Demonstrating a listening climate

In addition to actually listening carefully, managers must also seem to be listening and,

establish a climate that demonstrates receptivity. Without this climate, the

communication environment in an office can become like that in many homes:

Parent: Why don’t you ever tell us what you are doing?

.child: I do, but you don’t listen. You’re always so

busy.

Parent: We’re never too busy to listen to you, but just

don’t seem to want to tell us anything.

Are the parents too busy to listen, or do they just act too busy? The same is true with

many managers. Is it possible that they act too busy to listen? A manager may

unintentionally establish a non-listening climate by subtle behaviour that says to the

subordinate, “Why talk if nobody is listening?”

While a manager is responsible for a tremendous amount of infonnation and spends as

much as 50 per cent of her working day listening, she cannot listen if nobody is talking.

Managers need to demonstrate a listening climate to motivate people to “open up.”

Consequently, man(igers should strive to eliminate listening habits that discoUrage

communication. A listener demonstrating these behaviours is not exhibiting a positive

communication climate; consequently, the speaker may not feel he is being listened to.

This list can serve as a personal checklist for managers to see if they demonstrate any

of the irritating behaviours.

The level of intensity at the side reflects the relevance, the importance, or the

The level of intensity at the side reflects the relevance, the importance, or the

significance of the information involved. Listening has basically three levels of intensity.

Casual or marginal listening is used when the specific or technical information being

discussed is not critical. Because no goal for specific information is establised, a

manager need not be as alert as in other situations. Casual listening occurs in social

conversations or when listening to the radio.

The next level of intensity, factual listening, is necessary when specific information needs

to be obtained. Probably the most common type of listening in business meetings and

conferences, factual listening is the level that most people probably thinks of when they

consider the topic of listening. At this level, the listener should ask questions and receive

feedback to ensure effective communication.

A manager uses. the empathetic level of listening when he wants to understand another

person from that person’s Qwn internal frame of reference rather than from

Paralanguage can add richness, but also confusion when one listens to a message. A

short sentence such as “I’ll do it” may mean any on the following:

I’ 11 be really happy to do it.

I’ll do it, but it’s the last time.

You always make me do what you want.

All right you win.

Don’t worry, I’ll take care of it.

You’re so dumb I’d better take care of it myself.

Which “meaning” is implied can usually be determined by the tone or inflection of the

voice or by the stress placed on each separate word.

Robert J. McCloskey provided an interesting example of the relationship of

paralanguage and listening. A fonner member of the State Department, he was known to

have three distinct ways of saying, “I would not speculate. “Newsweek reported that

“spoken without accent, it means the Department doesn’t know for sure; emphasis on

the ‘I’ means I wouldn’t, but you may - and with some assurance, accent on ‘speculate’

indicates that the questioner’s premise is probably wrong.”

Why would a manager lack the willingness to listen? Several reasons explain this

unfortunate condition. First, most people would rather talk than listen, and even when

they ask.a question, they often break into the first sentence of the response with another

question or an argument. Second, the listener may quickly stereotype the speaker as

one who talks a lot but has little to say; consequently, the listener believes that the person

has little

. of value to say. Third, a listener may lack willingness because he may not want to

receive negative information. For the speaker who bears “bad tidings,”what incentive is

there to listen? Defensive behaviour relates closely to this. Some managers consider

the slightest attack on one of their opinions as an attack on them personally;

consequently, they will rise, sometimes almost obsessively, to the defense. This defense

often involves verbal attacks that preclude the possibility for listening.

This is only a summary of the many barriers to listening. Nevertheless, research

indicates that we can improve listening skills. When managers strategically analyze the

critical components of communication and apply the techniques suggested in the

following section, their listening skills and effectiveness as managers will improve.

General techniques for improved listening skills

Let us first look at the different types of listening to be

able to adapt techniques to the appropriate situation and three levels of listening

intensity for both types.

For the purposes of this discussion, active listening occurs in situations in which a

manager has little or no opportunity to interact verbally with the speaker. People in a

large audience use active listening as do those listening to a recorded message or

reviewing an audio-visual replay. People use interactive listening when they have the

opportunity to interact verbally with the speaker by asking questions or summarizing.

Interactive listening occurs with a manager involved in a conversation with one other

individual or in a meeting with many people. .

The “debate” represents a third type of barrier.

listener may suddenly find herself disagreeing with the speaker and begin to plan her

rebuttal. As she plans the rebuttal, she blocks out the listener and misses his message.

For instance, a manager listening to complaints from another department might prepare

a rebuttal as the other. person explains the incident. As a result, the manager creates a

defensive climate and misses the most important information.

Time, an important factor in every manager’s day, can also be a barrier to listening for

busy managers. “I just don’t have time to listen to this” is a common reaction for

managers at one time or another. The saying, “time passes quickly when you’re having

fun,” is really true; being involved in an interesting conversation can use more time than a

person realizes. However, time is relative and seems to drag on and on when people

have to listen to something in which they have no interest. When listening appears to

take too much time, managers tend to stop listening.

Hasty conclusion is one way some terminate listening. This time pressure may lead to

the tendency to judge, evaluate, approve, or disapproye a person’s statement too hastily.

To achieve real communication, resist me temptation to fOlm hasty cGmclusions.

Perhaps the greatest psychological barrier is lack. of willingness. A manager may not

want to listen. Before listening is even required, he may have lost any desire to listen. A

lack of willingness to listen is an attitude that

supersedes all other barriers-both physical and psychological.

