the individual recipient in
the given situation.
 Choosing appropriate language and medium.
 Flexibility/adaptability─being responsive, responsible, diplomatic,
tactful, more or less formal as required by the situation.
 Using non-verbal signals to support the spoken message.
 Seeking and interpreting feedback.

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F1 Accountant in Business Session 25 • Communication Within Business

Example 1 Methods of Communication

Suggest and justify a suitable method for communicating the following to employees of a company.
Solution

Suitable Method Justification

(a) A hostile bid has been

made to take over the
company.

(b) De-recognition of the

trade union representing
most of the employees.

(c) Staff canteen is to be

replaced with vending
machines.

(d) A fatal accident in the

workplace.

(e) Suspension of a director

pending a police inquiry
into alleged fraud.

(f) A pay freeze

(g) Introduction of a share

option scheme.

2.4.2 In Receiving Messages

 Active reading—understanding content, recognising
superfluous information, evaluating relevant information.
 Listening:
 Preparing to listen
 Being and looking interested
 Concentrating on the message
 Avoiding distractions
 Keeping an open mind
 Asking for repetitions of parts of the message
 Distinguishing the "gist" from the detail
 Asking for clarification
 Making notes on key points
 Using memory-retention techniques (e.g. mind-mapping).
 Interpretation:
 Perceiving underlying meaning─is too much being read into
the message?
 Recognising non-verbal messages─do they confirm or
contradict the spoken message?
 Use questioning skills to draw out the required information.
 Provide feedback.

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3 Presentation

3.1 Methods of Presenting Information

 Formal report
 Letter/memorandum
 Oral presentation
 Meetings.

3.2 Formal Report

The typical layout of a formal report:
 Title page─outline, author, date and recipient(s).
 Table of contents─an indexed reference.
 Introduction─purpose of report and terms of reference.
 Executive summary─overall summary including conclusions
and recommendations.*
 Body of report─sectioned with headings (usually numbered)
and sub-headings.
 Conclusions and recommendations.
 Appendices─supporting details.

3.3 Letters and Memoranda

 Contents may be similar to a formal report, but the format will
be different.
3.3.1 Letters
*"BLOT" approach—
 Sent to people in other organisations. Bottom Line on Top
 Features:
 Address of sender
 Your Ref/Our Ref
 Date
 Name and address of recipient
 Dear Sir/Mr … ("salutation")
 Title heading
 "Yours faithfully" or "Sincerely".

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3.3.2 Memoranda
 Sent to people in the organisation.*
 Features:
 Company Name *There is no "Dear
 MEMORANDUM … " or "Yours … " in
 To: a memo.
 From:
 Date:
 Subject:

3.4 Oral Presentations

3.4.1 Key Elements

 Assemble facts and ideas based on the

PREPARATION audience and their needs.
 Consider the environment of the presentation.
 Develop suitable visual aids.

 Decide what to include/leave out.

CONTENT  Prepare any handouts/course notes.
 Practice, practice, practice.

 Use appropriate language.

DELIVERY  Maintain eye contact.
 Enthusiasm.
 Be yourself.
 Be prepared for questions.

3.4.2 Visual Aids

Advantages Disadvantages*
Visual impact. Restricted in the amount of
High retention. information they can convey.
*There can easily
Add interest. Receiver may remember
be a tendency to
the "picture" rather than
Facilitate understanding. "PowerPoint" everything
the message. in a presentation.
Used as a substitute to the PowerPoint should
speaker (i.e. speaker just enhance and add value
repeats the visual content). to the presentation,
not become the
May be a "language" barrier.
presentation.

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Session 25 • Communication Within Business F1 Accountant in Business

4 Communication Patterns
A communication network channels information between people.
The design of a communication pattern for an organisation will
depend partly on the organisation's structure.

4.1 Circle
 Each person can communicate directly only with two others*:

P
* Not all group
members can
communicate directly
with the group leader
T Q or co-ordinator.

