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Impact of Effective Business Communication on Employee Performance

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 EJBMR, European Journal of Business and Management Research
Vol. 5, No. 6, December 2020

Impact of Effective Business Communication on

Employee Performance
Stavros Kalogiannidis

organization. Communication in business entities can

Abstract — Communication is considered an essential tool therefore be interpreted as the general process of
for organizational performances and growth. Most business disseminating or transmitting business information from one
rely on effective communication with both customers and employee to another or from one business stakeholders to
employees to improve sales and enhance business growth. Poor
or ineffective communication normally leads to
another. Effective communication also helps to build
mismanagement of an organization and undesirable business teamwork in the organization and consequently enhances
results. This study sought to explore the impact of business employee performance. This also helps to reduce the rate of
communication on the performances of employees. turnover redundancy in the organization. On the contrary
Communication was conceptualized into horizontal, weak business communication affects the general
downward, and upward communication forms and their confidence of employees which has a negative impact on
influence on employee performance was determined based on
data from 110 participants who were employees of different
both the productivity of employees and performance of the
banking institutions in Greece. The study confirmed that business entity [2].
effective communication in any business entity has a great Organizations that are so deficient in their means of
influence in employee performance. Business are encouraged to communication rarely achieve greater performance as
maintain a good flow of information across the organization to compared to those that possess high level of effective
as to improve employee performances and business business communication. Business scholars such as Al-
profitability in the long run.
Tokhais [1] indicated that the rationale of business
Index Terms — Business communication, Employee communication is organizations is majorly to maintain a
performance, Horizontal communication, downward good relationship between the organization and its different
communication and upward communication. stakeholders that cut across employees, shareholders and
business partners among others. However, most of these
business searchers have confirmed that the relevance of
I. INTRODUCTION business communication on employee performance is
Communication is commonly described as a process of normally ignored which forms the basis for this current
sending messages through different platforms and it is study [2]. This study seeks to bridge the existing research
normally comprised of verbal or nonverbal sentiments [1]. gap in the business communication research by testing the
Effective business communication is considered very following hypothesis:
important in enhancing the general performance of different H1: There is a significant relationship between horizontal
business entities since it influences proper co-ordination communication and employee performance.
between the employees and the employer or between the H2: There is a significant relationship between downward
entity and its customers. Through proper business communication and employee performance.
communication, business entities are able to enhance their H3: There is a significant relationship between upward
organizational management, improve employee communication and employee performance.
commitment, enhance profitability and consequently boost
the overall performance of organizations. Speaking,
listening and having the ability to effectively or efficiently II. LITERATURE REVIEW
understand both verbal and nonverbal meanings are among This section resents the theoretical perspective of business
the most important skills that mangers must possess in order communication and the empirical review of the different
to support or maintaining effective communication in constructs of communication as well as their impact on
organizations which is a perquisite for both improved employee performance.
performance and business growth. Basic business
A. Theoretical Review
communication skills are normally learned or developed
through observing other competent people and consequently Most communication scholars gave continued to connect
modelling individual behaviors based on what is observed and consequently integrate business communication across
on other professionals. It is important note that business different levels of analysis ranging from micro to the macro
information has no relevance if it is not effectively levels of organization. Albert Bandura’s (1986) social
communicated across different stakeholders in an cognitive theory and Jams Prochaska et al. (1994)
transtheoretical model assert that the general behavior of an
individual is always formed based on the perspectives of the
Published on December 10, 2020.
Stavros Kalogiannidis, Adjunct Lecturer, Department of Regional and broader community and social environment. This therefore
Cross Border Development, University of Western Macedonia, Greece. indicates that interventions aimed at ensuring effective
(corresponding e-mail: [email protected])

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Vol. 5, No. 6, December 2020