Since we have already discussed motivation as a barrier to listening, we must

differentiate willingness from

motivation. These concepts are closely related, but for the purposes of this discussion,

assume that a lack of willingness develops before listening even begins. This is why it

supersedes all other barriers’. If a person consciously or unconsciously decides not to

listen, listening skills are obviousiy of no advantage.

By contrast, listening results from a concentrated effort; it requires both physical and

By contrast, listening results from a concentrated effort; it requires both physical and

mental effort. .

Listening requires a special effort because physical and psychological factors work

against the process. In this chapter .we review those physical and psychological barriers

to listening and then analyze techniques to reduce these barriers.

Psychological barriers to listening .

A major psychological barrier to listening is lack of motivation. Many find. maintaining

the continuous motivation required for listening a challenge. The need for motivation

stands out when one recalls the speed of the thought process compared with that of

speech. During the 75 per cent of time when the mind is not being stimulated with words,

motivation for listening is a challenge. Managers who should be listening may be

day-dreaming, making private plans, or even focusing on an emotional problem. During

that 75 per cent void many things can take place that overpower the 25 per cent

listening.

Researchers have long known that motivation or incentive is a prevalent problem in the

listening process. Research c.ompleted almost 30 years ago demonstrated that people

score better on listening achievement tests when they know in advance that they are

going to be tested than when they think they are just supposed to listen. More recent

research has also indicated that scores on listening tests rise as the incentive to listen

increases. Since listening is hard work, we can expect greater effort when the goal is

known, and listeners can observe a positive outcome of the effort. This is why the

listening goal discussed later is so important.

miss important information. Second, listening makes a person more dependable:

people who listen well follow directions better, make fewer errors, say foolish things less

often, and generally become the kind of person others will ask for advice or direction.

Third, good listeners are more respected and liked by those they work with. Managers

who listen compliment those they listen to, in effect telling them they are worthy people.

This trait can lead to hmmonious labour relations since employees generally trust and

suppOrt managers who “listen them out.”

Fourth, better listening enables a manager to be better informed overall and more

sophisticated. Sophistication comes not from talking but, rather, by learning about the

world around one. Fifth, good listening spares a person many embarrassments. In many

situations, people may miss a name because of poor listening, or they may need to have

critical information repeated because of “daydreaming”. Worse yet, a direct question

may be unanswered because of inapt listening. Such embarrassing situations can

quickly label a manager as unconcerned or even apathetic.

Ultimately, the major reason for developing effective listening is to promote

understanding between people. People who need to be heard not only for their own

emotional well-being but to be understood create gaps by not listening. Mutual

understanding is required in any work group.

Listening -is not just hearing, and the effective manager differentiates between” the

two. Hearing is mechanical, an automatic sort of thing often difficult to

avoid. A horn blaring, heavy construction equipment”

groaning. children shouting in a playground-all these sounds, plus others, may be heard

even though they are not listened to actively. Hearing usually requires little special

physical or mental effort.

Identifying the communicator

Finally, it is worth re-emphasizing that the communication act is a two-way process. Not

only does a speaker attempt to identify his audience, but the audience tries to identify

the speaker through his communication. As the Elizabethan poet and dramatist Ben

Jonson wrote;

‘language must shews a man; Speak that I may see thee.’ Little reseaI’ch has been

unde11aken in industry into this factor although considerable ‘mchair psychology’ may

b.e called into play, when a lunch-time chat is commenced

with ‘I wonder what the boss really meant when he

said :’

After taking a short look in the next two chapters at the method used to measure the

factors affecting managerial communication and the backgrounds of managers involved

in the study, we can take the basic ideas of this chapter into the every-day life of the

manager. The findings of a study can only be as good as the methods used and might.

only succeed with management team of similar background.

Since managers spend as much as 50 per cent of their working day listening, they

should be accomplished in this skill. Yet, too often we hear such comments as “Bob just

doesn’t” or “Barbara is hard to work with because she never takes the time to listen” or

somebody wasn’t listening.” In fact, of the four primary communication skills needed for

effective management-reading, writing, speaking, and listening-listening is used the

most frequently and yet receives the least attention from educators.

A number of essential managerial skills involve listening. First, much of the data

necessary for decision making comes through listening to employees, yet poor listeners

From the foregoing it will be apparent that the communicating manager cannot rely

From the foregoing it will be apparent that the communicating manager cannot rely upop

the simple belief that factual communication will be instantly accepted by the receiver.

The concept of matching the communication with the intended audience has had

considerable ‘lip service’ paid to it in industry, but many company magazine failures

have been credited to such mismatches. Colby and Tiffin describe one in which they

measured the reading ability of iridustrial supervisors and related this to their age and

educational level, while others have

delineated the interests of vaIious target audiences. This type of research is providing a

base from which communicators, obtaining average details on age, education, interests,

etc., from personnel records, can make more scientific attempts to structure their

communication acts especially when communicating to large groups of employees. In

general, however, company magazines and bulletins leave much to be desired. In an

analysis of 69 articles selected at random from 13 representative employee papers,

over half (37) were on a readability level of difficult to ‘very difficult’-levels which are

above the capacity of 67-95 per cent of the adult population. In a similar study a survey

of 25 management and 25 union publications for employees showed that, on average,

they were pitched at a level of understanding for employees with high school or college

education. In terms of human interest, the majority of both company magazines and

union newspapers were only ‘mildly interesting’ or even ‘dull’. The authors conclude that

both management and union editors alike need to work strenuously towards language

simplification. Recent studies indicate that this advice has yet to be taken in Britain.

