EFFECT OF COMMUNICATION ON ORGANIZATIONAL

PERFORMANCE (CASE STUDY ON COMMERCIAL BANK OF

ETHIOPIA, YIRGALEM BRANCH)

A RESEARCH PROPOSAL SUBMITTED FOR PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR BA DEGREE IN Marketing MANAGEMENT

PREPARED BY: AMARE BANTI

ADVISOR: EPHREM DEGENE (MBA)

HAWASSA, UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF Marketing MANAGEMENT

April, 2017

YIRGALEM, ETHIOPIA

Abstract
This study is designed to assess the Effect of communication between workers
and managers in commercial bank of Ethiopia yirgalem Branch. The main
objective of conducting this study is to deal with the different problem related to
communication in organization and to investigate the possible relation between
workers and managers. The relevant data will be collected from primary and
secondary sources. The tools of data collection will be questionnaire for
employees and structured interview for manager of organization. The secondary
data will be collected from published and unpublished materials which are
available in organization. The study population will be 61 employees and all of
them will be selected as a sample. The data collected through questionnaire and
interview will be processed through descriptive analysis and will be presented
with tabulation and percentage. Finally conclusion is made and the possible
recommendation will be forwarded

Acknowledgment
First of all I prize to almighty God for his blessing and help throughout my
academic life. Next I would like to express my deepest gratitude for my advisor

EPHREM DEGENE for his constructive comments and professional guidance

starting from the beginning to the end of this proposal development. .

Table of Contents

Content page

Abstract.............................................................................................................I
Acknowledgment..............................................................................................II
CHAPTER ONE.................................................................................................1
INTRODUCTION...............................................................................................1
1.1 Back ground of the Study............................................................................................1
1.2 Background of the Organization...............................................................................3
1.3 Statement of the Problem............................................................................................4
1.4 Objective of the Study...................................................................................................6
1.4.1 General objective.................................................................................................................6

1.5 Specific Objectives.........................................................................................................6

 1.6 Significance of the Study.............................................................................................7
1.7 Scope of the Study.........................................................................................................8
1.8 Organization of the paper……………………………………………………………..……8
CHAPTER TWO.................................................................................................9
LITERATURE REVIEW......................................................................................9
2.1 Definition of Communication.....................................................................................9
2.2 Attributes of Communication.....................................................................................9
2.3 Process of Communication........................................................................................10
2.4 Objective of Communication.....................................................................................11
2.5 Methods of Communication......................................................................................11
2.5.1 Verbal Communication...................................................................................................11

2.5.2 Non verbal Communication...........................................................................................12

2.6 Channels of Communication....................................................................................12

2.6.1 Formal Communication Channels...............................................................................13

2.6.2 Informal Communication...............................................................................................14

2.7 Transparency and open Communication.............................................................14

2.8 Business Communication.........................................................................................15
2.9 Barriers of Communication.......................................................................................15
2.10 Making Communication Effective.........................................................................17
2.11 Factors Affecting Communication........................................................................17
2.12 Essentials to Effective Communication..............................................................19
CHAPTER THREE...........................................................................................20
METHODOLOGY.............................................................................................20
3.1 Research Design...........................................................................................................20
3.2 Data source....................................................................................................................20
3.3 Data Collection Method..............................................................................................20
3.4 Sampling Method.........................................................................................................20
3.5 Sample Size....................................................................................................................21
3.6 Data Processing and Analysis..................................................................................21
CHAPTER FOUR.............................................................................................22
4.1 DATA PRESENTATION ANALYSIS AND INTERPRETATION...........................22
CHAPTER 5....................................................................................................23
5.1 SUMMARY CONCLUSIONS AND RECOMMENDATIONS................................24
5.1.1 SUMMARY...........................................................................................................................25

5.1.2 CONCLUSION....................................................................................................................41

5.1.3 RECOMMENDATION.......................................................................................................42