communication in an organization must always include all performances since it acts as a source of motivation and new
efforts that influence positive changes in the larger knowledge, or skills [5].
organizational environmental. 2. Business Communication and Employee Performance
Similarly, most persuasion studies have focused on how According to Otoo [6], most effective leaders or mangers
the individual-level communication impacts the general in are those that clearly understand the different aspects of
behavior of a person. Most researchers have tried to explain communication and its general impact on the organization’s
the continued shifting nature of most organizations setting or structure. Possession of knowledge on the
especially as they are currently formed and consequently relevance of business communication enables managers to
transformed through different interactions among different improve the nature of communication in the organization
groups and systems. The most important interactions leading which in the long run yields positive results most especially
to positive organizational change are normally conducted concerning employees’ productivity performance. Odine [7]
among members of an organization. The external indicates that effective communication is a very reliable
environment or audiences and cultural meaning systems, vehicle that helps employees to fulfill their organizational
among others [3]. obligations. To enhance productivity in an organization,
Most early studies focused on behavioral change among managers must be willing to promote free-flowing
employees as a result of poor communication in communication across the different departmental units in the
organization. Most of these studies indicated that behavioral organization.
change was normally influenced by several variables Managers have an obligation of clearly communicating
including credibility of the source of data or information, the different organizational goals and objectives to the
fear, nature of arguments, and personality differences, employees and other stakeholders and this acts an
among many other variables. inspiration or motivating factor to the employees. Jiang et al.
Since the 1960’s most business related studies have [5] also indicate that effective communication helps to build
emphasized cognitive processing of data or information that trust between employees and the top leadership of the
results in persuasion. On the contrary recent studies have organization which encourages the former to perform
revealed that business and managed communication is an efficiently on the job. Maintaining a desirable level of
important and strategic tool for co-operations to achieve effective communication between managers and employees
their desired growth in terms of profitability and helps the former to successfully control and monitor
performance [3]. progress of the different activities being undertaken by
employees in the organization. Otoo [6] suggests that
B. Empirical Review
emphasizing a good flow of information across the entire
1. Employee Performance workforce in the organization helps in achieving the
Employee performance is commonly defined as the different strategic goals and objectives.
behavior exhibited by an employee while performing a Odine [7] revealed that communication is not necessarily
particular task assigned by the employer. It also relates to about talking, listening, and writing but rather involves
the outcome produced by a particular employer in an people interacting and understanding each other as well as
organization. Fuertes et al. [4] indicates that employee sharing knowledge or ideas about different issues. Various
performance is associated with the achievements of every studies have revealed that effective communication enables
employee in accordance with the different rules, regulations managers to share goals with other stakeholders of the
or expectations of the organization or employer. organization both internally and externally.
According to Jiang et al. [5], the nature of employee
performance reflects the abilities and capabilities of each C. Forms of Communication
individual employee in an organization. In this case, most 1. Horizontal Communication
competent and skirled employees tend to exhibit a high level Horizontal communication is associated with exchange of
of expertise and commitment on the job which leads to information or ideas across the same level or departmental
greater employee performance as compared to those with unit in an organization. Otoo [6] indicates that with
less expertise and skills. However, most scholars assert that horizontal business communication, the message is
there are additional factors that influence the level of effectively transmitted along a specific or defined level in an
employee performance other than skills, competence and organization hence may not move beyond that particular
expertise or professionalism, effective communication in an level. Horizontal communication helps employees to
organization is among the most essential factors that directly share essential information, actively participate in
influence employee performance and productivity levels. problem solving processes and collaborate to ensure
Fuertes et al. [4] assert that excellent employee performance successful execution of different assigned duties and
is essential in the creation of high-quality services for responsibilities. Effective horizontal communication
customers and higher profitability for the organizations. normally results in a higher quality of information exchange
These benefits of enhanced employee performance tend to in an organization. This is based on the fact that it occurs
lead to sustainable competitive advantage in the long run. directly between the different employees working in the
The zeal and commitment of employees is normally same departmental or at the same level in the organization.
boosted when the other employees or managers on the Research indicates that most organizations rely on
organization are undertaking their jobs effectively. The horizontal communication to ensure proper coordination of
nature in which the organization interacts or communicates the different activities in the various departments of the
with the employees plays a key role in improving employee organization. The other importance of horizontal