Pitch of communication

Once an audience has been identified, a further factor in successful communication is to

pitch the communication in order to maximize its acceptability to the receiver. The

credibility of the source of information has been shown to be important. Hovland and

Weiss demonstrated early in the fifties how a one-sided presentation, supposedly from

a communist source, was rejected by more of a sample audience than the same

one-sided presentation supposedly from a non-communist source. An over-emphasis of

fear¬raising actors in propaganda likewise increases chances of the message being

rejected, e.g. an excessive emphasis on the effects of lung cancer can cause heavy

smokers to disbelieve that smoking and lung cancer are related.

Considerable work has been done in establishing means of measuring the levels of

difficulty in understanding communication. From the early work of Carrol in 1938, who

demonstrated that intelligence, age, and education were the principal factors involved in

assessing vocabulary range, practical ways of gauging the ease of understanding of

individual communications have been suggested, e.g. readability scales. If a person

attempting to communicate has not determined what he wants to say, there is little

possibility that anyone else will

be able to understand his message without some difficulty.

The clearest communicators are those who develop a sensitivity to both the viewpoint

and the level of comprehension of their audience. Words must be pitched at the correct

level and with the right amount of detail to avoid misunderstandings.

There is evidence that little use is made of the readability scales mentioned above.

British Government booklets on prices and income policies, using these scales, were

‘very difficult’ and ‘dull’. This may be a cause of the comparatively low levels of

understanding Hilde Behrend and her colleagues at the Edinburgh Business School

found with such terms as ‘productivity bargain’.

For the much-pressed manager with little time to spare, a simple test of his ‘readability’

is the degree to which bis communication is listened to or read. Many a company

bulletin goes quickly to the waste-paper bin-the occasional retrieval may show why it

was not read and what the manager should avoid in his communication unless. he wants

his memos to fmish in a bin instead of a file. The manager should assess the degree of

interest he can arouse in his audience and the extent to which he gets his message

across.

Audience identification

Perhaps the first step in organizing one’s communication is to ‘identify one’s

audience-the receivers. To take an extreme example there would seem little point in

attempting to entertain a 5-year-old child by discussing quantum mechanics. Research

by the BBC has confIrmed

that an intelligent, interested audience will grasp more of.

the topic being communicated than a less intelligent, bored one. Many industrial writers

also realize the importance of knowing the intelligence, interests, attitudes, and technical

jargon of an intended audience. Few, however, have gone as far as suggesting sample

interviewing’ as a means of gaining this knowledge. Neverthe]es, it seems self¬

evident that the amount of effort applied in ‘type-casting’ an audience should depend, to

some degree, on the importance of the intended message. Even with the least important

message, however, it would seem rewarding to consider the target audience. Even the

least important communication has to be received to avoid a complete waste of eff0l1.

Complicating this picture even more are the results of a study by occupational

Complicating this picture even more are the results of a study by occupational

psychologist Gregson in which he found that departmental loyalties affected the use of

communication media. A large transport office contained both a service and a technical

section, and had a comprehensive information board devised, installed, and

maintained by the service section. Its use by the employees was not related to its

visibility alone but also to the degree to which staff felt allegiance to the board, and this

in turn vaded according to the section for which they worked. A man in the service

section working far away from the information board would use it more than a technical

section man working close to it. The former. seeing the board as a useful tool devised by

his section-the other seeing the board as another example of the service section trying

to ‘muscle into’ their work.

Having examined some of the basic benefits and drawbacks of the main communication

methods and the extent of the problem, we can proceed to look at ways of ‘getting

message across ‘-improving the transmission and reception of communication. Although

the pages which follow are generally thought to concern one person trying to improve his

communication with a group of people, e.g. in a public speech, the comments are

equally applicable when communicating to one person only.

Policies are often secret and may fall into the wrong

(1) Policies are often secret and may fall into the wrong

hands.

(2) They cannot be all-embracing, and, as times change, .

the policies can become outdated and even counter¬

productive.

(3) Over a period of time a mass of ‘red tape’ may

emerge.

(4) One circulated instruction does not. take into account

the reading ability of the individual readers.

(5) Feedback is more difficult and delayed.

By contrast the major benefits of written communication are:

(1) Authoritativeness.

(2) Accuracy-through being checkable. (3) Pennanence.

(4)

Coverage-communications can be reproduced exactly and quickly.

(5) Retention rate is high.

Before decisions are made as to which method of communication should be used in

certain circumstances, the comprehensibility of the telminology to be used should be

gauged. One such study involved 478 managers from various levels and departments of

Scottish industry. Among these executives only 9.6 per cent of the specialist words and

phrases commo:1ly used in industry were satisfactorily understood. A further 14.4 per

cent were partly understood, 34.9 per cent were wrongly understood, and 41.1 per cent

were not known. In terms of levels, senior management knew more financial and quality

control terms than other levels; middle management were marginally more

knowledgeable in the field of work measurement. Supervisory management showed the

worst all-round knowledge, being inferior to that of non-managerial specialists in various

fields.

Many managers recognize these factors although it may be argued that few apply them

.

In one survey of 100 company presidents, 98 thought the spoken word at least as

important as the written word and 40 felt that it was more important. On the other hand,

Higgin and Jessop, in a study of the British building industry, pointed out some of the

difficulties which resulted from the use of informal spoken communication. They found

that many vital pieces of information were committed to memory or the backs of

cigarette packets, and that sometimes detail became blurred. These snippets of

research, taken in isolation, may seem to contradict each other. Company presidents

favour

speech as opposed to writing, while the building industry apparently suffers from the use

of the same media. Common sense indicates that there is, in fact, no conflict It is quite

obvious that top-grade executives ensure that important information is committed to

paper but still use speech more often than memos, etc.