S R

4.2 Chain
 People at the ends of the chain have only one person with
whom to communicate.
 The leader cannot know whether the last member receives
the correct information; there is no direct feedback to confirm
whether the original message has been lost or distorted.*

P Q R S T

4.3 "Y"
Q R

* Members of
P the same group
(i.e. S and T) can
communicate with
each other. Members
of different groups
can only communicate
through the leader.
S

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F1 Accountant in Business Session 25 • Communication Within Business

4.4 Wheel
 Each person must go through the leader to get a message to a
third person.

T Q

S R

Example 2 Communication Networks

Consider the four network patterns above.

(a) Identify who you think leads each group.
(b) Rank the patterns (best to worst) in terms of:
(i) speed of problem solving;
(ii) level of job satisfaction.

Solution

(a)

(b) (i)

(ii)

4.5 All-Channel
 Combines all the above
P

T Q

S R

 In comparison with wheel and circle:

 wheel solves simple problems quickest;
 all-channel is better for complex problems.
 Under pressure to get results, the all-channel system tends to
fall into a wheel pattern.

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 Summary
 Communication involves a sender encoding and transmitting an idea through a
communication channel, which is received and decoded at the other end.
 Noise describes anything which hinders communication.
 The original sender of the communication needs feedback to determine whether a message
has been received and understood.
 Effective communication requires that the message be complete, concise, considerate,
concrete, clear, courteous and correct.
 Barriers to effective communication arise from the transmission mechanism; issues between
the sender and receiver; or misunderstanding the message.
 Transmission within an organisation can occur:
• vertically—up and down the chain of command within the same work group;
• horizontally—across the same level but in different work groups; or
• diagonally —down from higher levels in one work group to lower levels in another group,
or vice versa.

 Choice of communication media usually depends on urgency, complexity, sensitivity, cost

and the need for permanency.
 Written communication is less likely to be misinterpreted, is duplicable and may be used as
a source of reference rather than trying to precisely remember the communication. It may,
however, be less timely.
 Oral is more flexible and can provide the dimensions of demeanour as well as simple
testimony. It may, however, lack permanence and may be subject to later disagreement
as to substance.
 Body language can confirm or contradict a verbal communication. It may betray the real
intentions of the person communicating.
 Key elements of a message involve preparation, content and delivery.
 Visual aids should enhance rather than become the presentation.
 Generally, the fastest communication will occur when information traverses the least
number of nodes. This usually occurs through centralised networks.
 However, centralised networks allow for the least degree of creativity because they
determine how the information flows.
 In cases in which information is complex, a distributed processing (all-channel) network
may be desirable over a centralised network.

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 Session 25

Session 25 Quiz
Estimated time: 10 minutes

1. Describe the communication process. (1.1)

2. List TEN barriers to effective communication. (1.4)
3. State the requirements to be a good listener. (2.4)
4. State FOUR advantages and FOUR disadvantages of visual aids. (3.4.2)
5. Explain the concept of communication patterns, giving examples. (4)

Study Question Bank

Estimated time: 30 minutes

Priority Estimated Time Completed

MCQ25 Communication Within Business 30 minutes

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EXAMPLE SOLUTIONS
Solution 1—Methods of Communication
Suitable Method Justification
(a) A hostile bid Open meeting of staff Allows questions.
Can present a "united front".
Nothing in writing.

(b) Trade union derecognition (1) Notice board, then Quick (reduces gossip time).
(2) Staff meeting Allows questions.

(c) Vending machines Newsletter Factual

Considered management response

(d) Fatal workplace accident (1) Notice board, then Quick—to put an end to rumours.
(2) Staff meeting, then Generates a feeling of togetherness.
(3) Circular Precise response about changes in
working practices.

(e) Suspension of a director E-mail to all staff Targeted at those who "need to know".

(f) Pay freeze (i.e. 0% pay rises) Meeting Very personal.

May affect people's motivation.

(g) Share option scheme Memo Needs accuracy.

Complex issues need time to read
and understand.

Solution 2—Communication Networks

(a) P in "Y" and the wheel; P or T in the chain; anyone could be the
leader in the circle.
(b) (i) Wheel (best), Y, chain, circle (worst)
(ii) Circle (best), chain, Y, wheel (worst)

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F1 Accountant in Business Session 25 • Communication Within Business

NOTES

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