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communication is that it helps in the development stronger participants. The reason for using the different employees of
relationships among the employees. This in the long run financial institutions was based on the fact that they possess
improves the general productivity and performances of the great knowledge con darning the relationship between
entire employee group in an organization [8]. Hence, it was business communication and employee performance.
hypothesized that:
B. Sample
There is a significant relationship between horizontal
communication and employee performance. Data was collected from a sample of 110 participants who
2. Downward Communication were selected from the different banking institutions in
Downward communication is associated with messages Greece.
being transmitted right from superiors to the different C. Measurement of Variables
subordinates in the organization [9]. In this case information The influence of business communication on employee
flows from the top management to lower level employees. performance was measured based on a Likert scale of 5
The transmission of messages under downward constructs (1-5) that included; Strongly disagree (1),
communication is done from top to bottom along the disagree (2), Not sure (3), Agree (4) and Strongly agree (5).
organization’s hierarchy. Under this form of
communication, employees are able to share knowledge and D. Data Collection and Analysis
information with other different superiors at the different Data collection was conducted by availing the survey
levels of management. Osborne & Hammoud [8] indicate questionnaire through an online data collection platform
that interacting and sharing ideas with the most experienced (Survey monkey) that involved engaging with the targeted
and qualified managers or superiors motivate employees to sample size of participants. The questionnaire was
perform better in an organization. Hence it was completed by the respondents in a period of about 10
hypothesized that: minutes. Statistical Package for Social Sciences (SPSS)
There is a significant relationship between downward software was used to analyze the data obtained. Regression
communication and employee performance. analysis was also undertaken in order to determine the level
3. Upward Communication to which the different forms of communication predict the
Most business researchers have described upward level of employee performance in an organization. In this
communication as he mode of communication that involves case a multiple regression model was of great importance in
transfer of information from subordinates to their managers estimating different predictive values.
or superiors in an organization [1], [10]. Studies indicate
that under upward communication, the different essential 𝑌 = 𝛽𝑂 + 𝛽1 𝑋1 + 𝛽2 𝑋2 + 𝛽3 𝑋3 + 𝜀 (1)
messages and information are shared from the bottom to top
along the defined hierarchy of a particular organization [7], where
[9]. Upward communication is normally utilized when Y= Employee performance.
subordinates request for different opinions or information β0= constant (coefficient of intercept).
from their superiors. Research indicates that upward 𝑋1 = Horizontal communication.
communication helps to trigger different decisions from the 𝑋2 = Downward communication.
top leadership or management of an organization. The 𝑋3 = Upward communication.
different aspects of upward communication improve the 𝜀 = Represents the error term in the multiple regression
levels of cooperation between the employees and the top model.
management or superiors. Studies indicate that upward β1…β3= Represents the regression coefficient of the
communication in any business entity allows employees to different independent variables of the study which double as
freely express their opinions or feelings concerning the the different constricts or forms of communication that are
nature of the job and other pressing issues at the workplace normally used in organizations and these helped in
[11]. This has a great impact on their ability to perform determining the level of influence that the independent
efficiently on their different task or obligations. Hence it variables (Horizontal communication, Downward
was hypothesized that: communication, and Upward communication) on the
There is a significant relationship between upward dependent variable (Employee performance).
communication and employee performance.

IV. RESULTS
III. METHODS
A. Background Information
This section describes the methods and tools used in
Out of the 110 participants, 73 (66.4%) were males
conducting this study
whereas 27 (33.6%) were female. Majority of the study
A. Research Design particulates were aged between 25 to 36 years and this
The study adopted a cross-sectional survey design that represented 62% of the total number of participants.
involved using an online survey questionnaire to collect data Concerning marital status, the results showed that only 46%
from different participants selected from the different of the participants were married while the least portion of
financial institutions in Greece. The study employed participants (5%) were divorced. Concerning education
probability sampling techniques whereby simple random background, majority of the participants (98, 89.1%) were
sampling technique was used in selecting the different study bachelor’s degree holders.

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B. Descriptive Analysis (r=0.316**, n=110, p=.000). We accept H1; that there is a