Apparently conflicting research results are not always so easy to reconcile, and a

general criticism which can be levelled at earlier work of research is that the approach to

communication problems has been too narrow.

Often studies have involved only two or three factors in assumed isolation, and the

conclusions reached have been used to provide ‘simple’ solutions with ‘universal’

applications. These ‘formulae’ for effective communication

have stimulated the current interest in lucid writing’ techniques, courses in public

speaking, visual aids, etc., each advertised as the answer to communication

breakdowns.

With this in mind, some of the major drawbacks to written instructions can be given:

The problems outlined

This growth of interest in communication has not been due solely to man’s inherent

curiosity, but also because ineffective communication has been seen as major industrial

problem.

One poll of 650 British works managers put the

following problems in their ‘top five’. .

(a) insufficient cost information to indicate the best areas

for improvement in productivity;

(b) frustration at all managerial levels due to lack of

clearly defined spheres of delegated responsibilities;

© poor communication-upwards and downwards.

Many industrialists define the manager as a person who gets his work done through

others, a job which requires cle.ar instructions passed down, and the ability to obtain the

details of the results created. These same men

The following. quote from a manager demonstrates this: Well, the director told me that

my project was at the

top of his list of priorities. After another few weeks of frustration and no action I went

back to remind him. “Yes,” he’said, “your project is still at the top Qf my list¬but the list

isn’t necessarily in order.”

Organizational research into the media of

communication has tended to concentrate on the merits and drawbacks of written and

spoken messages Baker and his colleagues of.Princeton University found low reader

interest’ in the employee’s handbook of the company they studied, and Professor Maier,

in the study mentioned earlier, found that written job descriptions did not affect the

degree of agreement over job details between superior-subordinate managers, and that

firms without this system were rated as highly as finns with it. In general, interest in

company magazines increases as the style becomes more informal. Where the

company literature is stiff, precise, and full of company jargon, employees prefer to

obtain their infonnation from personal contacts.

Growth or public interest

Historically, the need for effective communication in management has been noted since

the turn of the century, but few specific works on industrial communica!ion occurred

before the forties. One of the first comprehensive books on the subject, published in

1949, had a

bibliography of 103 titles with only two references dated . before 1940.

The subsequent growth of interest in organization communication can be attributed to:

(1) the marked increase in the size of companies and their

international growth since W orId War I;

(2) the continued specialization of occupations and the

resultant demands for co-ordination; .

(3) the growth of trade union power and its requirements for information about all matters

affecting its member’s work or terms of employment with the result that explanations are

being seen as a right and authoritarian instructions are being rejected;

(4) the growth of national communication networks,

forcing co-ordination in and between firms;

(5) the pressures for increasing occupational mobility which cause the recruit to be

heavily dependent on the organization’s communi-cation system if he is to ‘learn the

ropes’ as soon as possible;

(6) the ‘information revolution’ -through the discoveries and use of automatic information

storage and retrieval, the automation of information search and analysis, instant physical

transmission of information, semi-automatic planning, and decision-making etc.;

(7) the belief that all of these trends seem likely to

continue.

In this brief introduction to the concept of ‘noise’ in the communication process

In this brief introduction to the concept of ‘noise’ in the communication process it may be

dangerous to draw the conclusion from the examples above that gestures are more

capable of being misunderstood than words. The nineteenth- century politician Disraeli

said: “Words are just vessels for me to pour meaning into.’ Similarly, the expression ‘I

think they got the message’ often implies that the speaker has not been direct in

expressing his feelings but instead has purposely pursued a roundabout method to put

over his point.

Practising industrialists have no doubt of the importance of communication in

organizations. Fayol placed ‘unity of direction’ in his seven management principles while

Barnard, in his popular book The Functions of the Executive, saw ‘maintenance of

organization communication’ top of his list of three basic executive functions. Perhaps

Bavelas and Barrett expressed this most eloquently when they wrote: ‘It is not a

secondary or derived aspect of organization-rather it is the essence of organizational’

activity and is the basic process out of which all other functions derive’.

Perhaps the commonest of the media used is language. In itself language brings

Perhaps the commonest of the media used is language. In itself language brings

benefits in that it can help clarify thought. A young child replied to her father who had

scolded her for ‘speaking out of turn’-‘But Daddy, how can I watch what I’m saying until

I’ve seen what I’ve said?

This difficulty in visualizing words, objects, phrases, etc., diminishes as an individual’s

vocabulary increases. Miller describes experiments which demonstrate that colours

become more distinguishable as they are given

names. Similarly, Arabs have only one .word, tilage, for the English equivalents of snow,

ice, and frost, while Eskimoes have five words for snow alone, each one desbing a

slightly different kind of snow, recognizable to Eskimoes but not to English-speakers.

The transmission of concepts is also more difficult to explain when a language has a

limited vocabulary. While in New Guinea one was amused to read the pidgin English

translation beneath the message ‘high voltage,. It read roughly as follows: ‘sipos man e

holdim disfela, disfela bagarap man, em e dai fmis’.

Gestures also can create communication problems. To primitive people a handshake

may mean ‘I carry no weapons, my hand is open, and not clenched to strike you’.

Between friends or politicians, however, the handshake can mean vastly different things.

