By definition, organizations are networks of people who communicate with each other. Depending on the complexity of an organization, communication can flow internally and externally, vertically and horizontally and formally and informally. Communication is the lifeblood of all organizations: it links employees to each other, to various levels of management, and to resource holders needed for the company's operation. Through communication, organizations acquire its primary resources (such as labor, capital, and raw materials) and develop valuable secondary resources (such as image, reputation, legitimacy or brand). Not all organizational communications are necessarily work related or even aligned with organizational objectives; however all communications do influence the perception of participants and observers about organization and its activities.

Organizational Communication itself is a very challenging subject because there is always room for improvement. Each improvement can result in strategic advantages to the company practicing it by greatly affecting the company's operational effectiveness, therefore leading to higher productivity and profitability. Research conducted by Watson Wyatt Worldwide (a management consulting service and a provider of human capital in more than 30 countries), effective communication has been shown to be a leading indicator of financial performance. Study of 267 U.S. companies and found that:

• Companies that communicate effectively have a 19.4 percent higher market premium than companies that do not
• Shareholder returns for organizations with the most effective communication were over 57 percent higher over the last five years than were returns for firms with less effective communication
• Firms that communicate effectively are 4.5 times more likely to report higher levels of employee engagement versus firms that communicate less
• Companies that are highly effective communicators are 20 percent more likely to report lower turnover rates than their peers
• On average, firms within the financial and retail trade sectors rank among the most effective communicators. Health care, basic materials, telecommunications and other service companies rank among the least effective communicators

These findings validate the earlier conclusion that communication is an essential element of organizational existence. It is the lifeblood of a successful organization.

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