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4 Main Types of Business Communication

4 Main Types of Business Communication

The 4 main types of business communication include upward communication, downward communication, lateral communication, and external communication.

Upward Communication: Empowering Employee Voice

Upward communication is the most important communication which is used by the stuff to provide information, ideas, suggestions and non–routine problem orders. Though this type of interactions took form toward upper management relatively, there are also upward interactions between supervisors and workers. Downward communication is traditionally classified to four main streams:

  • Performance review;

  • Suggestion schemes;

  • Open–door policy;

  • Meeting with employees.

Identifying examples of upward communication

One of the most frequently used examples of upward communication is an annual performance review. Though stuff quite frequently do their best for the whole year in order to get a high enough grade, and payment increase, we are free to discuss the problems the workers face at the working place, which of the stated in a job description has not been implemented, and much more. While defining performance review, into two sets serious deficiencies get pointed out: wage raises and dismissals . Another example of upward communication might be suggestion schemes. A great example there is Google Company which offers their workers a chance to suggest preferential innovative ideas and improvements . Such schemes are often implemented by each company within their environment.

The strengths of upward communication

Some critical functions are served by upward communication as potential actions upon information, for example:

  • Uncertainty absorption: in a case of significant uncertainty reduction quantitative information is not 100 percent the context;

  • Information accuracy and completeness increase;

  • Accountability of liability: the reliable information availability is impossible in case of not using upward communication;

  • Employee awareness concerning the personal attitudes, management style, understanding of the goals and their importance;

  • Employee satisfaction evaluation.

The weaknesses of upward communication

The main weakness of upward communication is the fact that it is generally intimidating for the stuff because of all the hierarchy. A survey was held in 2001 and only 30 percent of the employees could tell that their employers encourage open and honest communication .

Downward Communication: Directing the Corporate Narrative

Downward communication is the message that flows from higher ranks to lower ranks. A message that is sent from a top-level manager to the middle managers, the first-line managers, and the workers is considered as downward communication. It is the most commonly used method of communication. As such it is used to issue an order, directions, or to inform about company policies. The following are the examples of downward communication.

Examples of Downward Communication

A classic example is when Microsoft announces to lower-level employees about the new software update. Lacked detailed guidelines and smooth implementation. The same company tried to exercise downward communication every time their CEO announced ways to compete with Google. Downward communication can take the form of written communication through the use of memos, emails, reports, user manuals, or company blogs.

Strengths of Downward Communication

Downward communication has lower costs of communication. Developing procedures or guidelines of conducting business is less expensive, for instance, the CEO can send an email detailing company policies and procedures at no extra cost. Downward communication is being sued to maintain and create a shared culture among the opposite. It could also ensure that the organization is run within specified rules.

Weaknesses of Downward Communication

The senior most managers do not have the opportunity to answer the questions from the junior members of staff. Messages can get distorted as they pass through the hierarchy of management. A case study conducted on a Fortune 500 Company found that the level of distortion in communication resulted in an operational delay exceeding $200,000.

Tips for Success in Downward Communication

Leaders should use digital tools in ensuring that what was said is what was heard. For instance, retail company Giant Eagle uses an internal blog for posting updates and heads up, they also video the message of the month. Zappos uses no more than two-minute video messages on major issues from the CEO. Both companies use these tools to send the message in a personal way and avoid distortion. The use of real-time digital Q&A to enable executive managers to respond to questions and additional clarification on communication.

Lateral Communication: Facilitating Cross-Departmental Collaboration

Lateral communication involves communication, information exchange, and feedback between colleagues who are on the same hierarchical level or different departments within the formal organizational environment . In the current competitive environment, organizations require people to work closely with others in order to achieve success. Lateral communication plays a significant role in promoting collective decision-making, coordination, sharing knowledge and experiences that foster mutual understanding.


There is a lateral communication example whereby members of different departments work on one project. For example, marketing experts and product development vide members can work on a project of launching a new product. According to the research study by McKinsey & Company, companies that have more effective lateral communication than those of their competitors are 1.5 times more likely to outperform their industry peers. Moreover, companies like Apple prefer breaking retreats by cross-functional teams as they contain people right up and down the organizational hierarchy and have employees from various departments working on the same project. It creates synergy by ensuring that all company members with diverse skills work together on a particular project.