The meaning attached to this gesture will depend on the frame of reference of the

person concerned. Not only can the¬significance of gestures .vary with the degree of

civilization but also with the type of culture-Arabs speak in a loud voice when sincere; to

them a soft voice indicates weakness and deviousness.

Some general concepts

Perhaps the commonest of the media used is language. In itself language brings

benefits in that it can help clarify thought. A young child replied to her father who had

scolded her for ‘speaking out of tum’-‘But Daddy, how can I watch what I’m saying until

I’ve seen what I’ve said?

This difficulty in visualizing words, objects, phrases, etc., diminishes as an individual’s

vocabulary increases. Miller describes experiments which demonstrate that colours

become more distinguishable as they are given

The total field of communication research and opinion embraces work in electronic,

psychology, languages, and in a dozen other subjects. This chapter is concerned with

one aspect from the field of communication systems—the transmission of ideas and

information from one person to another.

Human communication is used to exchan& information and opinion, demonstrate and

improve status, and to express emotions. In industrial settings three

important communication functions occur, gathering

I

information for decision-making, passing decisions on, and

attempting to change attitudes.

general semantics concerns the study of reality,

In a simplified

sense, general semantics concerns the study of reality, of our perception of reality, and

of how we relate to our perceptions in words, thoughts, and actions. Its

emphasis is one recognizing the true nature of reality. Much of the source material for

this review is highly sophisticated, but every effort has been made to simplify it. Perhaps

some people will look upon it as being oversimplified.

After establishing a foundation of understanding, our study shifts to applications of this

theoretical material to the real-life activities of an organization. For reasons of course

design, much of the material concerns written

communication. Specifically, we shall emphasize the areas of cOlTespondence and

report writing, for these are vital areas in today’s business organization. Here our

emphasis will be on communication with words and concepts that match reality, which is

a plimary message from the theory chapters. We shall give some emphasis to other

areas, especially oral communication. It should be apparent, however, that this coverage

is far from complete. The almost infinite nature of the subject makes it so; Even so, the

applications presented should show you the ways to handle the theoretical matelial in

your day-to-day work in business.The total field of communication research and opinion

embraces work in electronic, psychology, languages, and in a dozen other subjects. This

chapter is concerned with one aspect from the field of communication systems—the

transmission of ideas and information from one person to another.

Human communication is used to exchan&f information and opinion, demonstrate and

improve status, and to express emotions. In industrial settings three

important communication functions occur, gathering, information for decision-making,

passing decisions on, and attempting to change attitudes.

There is no evidence which even remotely suggests that the needs for

. There is no evidence which even remotely suggests that the needs for

the messages communicated in letters, reports, and memoranda will decrease. And of

even greater importance, there is absolutely no evidence to suggest that these

messages can be handled in a way which does not require the basic writing skills.

Clearly, business writing is here to stay. In fact, the increasing complexity of the

technological world of the future is likely to require more-not less-of it.

A preview to the presentation

The foregoing review merely skims the surface; yet,

hopefully, it has given you an appreciation of the importance of communication to

yourself and to organizations. It has shown you how extensive communication is, how it

permeates every segment of the organization in a most intricate and complex way. And

it has shown you that good communication is vital to the successful operation of an

organization. These conclusions, combined with the convincing evidence that most

organizational communication is not well done, should lead you to yet another

conclusion: that communication is an area deserving increased study by those

concerned with improving the operations of an organization.

. In the following pages such a study is unde11aken. Its approach is first to gain an

understanding of what communication is-how it works and how it does not work. The

material covered here borrows from many disciplines-from psychology, sociology, and

linguistics. But primarily it borrows from the relatively new discipline of general

semantics. Perhaps the term general semantics requires definition, for the generally

used meanings of the two words in the term do not apply in this case.

Effects of changing technology

From the preceding review it appears that much of the communication that goes on in

organizations is written communication-letters, memoranda, reports, and such. Thus, it is

vital that we address a question that sometimes is heard. It is the question of the role of

written communication in the years ahead. The evidence suggests that we are moving

rapidly into the age of automated

communication-the age of the paperless office. This will be a time when there will be no

letters, no reports, ncr

files. Instead, each work station in an organization will be equipped with a computer

terminal, or perhaps a microcomputer. As a result, internal-operational communications

will be done primarily through computers. In the short run, a company’s written

external-operation communications will be done through the word-processing

capabilities of the computer; and they will be in paper form: But in time,

company-to-company computer link-ups will develop; and in more time there will be

consumer-to¬company link-ups. The result will be that computer-to¬computer

communication will replace conventional letters.

Although it is impossible to say with certainty what the future holds, it appears

reasonable to say. that computer technology will bring about revolutionary changes in

communication. In fact, revolutionary changes are occurring now; and probably they will

continue to

occur at an accelerating rate. But we must keep in mind.

forms which supply working information to the various parts of the organizatio

Included here are the reports, records, and

other. forms which supply working information to the various parts of the organization;

the orders, instructions and messages which flow up and down the organization’s

authority structure; and the letters, sales presentations, advertising, and publicity which

go to an organization’s publics. These main channels do not just happen; they are

carefully thought out, or at least they should be. In the modern office, these channels are

fonned by cOI?puter information

systems. Information from work stations is put into the

I

company’s data base. And from the data base

the information can be assembled at the work station

needing it. .

Our overview also shows us a secondary network of information flow cOITesponding to

the veins of the body. This is the network made up of the thousands upon thousands of

personal communications which take place in any organization. Such communications

follow no set pattern but rather form an intricate and infinitely complex web of infonnation

flow linking all of the members of the organization in one way or another.