References......................................................................................................43
Appendix........................................................................................................44
 CHAPTER ONE
INTRODUCTION
1.1 Back ground of the Study
The art of communication was as old as mankind. The relation of human being
was established by communication (Madhukar 2001P.2).Sociologist describes
“human being as a social animal “As a member of society they nave to interact
with each other consistently. They have to build links and establish
relationships. The need for communication arises from their desire to express
themselves in meaningful manner. (Madhukar, 2001, P.11-13)

Different scholars define communication in different ways. But the common

consensus was that communications was a two way process of exchanging
ideas and information between human beings. Communication was considered
effective when it achieves the desired reaction or response from the receiver. In
actual practices, however, communication is not simple because it involves
elements like sender, message, medium, Receiver and feedback (Madhukar,
2001)

At Organizational level communication is the main way through which people

come together there and coordinate with each other to accomplish their
objectives. Managers have to communicate with workers to inform, motivate, ,
to persuade to educate, to entertain and to integrate organizational resources
for common objectives of organization. (Madhukar, 2001).

In organizations communications takes place in two ways; through verbal

communication and through nonverbal communication. Verbal communication
is the ability to communicate by using words that separates human beings
from other animals. Verbal communication includes oral and written
communication .Nonverbal communication is the process of communicating
through sending and receiving wordless message. It is closely related with the
power of observation. The receiver of communication should be in a position to
Cleary see the face, hear and even feel communication. (L. Hilter, 2008, P.200).

Also, in organization the communication network has two important channels.

The formal to Officials channels of communication and informal channel of
communication; usually called grapevine. Both channels carry message from
one person to another person or group in organization downward, upward and
horizontally. (Raymond, 2008, P.56-61).

Effective communication between managers and workers will provide

managers with feedback about current organization issues and problems and
information about day to day operation. It relieves employee’s tensions by
allowing lower level organization members to share relevant information with
their manager. It encourages employee’s participation and involvement, thereby
enhancing organizational cohesiveness (Raymond, 2008, P. 46-49).

1.2 Background of the Organization

The history of banking system in Ethiopia can be traced back to the
establishment of bank of Abyssinia on March 1905 in the premise of Ras
Mokonin. The bank the first bank in Ethiopia .The bank continues to operate
until 1931. Later on it was wholly purchased by government of Ethiopia and
renamed National bank of Ethiopia. After the victory over the fascist Italy the
state bank of Ethiopia was established under the proclamation 95/1942 in
August 1942. It was fulfilled commercial bank a year late in 1943. It was given
additional central banking function until it was splinted in 1963 to form the
two bank. They are national and commercial bank of Ethiopia (www.
NbE .com). In 1963 commercial bank of Ethiopia re-established and started
making commercial banking activities in different branches throughout the
country. Yirgalem branch is one of the branch which is found in southern
regional state in Yirgalem town. It was established in 1968’S E.C at Yirgalem
town. The operation of the branch was started by 16 employees. (CBE,
Yirgalem branch interview).

1.3 Statement of the Problem

Effective business communication is lifeblood of every organization in its
internal messages and by employees as well as in its external contacts with
customers, suppliers and public. Thus effective communication between
managers and workers enables the business organization to improve
competitive power and increase manager’s effectiveness. So, effective
communication is fascinating journey both for worker and business
organization (Murphy, 2008, P.3).

According to Namta poor communication in organization arises as a result of

behavioral difference, difference in skill and understanding as well as physical
factors. While some causes of poor communication like behavioral difference
and difference in skill are applicable to all methods of communication, factors
arising out of physical factors are specific to the method of communication
adopted. Some causes of poor communication which are specific to written
communication are hard writing, spelling error and legibility. (Namta, 2004,
P.24). Similarly causes of poor communication for oral communication invades
absence of felicity of expression, accent, speed of delivery and appropriate ness
of language (Namta, 2004, 21-22).

