QUESTION
The Importance of Effective Communication
The Building Societies Association (BSA) is the trade association for all the UK's building societies. A building society is a financial institution that offers savings accounts and mortgages as its main business. About 15 million adults have building society saving accounts whilst over 2.9 million adults are currently buying homes with the help of a mortgage. The UK has 54 building societies with assets of £395 billion. All are members of the BSA.
Effective communication is vital to all businesses. The communication process involves: If the right message does not get to the right person, in the right format, then this could affect the overall efficiency of the business. Worse still, the wrong messages might be passed on to the wrong people. This could actually harm the business.
It is vital that each part of the message is correctly chosen and in place. If not, the message may not be received or understood. Sending a text to someone without a mobile phone will obviously fail. It is important for a business to choose how and when it will send messages to intended receivers. For example, a building society will only send information about a new savings product to its members by text or email, if they have specifically chosen to receive communication by that method. Sending information by this method to people who cannot receive text or email could result in losing an opportunity to sell a new product.
The BSA's member building societies mainly communicate with the following groups:
1. Members who require information about the society's aims and performance. Members are legally entitled to receive certain information from their society, such as a copy of the annual summary financial statement on the society's business and notice of the Annual General Meeting. As well as the required formal forms of communication, societies also communicate with their members on a more informal basis.
2. Societies believe it is important to engage with the local communities in which they work: The Cambridge Building Society explains its commitment to local people: 'As a local, mutual society, we are committed to supporting the local community in which we operate.'
Building societies deal with members' money and the purchase of their homes. They work within a legal framework, which requires formal communications. Formal communication uses a set format and has a record kept. Examples include annual reports, briefing notes, leaflets, factsheets, letters, seminars and training courses. These are all effective in carrying the formal messages of the building society. Other media include presentations, member groups and panels, newsletters and new technology. Informal communications, such as the office 'grapevine' can be effective channels. However, they are more appropriate for non-urgent issues or for communication on a one-to-one basis, for example, building society employees talking to each other in a branch.
The Building Societies Association represents the interests of its member building societies. In turn, these building societies serve the interests of their own members - who are also their customers. The BSA and societies need to convey clearly the benefits of mutuality to member customers, as well as to potential new customers. Mutuality brings positive impacts to both customers and communities.
a) Effective organisations should be capable to ensure an effective communication process. Explain the communication process and elaborate on the components that should be considered in an effective communication process based on the case study provided. Provide a relevant diagram to explain your answer.
(b) Explain the difference between formal and informal channels of communication and discuss their importance for an organisation such as BSA. Suggest examples of when each might be appropriate in relation to the above case study.
(c) Discuss the benefits that BSA can derive by communicating effectively.