The complexity of the network cannot be overemphasized, especially in the larger

organizations. Typically it is not a single network at all. Rather, it is a complex relation of

smaller networks made up of groups of people. The relationships are made even more

complex by the fact that the people in the organization may belong to more than one of

these groups, and group memberships and the linking between groups are continually

changing. Truly, the network structure in a large organization is so complex as to defy

description.

The picture of this network of information flow’ is

Absolute denial of the

communication privilege could lead to some degree of emotional upsets, for people

hold dear their right to communicate. On the other hand, excessive personal

communication could interfere directly with their work effort. Probably somewhere in the

middle-ground area lies the optimum policy toward personal communication.

Personal communication also can help to form attitudes and beliefs, which are stronger

and have more lasting effects on the mind than opinions. As was illustrated in the

preceding account of Ram’s workday at Typical, Ram and his chartered bus friends

spent some of their conversation time discussing a proposed new policy for Typical.

And in talking, each helped to crystallize the opinions of the others. It is in this way that all

members of an organization determine much of what they think about their organization,

their co-workers, and their work situation in general. What they think can affect their

relationships with organization. And what they think can have a direct influence on

productivity.

or even thousands of individual members engaging in untold numbers of communication

events throughout each working day. The picture of this network of information flow’ is

infinitely complex.

In simplified fonn, this infinitely complex infOlmation flow in a modern-day organization

may be likened to the network of arteries and veins in the body. Just as the body has

artelies, the organization has well-established channels of information flow. These are

the formal and established channels of communication-the main line of the

organization’s operational communication.

Such personal communication also takes place in the work

Such personal communication also takes place in the work

situation, and it is a part of the communication activity of any business organization.

Although not a part of an organization’s plan of operation, personal communication can

have a significant effect on the success of this plan. This effect is a result of the influence

personal communication can have on the attitudes, opinions, and beliefs of the

members of the organization.

Attitudes of the organization members toward the organization, their fellow employees,

and their assignment directly affect the members’ willingness to do their assigned tasks.

And the nature of conversation in a work situation affects attitudes. In a work situation

where heated words and flaming tempers often are present, the

participants are not likely to make their usual productive effort. Likewise, a rollicking,

jovial work situation is likely to have an equally adverse effect on productivity. No doubt

somewhere between these extremes the ideal productive attitudes lie.

Also affecting the organization members’ work attitudes is the extent of personal

communication permitted the members.

The extreme importance of an organization’s external communications hardly requires

The extreme importance of an organization’s external communications hardly requires

supporting comment. Certainly, it is obvious that any business organization is dependent

on people and groups outside itself for its success. It is an elementary principle of

business that, because a business organization’s success is dependent on its ability to

satisfy the needs of customers, it must communicate effectively with these c,ustomers. It

is equally elementary that in today’ s complex business society, organizations are

dependent on each other in the manufacturing and distribution of goods as ell as the

sale of services. And this interdependence nec.essarily brings about needs for

communication. Just as with international

communication, these outside communications are vital to an organization’s operation

Not all the communication that goes on in an organizatio is operational, however. In fact,

much of th, communication in an organization is without purpose a: far as the

organization is concerned. Such communication may be classified as” personal..

Personal communication is all that incidental exchange of information and feeling which

human beings engage in whenever they come together. Human beings are social

animals. They have a need to communicate, and they will communicate even when they

have little or nothing to express.

Much of the time people spend with each other is spent in communication, for it is simply

the thing to do when people get together. Even total strangers are likely to communicate

who they are placed in a position together, as for instance on a plane trip, in a waiting

room, or at a ball game.

External-operational communication

External-operational communication is that part of an organization’s structured

communication which is concerned with achieving the organization’s work goals and

which is conducted with people and groups outside the organization. It is the

organization’s communication with its public-its suppliers, service companies,

customers, and the general public.

Into this category fall all of the organization’s efforts at direct selling-:-the sales

representative’s sales spiel, the descriptive brochures, the telephone callbacks, the

follow¬up service calls, and the like. Included also are all of an organization’s advertising

effOlts. For what is advertising but a deliberate, structured communication with an

organization’s publics? Radio and television messags, newspaper and magazine

space advertising, and point-of¬pur-chase display material obviously playa role in the

organization’s plan to achieve its work objective. Also falling into this category is all an

organization does to enhance its public relations. This includes its planned publicity, the

civic-mindedness of its management, the courtesy of its employees, the condition of its

physical plant. All these and many more communication efforts combine to make up the

organization’s external¬operational communication.

Specifically, internal-operational communi-cation is carried out through any number of

Specifically, internal-operational communi-cation is carried out through any number of

structured activities. In the Typical Company, for example, much of the

internal¬operational information is entered into the Company computer to become a

part of the company’s data base. From the data base, programmed rep0l1s are

developed to give each operations department the information it needs. For example,

sales reports and inventory records combine to communicate reduction needs to the

production planning department. Then the production planning department

communicates this need to the various production departments through a strategically

planned work schedule.

Within each production unit and between production units there is, of course, additional

communication that must go on. Superiors make decisions and transmit them to

subordinates. Departments exchange infOlmation, and workers communicate working

informations with each other. Memoranda are written, reports are prepared,

conversations are held, all in the process of coordinating efforts and supplying the

information needed to achieve the organization’s goals. In every division of the company

and in every activity, similar internal-operational communication occurs.