1. Analysis of Employee Performance significant relationship between horizontal communication
The results in Table 1 show that 5 variables had means and employees’ performance.
above 3.5 which clearly indicated the existence of the 3. Analysis of Downward Communication and Employee
different variables about upward communication. This Performance
shows that participants agreed or strongly agreed to all these The analysis of the different opinions of participants
statements about employee performance. However, concerning downward communication is presented in Table
employees disagreed with two statements which included: I 4 below.
am always recognized for quality work done (2.54) and I am The means in Table 4 were all above 3.5 which clearly
given feedback concerning the quality of my work (3.27). indicated the existence of the different variables about
Such scenarios in organizations tend to affect the level of upward communication. This shows that participants agreed
employee performance. or strongly agreed to all the statements about downward
2. Analysis of Horizontal Communication and Employee communication. The relationship between downward
Performance communication and employee performance is presented in
The study focused on assessing horizontal communication Table 5.
based on opinions of participants as presented in Table 2 The results showed that there is a positive relationship
below. The means in Table 2 were all above 3.5 which between downward communication and employees’
clearly indicated the existence of the different variables performance (r= 0.531**, n=110, p=.000). This was an
about upward communication. This shows that participants indication that the different aspects of downward flow of
agreed or strongly agreed to all the statements about information tend to boost employees’ performance in an
horizontal communication. The relationship between organization. These results also led to the acceptance of the
horizontal communication and employee performance is null hypothesis H2; that there is a significant relationship
presented in Table 3. between downward communication and employee
The results confirmed a significant relationship between performance.
horizontal communication and employees’ performance
TABLE 1: DESCRIPTIVE STATISTICS ON EMPLOYEE PERFORMANCE
Percentage responses (%) Std.
Items Mean
1 2 3 4 5 Deviation
I am always recognized for quality work done 13% 15.7% 3.9% 39.4% 19.7% 2.54 .107
I am given feedback concerning the quality of my work 9.2% 10.5% 11.8% 43.4% 25% 3.27 .588
My manager always briefs in my contribution to the
2.1% 21% 6.5% 38% 13% 3.70 .506
organization
I always base on advice from colleagues to perform
1.5% 6.5% 7.8% 55% 28.9% 4.01 .483
better
I continuously seek more knowledge and skills to
3.9% 3.9% 7.8% 52.6% 31.5% 4.12 .464
perform better on my job
I am always eager to explore new ideas about my job so
2.6% 2.6% 6.5% 53.9% 34.2% 4.14 .433
as to perform better
Easy access to information has improved my desire and
0% 5.2% 16.6% 44% 33.1% 3.62 .476
zeal to perform better
Source: Primary data (2020).

TABLE 2: DESCRIPTIVE STATISTICS ON HORIZONTAL COMMUNICATION

Percentage responses (%) Std.
Items Mean
1 2 3 4 5 Deviation
I maintain good language when interacting with fellow
2.3% 1.3% 3.9% 61.8% 31.5% 4.03 1.604
employees
I normally share knowledge with my colleagues on
0% 3.9% 9.2% 61.8% 25% 4.09 1.282
essential issues
I perform better by discussing with my colleagues on the
3.9% 2.6% 6.5% 53.9% 34.2% 4.11 1.195
job requirements
I always listen to the advice from my fellow employees 2.0% 5.5% 25.0% 36.5% 30% 4.01 2.316
I always seek essential information from my colleagues
5.2% 5.2% 11.8% 42% 35.5% 4.18 1.506
in my department
Sharing information keeps employees motivated to
2.6% 3.9% 7.8% 59% 26.3% 4.21 1.926
perform better
Source: Primary data (2020).

TABLE 3: CORRELATION BETWEEN HORIZONTAL COMMUNICATION AND EMPLOYEE PERFORMANCE

Horizontal Employee
communication performance
Pearson 1 .316**
Horizontal Correlation .000
communication Sig. (2-tailed)
N 110 110
Pearson .316** 1
Employee Correlation .000
performance Sig. (2-tailed)
N 110 110
**. Correlation is significant at the 0.01 level (2-tailed).

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TABLE 4: DESCRIPTIVE STATISTICS ON DOWNWARD COMMUNICATION

Percentage responses (%) Std.
Mean
1 2 3 4 5 Deviation
Easy flow of information from my superior improves
5.2% 11.8% 5.2% 42% 35.5% 3.73 .610
my job performance
My views and ideas are given attention by my manager 1.3% 1.3% 3.9% 71.8% 21.5% 4.17 .597
I derive motivation from communicating with the top
0% 0% 7.8% 50% 42.2% 4.51 .640
management team
I have knowledge on the nature of my tasks as provide
0% 0% 2.6% 50% 47.3% 4.37 .639
by my manager
My manager ensures that I have a continued access to
14.4% 9.2% 36.8% 28.9% 7.8% 4.44 .467
essential information
I access essential information from my manager 5.2% 11.8% 5.2% 42% 35.5% 3.83 .131
Source: Primary data (2020).

