Communication plays a vital role in the smooth functioning of any organization. The corporate world is no longer what it used to be say 50 years ago and the changing face of this sector has also transformed the way business is conducted today. Fifty years back, it was considered a cardinal sin to share top-level information with employees; today hiding the same could spell disaster. The management today needs to understand how important it is to share information with the employees or else there is a risk of wrong information pouring in which can be damaging in the long run. The communication that flows within the organization is called internal communication.
Lack of communication within the firm is in fact the most serious problem any company can face and one that gives rise to an air of mistrust among the employees. It is very important to understand that communication plays a very significant role in the company's success because this is what creates a feeling of trust as employees begin to feel like an integral part of the organization. Normally people would work for a company and never feel as if they belong unless the management and leadership make them feel so.
Communication is a major problem in many organizations as employees feel they do not know what exactly is happening within the firm. Especially in today's corporate environment where 'change' is the only predictable factor, it is extremely important to have an internal communication strategy in order to ensure smooth flow of relevant information within the firm. When changes are being planned, the importance of communication is heightened. The employers should take the staff into confidence and explain clearly why improvement measures are being implemented. Internal communication is important because various surveys and studies reveal that employees are seriously concerned about lack of access to relevant information. However the type of information they need may differ from person to person.
A survey in this connection was conducted with employees of a major international organization. This survey was mainly concerned with why internal communication was needed and what were the major communication concerns of employees in business organizations. The survey revealed that one concern that topped the list and was shown by 30 percent if employees were connected with internal organizational culture. These employees wanted feedback on their performance and said it was important for them to know if their work added value to overall organizational performance. 22 percent needed to know how safe their working environment was. A significant majority needed information about overall performance of the firm. How a company is doing is one of their major concerns. 17 percent workers were concerned about daily improvements and another 17 percent wanted to know more about annual goals and objectives of the firm. (Geddie, 1995)
Apart from the employees, other stakeholders are also involved in the effective communication system. People such as the shareholders, suppliers, business partners also need to be kept abreast of every change that is likely to have an impact on the company's progress, success or its revenues. However without an effective internal communication strategy, it is seriously impossible to expect success and smooth operation in the long run. Internal communication programs must be developed with one thing in mind i.e. stakeholders have a right to know what is happening within the firm or with the firm and they must be taken into confidence. David Brown (2002) explains why an internal communication strategy is crucial to a firm's success: �Without effective internal communications, the crisis of confidence in businesses and corporate leadership could hurt sincere efforts to build a positive corporate culture and to enhance employee morale and productivity, and devastate the overall image of an organization. The importance of a comprehensive internal communications program, particularly at a time like this, cannot be understated. How employees, association members and other related audiences such as investors, trustees and business partners, perceive the organization is crucial to its success." 
Corporate culture is undergoing serious transformation as stakeholders from employees to investors demand transparency in organizational operations. This transparency however cannot be maintained without the help of an effective internal communication strategy. Fortunately more and more firms are beginning to realize the need and importance of internal communication programs. They are beginning to see the importance of keeping employees well informed because that is only way management can convey company's goals and objectives to them.
It has been noticed that companies of all sizes benefit from developing and implementation an effective internal communication strategy. Mirian Graddick-Weir, AT&T executive vice president of human resources has this to say about internal communication: �Internal communication is more important today than in previous years partly because the business and market conditions are more complex, ...There is a lot of information in the marketplace and it's crucial that employees understand it. We put it in perspective--what does it mean to the company and the individual." It is true that there is American workforce today is bombarded with information. However a business organization can filter this information to ensure that only the relevant facts reach its employees with the help of a good internal communication program, Graddick-Weir further adds: �When you've got informed employees who understand the business, it helps them do their jobs more effectively."
The principles that must be kept in mind when developing a communication strategy is that it should be effective and relevant. This means it should be effectively connected with the core values and objectives of the firm. An internal communication program that doesn't incorporate the organizational mission and values destroys its own purpose. Another important thing is the channel through which information flows within the organization. Who will be responsible for delivering messages and how will they be conveyed are the kinds of questions that need to be answered in this stage of development. The third important thing is management and leadership endorsement. Without their support, it is neither easy nor practical to have an effective communication strategy.
An effective communication strategy is not only important for smooth flow of relevant information it also has a positive impact on other areas of organizational function. It helps keep the employees motivated and involved when information is shared with them as and when the need arises. It is also critical to bear in mind that messages must be exchanged and delivered in a timely fashion. Sharing the facts that the entire world already knows is a surefire way of losing employees' trust. Stale information is of no use to the stakeholders and usually results in greater mistrust and friction. However for timely delivery of information, senior management or whoever is responsible for transferring information from one end to another must avail all forms of communication including:
Face-to-face meetings, Voicemail and email messaging, Brochures, pamphlets etc. Apart from time, another thing that must be kept in view is the content of messages or information delivered to employees. Messages must be clear and consistent at all times. Brown adds, �Make sure messages are clear, consistent and credible. While this may seem obvious, too often, communications with conflicting messages come from different departments, leaving employees confused. Clarity and credibility are essential." 
Formal and informal communication thus occupies pivotal position in the success of any organization in today's highly competitive corporate world. However it is widely believed that for the success of an internal communication strategy is not determined solely by principles on which it is based, the sincerity and dedication of the staff also plays an important role in making it successful.
Apart from communication of this sort, we have also seen that many firms have intranets to keep the flow of information intact without having to resort to paper trails. Paper trails are used in some corporations to maintain record of work done on daily basis. Mounds of paper trails are generated every day which not only proves messy and expensive for the firm, it also consumes precious time and might even cause environmental problems. Most firms have to hire people to maintain record and to preserve paper trails. These paper trails can be in the form of sales and marketing brochures, attendance sheets, various kinds of forms etc. This form of communication is not feasible since it costs money- money that could have otherwise been used for more productive purposes. The costs connected with paper trail such as cost of mailing, record-keeping etc are all overhead expenses that most firms would want to avoid. Paper trails can actually slow down business and some people that intranets can successfully and efficiently replace paper trails.
There are many important communication technologies which can be used to make intranet communication effective. These technologies include emails, web publishing, workgroup software etc. These technologies can help save paper and related costs.
1) Gordon, Gloria The state of internal communication - three views. (Panel Discussion) Publication: Communication World; Date: 03/01/1998;
2) Geddie, Tom B. Internal communication: a model for the future Publication: Communication World; Date: 01/01/1995;
3) David Brown IN DEPTH: BUSINESS STRATEGIES: Internal communications should be of vital importance to any business The Business Review (Albany) - August 19, 2002
Source: ChinaStones - http://china-stones.info/free-essays/business/effective-communication.php