A group of promoters propose to establish a company for charitable purposes without the addition of the word ‘Limited’ as part of its name

A group of promoters propose to establish a company for charitable purposes without the addition of the word ‘Limited’ as part of its name. Discuss briefly the procedure to be followed in addition to the normal procedure for incorporation of a

company. [C.A. (Final) May, 2001)

flLns. For establishing a company for charitable purpose and without the addition of the word ‘Limited” as part of its name, the promoters have to take the following steps

to obtain permission of the Central Government.

‘-- - --

I. An application has to be made to the Regional Director of the concerned !,egicm

along with the following documents:

(a) Three ce:; of draft memorandum and articles of association of the

proposed company.

(b) A declaration that all requirements pertaining to the formation of the

company have been duly complied with.

(c) Three copies of list of names of the promoters as well as the proposed

directors together with the narhes of companies in which they are inter

ested along with the relevant particulars.

(d) A statement showing the assets and liabilities of the association as on the

date of the application or within seven days of that date. J ‘,. I

(e) An eS’timate of the future annual income and expenditure of the proposed

company.

(j) A statement giving a brief description of the work proposed to be done

after formation which must be non-commercial.

(g) A declaration that profits, if any, shall not be distributed by way of

dividends but shall instead be used for furtherance of the cause for which

the company has been established.

(It) A statement specifying briefly the grounds on which the application is made. (i) A declaration by the applicants regarding their competence to make the

application.

. XYZLimited decided to terminate the services of Mr. X, who was employed as sales manager

It is apprehended by the company that the sales manager may not vacate the company’s flat at Bombay. What action can be taken by the company under the Companies Act to regain possession of the flat? Is it necessary to take such action under the Companies Act before terminating the services of Mr. X? Will it make any difference if the flat is not owned by the company but taken on lease?

fC.A. (Final) May, 2000J

.9L1l.5 .

Wrongful Withholding of Property

The company can take action under Section 630 of the Companies Act, 1956 if the sales manager refuses to vacate the residential accommodation provided by the company.

According to Section 630, it is an’offence if .Y_9.f!icror employee of a company (a) wrongfully obtains possession of anfprop-erty of a company”or (b) having any such property in his possession wrongfully withholds it or knowingly applies ito purposes other than those expressed or directed in the Articles and authoed by the Act and such an offence is punishable with fine which may extend to,Rs. 1,00(r[Section 630(1)]. Further, the Court trying the offence may also order such officer or employee to. deliver to the company, any such property wrongfully’ obtained or wrongfully withheld, within a time fixed by the Court. Non-compliance of the court’s order is an offence

punishable with imprisonment for a term which may extend to two years [Section 630(2)J.

So, the company can file a complaint under Section 630 as it provides speedy relief to the company.

Tl).ough the expression used in Section 630 is not ‘past or present officer or employee’, it has been held by the Supreme Court that the term ‘officer or employee’ in Section 630 applies not only to existing officers or employees of a company but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property of the company; or (b) having obtained such property during the course of his employment withholds the same after the termination of his employment [Baldev Krishna Sahi Vs. Shipping Corporation of India Ltd. (1988)]. In view of the Supreme Court’s decision, it is possible to initiate action under Section 630 even after terminating the services of Mr. X.

It is not necessary that the property in question should be actually owned by the company. Even if the company exercises only a leasehold right, the provisions of Section 630 can be invoked [Po V. George Vs. Jayens Engineering Co. (P) Ltd. (1990)].

State the disclosure requirements. if any under Schedule VI to the Companies A9t. 1956 in respect of the following

(i) Loans received from directors.

(ii) Loans received from director’s relatives.

(iii) Debts due by directors towards goods supplied and advances made by the

company.

(iv) Debts due by partnership firms in which the directors or relatives of directors

are partners.

(v) Debts due by companies in which the directors or their relatives are directors

or members. .

(vi) Loans and advances received from and given to a subsidiary company and

the partnership firm in which the subsidiary company is a partner.

(vii) Remuneration received by a director of a company from its subsidiary

company.

(viii) C6mmission paid to selling agents including sole selling agents.

.9Lns. The disclosure requirements under Schedule VI are as follows: .

(i) Loans received from directors - It should be classified as secured and URSecured

..J loans and shown separately on the liabilities side of the Balance-sheet.

(ii) Loans received from directors’ relatives are not required to be disclosed in the

Balance-sheet.

(iii) Debts due by directors towards goods supplied by the Company must be shown separately under Sundry Debtors. The maximum amount due by directors of the’ company at any tfme during the year must also be disclosed in the Balance-sheet by way of a note. Similar disclosure is required in respect of loans and advances made to directors.

(iv) Debts due by partnership firms in which any director of the company is a partner must be disclosed separately. But no disclosure is required if only the relatives of directors are partners.

(v) Debts due by private companies on which the directors are directors or members must be stated separately in the Balance-sheet. But, it is not necessary if the amount is due from public companies. Similarly, it is not necessary to disclose separately the amount due by companies in which the relatives of directors are directors or members.

(vi) Loans and advances received from subsidiary companies should be classified as secured and unsecured loans and shown separately. But no such disclosure is required in respect of loans received from partnership firms in which the subsidiary company is a partner. Loans and advances given to subsidiary companies and the partnership finri in which the subsidiary company is a partner must be disclosed in the Balance-sheet.

(vii) Managerial remuneration received by a director of a company from its subsidiary

should be shown separately in the Profit and Loss account by way of note.

(viii) Commission paid to sole selling agents and other agents must be shown separately

in the Profit & Loss Account.