Strengths and Weaknesses

Lateral communication has a significant importance for companies since it brings about innovation and better ways of solving problems. The report from McKinsey & Company goes ahead to show a quantitative analysis that supports the statement. It states that companies that have strong lateral communication are 1.5 times able to outperform their industry peers. However, there might be ineffective lateral communication between employees from different departments due to misunderstandings, which may lead to the wrong decisions being made. According to HBR , 75% of cross-functional teams performed poorly in communication and working as distinct teams.

Being successful in the cross-departmental communication means that both the strategy of engaging employees and communications should be analyzed. Adobe Case Solution for engaging employees was the one in which senior shareholders reach out to employees across departments through social networking. This makes the employees feel that they are being appreciated by the top leadership, have a sense of belonging, and can share ideas with others. Therefore, employees should have the right information, skills, and understanding in order to maintain a competitive advantage.

External Communication: Building Relationships Beyond the Organization

External communication is a type of interaction between the organization and the environment, including customers, suppliers, investors, and the public. External communication implies utilizing various channels of communication and communication strategies aimed at transferring information, publicizing products or services, and managing the organization’s brand in the external environment.

Examples of External Communication

An example of external communication is a marketing strategy developed and implemented by the company. People have become widely aware of the “Share a Coke” campaign. Its essence lay in the production and distribution of bottles with buyers’ names instead of the product’s conventional logo . This marketing tactic was successful, allowing the company to motivate customers to look for their names when shopping, creating new advertising opportunities and increasing sales quantity and quality.

Strengths of External Communication

External communication plays a critical role in creating and maintaining relationships with stakeholders and customers, conditionally increasing the brand’s reputation and profit . According to a study conducted by HubSpot , 75% of buyers would hardly acquire a commodity unless they receive the same information on all channels. As can be inferred, external communication should be so powerful that it eliminates the demand for external confrontation methods.

Weaknesses of External Communication

The disadvantage of external communication is the possibility of its improper application: it is challenging to plan the optimal message corresponding to the characteristics of all channels and audiences in external communications and manage their transmission actively. According to Nielsen’s study , inconsistency lowers gross income by 23%.

Tips for Success in External Communication

To maximize the benefits of external communication, the organization should employ a communication strategy developed considering current industry tendencies and audience characteristics. It is also necessary to select proper channels for the message transfer and establish the tracking and feedback control system, including analysis of the received information and planning new measures. To build trust in external communication, the organization should only provide the most useful and accurate information to the public.

How Business Communication Affects Your Company

Business communication is directly related to the success of any organization, its influence on the process, efficiency, and quality of the work of personnel. Understanding all types of communication is essential for managing business activity and external relationships.

Verbal Communication: Interaction with Immediate Feedback

Verbal communication is understood as any interaction on the telephony territory, face-to-face confrontation. For instance, it becomes possible to conduct a business meeting on a remote-team building. Examples of verbal communication are the presentation of a new business idea to subordinates or a phone conversation with the recruitment manager. According to Their Research , effective verbal communication can increase team performance by 50%.

Written Communication: Documentation and Clarifications

Written communication is understood as any interaction on the writing area, for instance, e-mails, reports, and proposals. A business letter to the director of the company is an illustrative example of written communication. Writing a project proposal is an example of business-written speech. According to McKinsey , the average worker spends about 28% of their workweek doing email.

Non-verbal Communication: Building Trust and Improving Efficiency

Non-verbal communication is understood as any interaction on the authoring area, such as gestures, eye contact, or euphoria of speech. An illustrative example of a non-verbal medium is a sales presentation in which the presenter communicates with the recipient through comfortable eye contact and gives promising gestures. According to Their Research , non-verbal communication plays a 93% role in establishing effective dialogues.

Visual Communication: Complex for Simple Dissemination

Visual communication is understood as the presentation of information on the graphic area. The relationship between the report has been spread on the business arena and posters. A brief exploration of 3M Company’s study of brain activity found that presentation is 400 times better suited to its complex perception.

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