by Michael A Watson FCMA, MM.

Why Communication is everything

Today a business is all about a partnership - with employees, shareholders, customers, suppliers and advisers - the ability of management to communicate effectively takes on even greater importance.

Employees, for example, will not be motivated - or even retained - if they are not properly led, informed and involved in the enterprise, and appraised and rewarded for their contribution to it.

Customers will not materialise if products and services are not marketed properly. And once won, customers will not remain loyal if they are not "cared for" in the pre- and post-sale service they receive.

Suppliers will fail to deliver consistently at the right time, place and price if they are not engaged in a mutually beneficial partnership built on regular, honest contact.

And neither shareholders nor banks will come up with finance unless directors present a sound proposition to them - and retain their confidence on an on-going basis.

That these business relationships are crucial may seem obvious, but it is surprising how often businesses fail to nurture them. It is also worth remembering that communication is a never-ending process - and its effectiveness and cost-efficiency can always be improved.

Communication Breakdowns

Remember "No news is bad news". At a conference in Chicago for senior managers that I attended it became apparent that no-one felt they knew what was going on within the business - if they wanted information they felt the need to ask a junior. They were not happy. I suggested that what was required was a weekly bulletin from the Chief Executive. His initial response illustrated what I believe are the most common communication mistakes in business:

Mistake 1 - Turning communication into a "big deal"

With so many "delicate" developments in the business, it would be premature to "announce" anything until deals were signed.

By not communicating the information, the message that his managers received was that they were not important enough to know about present and future developments. Worse still his belief that confidentiality could be jeopardised sent another message - "I don't trust you!".

Mistake 2 - Communicating propoganda

When a business actively embarks on a "communications programme" for the first time it is often seen by directors as a one-way vehicle for company propaganda.

This is a wasted business opportunity. Staff are invaribly far more intelligent and probably care more about the business than they ever are given credit for. Propapanda is easy to spot - there's never any bad news!

Surprisingly, plain old honesty can be really great for business morale. The only downside to honesty is that it can often lead to honest feedback.

Mistake 3 - Seeing communication only as a cost

Communications projects costs must be compared to the results that the project is seeking. Communication obviously has a financial cost but effective communication will always produce a high return on investment along with improvements to staff motivation, productivity, efficiency and increased business.

Mistake 4 - Being "economical" with the information

It is so tempting to be selective about the information you give to staff, customers or suppliers. A "need to know" approach from the top of an organisation will inevitably cause pain, frustration and confusion for everyone in the longer term.

If you tell the whole story, people then understand the problem and accept a decision which may have a negative impact on individuals but a positive one on the business as a whole.

Mistake 5 - Not realising "communication is the response you get"

When you make an announcement which receives a response you do not want or expect, your communication has obviously been ineffective.

But so few people devote time to thinking about the response they want to evoke - too much effort is put into the composition or delivery of the message.

Mistake 6 - Believing that everyone thinks the same way as you

"If I tell you something and you do not understand it - whose fault is it?" Without a doubt it is my fault. Why? Because you are not stupid - or probably not! But it is surprising how this view changes when someone is impatiently trying to explain something complex to a "slow" subordinate. Therefore you must ensure that the message that you are communicating is delivered in such a method that the audience understands it correctly.

Mistake 7 - Assuming that simply because someone speaks your language, they understand what you say

This is particularly true when communicating with foreigners who speak fluent English. They may appear to understand but it is worth realising this: when they speak, they can choose the words they use. But when they listen, they are limited to the words you choose.

Mistake 8 - Always trying to be interesting

The best and most effective communication is based on improved listening skills. Really listen to what is being said to you instead of using the time to work out what you plan to say next. An effective communicator concentrates much more on being interested, than being interesting.

How To Get The Message Across

• Clear messages imply success The defensive writer assumes, often subconsciously, that important-sounding words will do a job that plain English cannot. This simply is not true.

  Experience shows that successful companies are those that have the confidence to send out clear messages. A recent study of company reports showed that abstract, evasive language was a sure sign that the company was doing badly.

• Pre-fabricated phrases Business literature is full of phrases dropped in because certain words always go together. So "impacts" are always "insignificant", "factors" are always "key", "experience" is always "hands-on", "broadly-based, market-driven operations continue to face challenges right across the spectrum on a global basis". Absurdity is never far away.

• Flannel A lot of glued-together phrases have entered the business vocabulary because they endow ordinary activities with a certain mystique. After a while, it becomes hard to say something simple, even if you want to.

• Plain English indicates clear thinking The lesson is simple. Ask yourself what you are trying to say, consider who your message is for, and write it so that it can be understood as quickly as possible. The chances are you will use plain English.

Employee Communication

• Be Consistent - Internal communication must be consistent and regular.

• Learn to Listen - Internal communication must be a two-way flow.

• Be Brave - You are competing against the grapevine and therefore you need to maintain credability to be believed and not the grapevine.

• Trust the Communicators - Allow the professions to deliver the message.

Directors' Obligations

1. Providing employees systematically with information on matters of concern to them as employees

2. Consulting employees or their representatives on a regular basis so that views of employees can be taken into account in making decisions which are likely to affect their interests

3. Encouraging the involvement of employees in the company's performance through an employees' share scheme or by some other means

4. Achieving a common awareness on the part of all employees of financial and economic factors affecting the performance of the company.

Customer Communication

• Local Knowledge - Where did local shopkeepers gain their personal touch? They knew their customers - maybe even lived next door to some of them. They knew who paid their bills regularly and who needed reminding. They also knew about special habits.

• Get Personal - Get closer to your customer through your customer database.

• Customer Loyalty Programmes - Customer loyalty programmes are a way of getting to know your customer. It is a means to communicate to your customers and find out their needs and ensure you provide the customer with what they need.

Supplier Communication

Essential points

It has been said that if there were just three truly "golden rules" of modern business they would be, in this order: communicate, communicate and communicate.

Michael Watson of Accountancy Services for Business is a Chartered Management Accountant with a Masters in Management from the much acclaimed J. L. Kellogg School of Management at Northwestern University, Evanston, nr Chicago, USA. With 30 years experience in accounting initially trained in Practice, then over 20 years with a USA fortune 500 company operating in the UK and Europe. He has held senior Management accounting roles including director for UK and European operations. Experienced in compiling accounts for small businesses, completing tax computations, business forecasting, financial modelling, budgets and strategic planning, UK statutory accounting and Company Secretarial.

To contact Michael, phone 01932 346765 (UK), or email him via IRL.