TABLE 5: CORRELATION BETWEEN DEMOCRATIC MANAGEMENT STYLE communication and employee performance (r= 0.612 **,
AND EMPLOYEES PERFORMANCE
Downward Employee
n=110, p=.000). These led to the acceptance of the null
communication performance hypothesis H3; that there is a significant relationship
Pearson 1 .531** between upward communication and employee
Downward Correlation .00 performance.
communication Sig. (2-tailed)
110 110 5. Regression Analysis
N
Pearson .531** 1 Regression analysis was also conducted to further
Employee Correlation .000 establish the level to which the different independent
performance Sig. (2-tailed)
N
110 110 variables (different forms of communication) predict
**. Correlation is significant at the 0.01 level (2-tailed). employee performance in an organization.
Source: Primary Data (2020). The results presented in Table 8 clearly show that the
different study variables can predict a 42.1% change in
4. Analysis of Upward Communication employee performance (Adjusted R Square = .421). The
The analysis of the different opinions of participants results indicated that among the different predictors of
concerning upward communication is presented below. employee performance, downward communication (Beta =
The means in Table 6 were all above 3.5 which clearly .451, p < .01) is a better predictor as compared to horizontal
indicated the existence of the different variables about communication (Beta = .354, p < .01) and upward
upward communication. This shows that participants agreed communication (Beta = .158, p < .01). The results clearly
or strongly agreed to all the statements about upward show that whereas business communication being a
communication. The relationship between upward determinant of employee performance, there are other
communication and employee performance is presented in factors that may impact employee performance other than
Table 7. the different components or forms of communication.
The results obtained after cross tabulation indicate that
there is a positive correlation between upward
TABLE 6: DESCRIPTIVE STATISTICS ON UPWARD COMMUNICATION
Percentage responses (%) Std.
Items Mean
1 2 3 4 5 Deviation
I provide quick feedback to my superior
10.5% 14.4% 30.2% 26.3% 18.4% 3.68 1.331
concerning any request fir particular explanations
I request information from my manager about
7.8% 17.1% 28.9% 27.6% 18.4% 3.33 1.141
different work issues
Top management makes decisions based our
10.5% 13% 31.5% 22.3% 22.3% 3.52 1.133
request fir particular information
Attending to my needs on time improves my
13% 15.7% 3.9% 39.4% 19.7% 2.54 1.107
performance
I am always appreciated for offering certain
9.2% 10.5% 11.8% 43.4% 25% 3.27 .588
information
I raise any queries about the nature if the job 21% 21% 6.5% 38% 13% 3.70 .506
I discuss with my superiors on what to change in
6.5% 6.5% 7.8% 50% 28.9% 4.01 .483
the organization
Superiors encourage us to work better through
3.9% 3.9% 7.8% 52.6% 31.5% 4.12 .464
upward communication
Source: Primary data (2020).

TABLE 7: CORRELATION BETWEEN AUTOCRATIC UPWARD COMMUNICATION AND EMPLOYEES’ PERFORMANCE

Upward Employee
communication performance
Pearson 1 .612**
Upward Correlation .000
communication Sig. (2-tailed)
110 110
N
Pearson .612** 1
Employee Correlation .000
performance Sig. (2-tailed)
110 110
N
**. Correlation is significant at the 0.01 level (2-tailed). Source: Primary Data (2020).

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TABLE 8: REGRESSION ANALYSIS

Unstandardized Standardized
Coefficients Coefficients
Model t Sig.
Std.
B Beta
Error
(Constant) 2.441 .354 5.186 .000
Horizontal communication 0.263 .041 .354 4.431 .000
Downward communication 0.092 .036 .451 2.596 .000
Upward communication 0.073 .083 .158 1.1284 .317
Dependent variable: Employee performance
R .501
R Square .154
Adjusted R Square .421
Std. Error of the Estimate .713
Change Statistics
F Statistic 16.301
Sig. .000
Source: Primary Data (2020).

consequently maintaining desirable working relationships in

V. DISCUSSION an organization. The general trust among employees can
The results clearly indicate that business communication build up in an organization if every person is committed to
has a significant impact on the level of employee engage in effective communication. It is important to note
performance in an organization. The findings confirm that that clear or effective business communication helps to
emphasizing effective communication in an organization enhance the productivity and cooperation between
helps employees to share information, ideas or knowledge employees thereby encouraging teamwork on which
and skills which enable them to effectively perform to the employees base to improve their performance. Business are
expectations of the employer. A positive and significant encouraged to maintain a good flow of information across
relationship between downward communication and the organization to as to improve employee performances
employee performance was confirmed. The literature also and business profitability in the long run.
revealed that effective downward communication enhances
the level of leadership based communication majorly
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