The concept of ‘Public Interest’ has been making rapid inroads into the Indian

A survey of the provision of the Companies Act would reveal the truth of the statement that concept of ‘Public interest’ has been making rapid inroads into the Company Law. Some of such provisions are stated below very briefly:

(i) Section 396 empowers the Central Government to provide for compulsory amalgamation of companies into a single company in the public interest. Such a provision was made in the Company Law for the first time by the Companies Act, 1956.

(ii) Section 211 (3) empowers the Central Government to exempt any class of companies from compliance requirements in Schedule VI pertaining to form and contents of Balance-sheet and Profit & Loss Account, if it deems fit for public interest.

(iii) Regarding transfer of shares which is likely to change the composition of the Board of Directors prejudicial to public interest, Central Government is now empowered under the 1956 Act [section 250 (3) & (4) to impose restriction on such transfer, i.e., for voting right, upto 3 years, without its sanction].

(iv) Under Section 397 the members can file application to the CLB for appropriate relief where the affairs of the company are being conducted in a manner prejudicial to public interest, provided the requirements of Section 399 are fulfilled.

(v) Again, under Section 398, shareholders can file an application to the CLB for

relief for public interest.

(vi) Under Section 408, the Central Government, on recommendation of CLB may

appoint directors to the Board for safeguarding public interest.

(vii) Qnder Section 394(1) the Court is empowered to refuse its sanction to any

compromise or arrangement, when a company is being wound-up, when the

Court feels that the scheme is prejudicial to public interest.

the Court must consider the report, and direct the person charged/ concerned

the Court must consider the report, and direct the person charged/ concerned

-

to attend on a qay appointed for the purpose and publicly examine the person,

as to the complained conduct and dealings in his capacity as such promoter or officer;

(iii) the Official Liquidator shall take part in the examination, and if authorised by the Court, may employ counsel for the purpose of assisting him in the proceedings;

(iv) any creditor or contributory may also take part in the examination either

personally orby counsel, entitled to appear before the Court;

(v) the Court may put such questions to the examinee, as it thinks fit; .

(vi) the public examination of the person shall be on oath, and the examinee shall

be liable to answer all questions as may be put tohun by the Court or allowed

to be put to him by the other person, with the leave of the Court;

(vii) the person examined,hall before his examination be fu..rnished (at his own

cost) a copy of the rt of the Official Liquidator, and engage at his own

cost, a co who may put to him such questions as the Court may deem just for the purpose of enabling him to explain or qualify any answers given by him;

(viii) if the examinee applies to the Court to be exc.ulpated from any charges made, it would be the duty of the Official Liquidator to appear at the hearing of the application and call attention of the Court, to relevant matters, whereafter, the Court may on hearing evidence, grant or refuse the application; .

(ix) notes of the examination shall be taken down in writing, read over to or by, and signed by, the person examined and thereafter may be used in evidence against him, and shall be open to inspection of any creditor or contributory at all reasonable times.

Scope of Section 391. The aid of the section may be invoked when it is not otherwise

Scope of Section 391. The aid of the section may be invoked when it is not otherwise possible to made some arrangement or compromise which would be in the interests of the company and the other party or parties to the arrangement. It can be used whether the company is a going concern or is in the course of winding up.

Exercise of the Court’s discretion

Before the Court sanctions a scheme, it will normally need to be satisfied on the

following matters:

1. The Statutory Provisions must have been Complied With. The Court must see

that the resolutions are passed by the statutory majority in value and number in accordance with the legislation at a meeting or meetings duly convened and held. In this regard, it may be noted that Section 391 contemplates a scheme between a company and its creditors or any class of them or between the company and its members or any class of them. Thus, where a scheme was agreed to by the company and its ordinary shareholders only, without interfering with the rights of the preference shareholders, the scheme was held to be valid even though a meeting of the preference shareholders was not called to ascertain their views-Mcleod & Co. V s. S.K. Ganguly [1975]45 Compo Cas. 563:

The Court shall not make any order sanctioning the compromise or arrangement unless it is satisfied that the company or any other party making the application has disclosed to the Court, by affidavit or otherwise, all material fact relating to the company, such as :

(a) the latest financial position of the company;

(b) the latest auditor’s report on the accounts of the company;

(c) whether any investigation or proceedings under Sections 235 to 251 are pending against the company, etc. (Proviso to Sub-section (2) of Section 391). “Further, an order made by the Court sanctioning the compromise or arrangement shall have no effect until a certified copy of the same is filed with the Registrar. Moreover a copy of every such order must be annexed to every copy of the Memorandum, issued after the filing of the certified copy of the order or, if the company has no Memorandum, to every copy of the instrument constituting or defining its constitution [Sub-sections (3) and (4) of Section 391].

Ramana Dayaram Shetty Vs. International Airports Authority of India AIR 1979 SC 1628.

(i) If the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of government;

(ii) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality;

(iii) It may also be a relevant factor... whether the corporation enjoys monopoly status which is State conferred or State protected;

(iv) If the functions of the corporation are of public importance and closely related

to Government functions, it would be a relevant factor in classifying the

corporation as an instrumentality or agency of government;

(v) Specifically, if a department of Government is transferred tc a corporation it would be strong factor supporting this inference of the corporation being an instrumentality or agency of Government.

It should be noted, however, that the tests referred to above are not individually decisive; their cumulative effect in each particular case has to be taken into account.

A Government Company-Whether a Private or Public Company

Should a government company be incorporated as a private company or a public company, is a question on which the Companies Act, 1956 is silent. As a result, a government company may be incorporated either way.

Exemptions