In daily activities of commercial bank of Ethiopia, Yirgalem Branch, complexity

of communication is obviously observed in between workers and managers.
Due to complexity of communication the organization is subject to lack of focus
on organizational objective, employees turnover, carelessness, absenteeism and
poor customer relation (commercial Bank of Ethiopia, Annual report
2000/2001 Addis Ababa ).

The researcher is motivated to conduct this study on this area because

improvement of communication between managers and workers will have a
great contribution on improvement of service delivery to nearby communities of
the organization. During the actual research, the research is going to answer
the following basic questions.

• What is the effect of communication on organizational performance?

• What are the major causes of complexity of communication in between

managers and workers in commercial bank of Ethiopia, Yirgalem
branch?

• What kind of communication is being used in the organization?

• Is there transparency between managers and workers while

communicating with each other?
1.4 Objective of the Study

1.4.1 General objective

The general objective of the study is to analyze the effect of communication
between workers and managers on organizational performance.

1.5 Specific Objectives

The specific objectives of the study are

• To identify the effect of communication on organizational performance

• To identify major causes of complexity of communication in between

managers and workers in commercial bank of Ethiopia, Yirgalem Branch.

• To identify types of communication being used in the organization

• To identify existence of transparency between managers and workers during

communication.
1.6 Significance of the Study
The study focuses on effect of communication between managers and workers
on organization performance. Conducting this study would have much more
importance for the following parties. Generally the study would have the
following importance.

• It was provide useful information for the stake holders of commercial bank
of Ethiopia concerning effect of communication between managers and
workers on organization performance and is provide recommendation

• It is provide information for trade and industry department of zone what

factors influence performance of financial institution and suggestion to solve
those problems.

• The outcome of the study would have contribution on improvement of

service delivery which in turn have contribution for the customer of the
organization which are parts of Yirgalem area community.

• It is serve as a base for other researcher who are interested to conduct

research on this area in depth. Also it will enhance the researcher’s ability
and to skill conduct further research. The researcher would gain experience.
1.7 Scope of the Study
The study is limited (restricted) to the Assessment of effect of communication
between managers and workers on organizational performance in case of
commercial bank of Ethiopia, Yirgalem branch such as increase in manager’s
effectiveness improvement in profitability, improvement in competitive power
and solving business problems easily. This organization is selected because it
is one among other organization which lack proper communications between
managers and workers.

1.8 organization of the study

This study consists of five chapters. The first chapter deals with the
introduction part of the study. Here, the statement of the problem, research
question, objective of the study, and significance of the study, scope and
limitation of the study where included.

Chapter two focuses on literature review of important concepts and theories

that where relevant to the study. The third chapter deals the methodology used
for the research.

Chapter four focus on result and discussion and finally chapter five
represents summery, conclusion and recommendation.

CHAPTER TWO
LITERATURE REVIEW
2.1 Definition of Communication
In different times different scholars define communication in different ways. All
definitions over the year attempts to define communication in different
dimensions (Madnukar 2004. P.7).
According to Boone and Kurtz communication is the broad field of human
interchange of fact and opinions. This definition emphasized on the fact that
communication has to do with interchange or commercial interaction. Thus
communication is the transmission of idea, emotion, skill etc. by use of
symbol, graph etc (Boone and Kurtz, 2008, p.2)

Madhukar defines communication as a process by which information is

transmitted between individual and organization so that an understanding
results which leads to response. (Madhukar , 2004, P.15) communication is
the process of passing information from one person to another. It is a means
through which power is exerted. Communication have a power to link the
discontinues part of the world (Bantie and yigremaw, 2008 P.2).

2.2 Attributes of Communication

Communication is a two way process. Communication is said to be complete
only when the sender gets a response from the receiver. Unless there is a
response we cannot say that communication has taken place.

Communication is by dynamic. It grows and develops over the time. Every time
anyone has engaged in the communication they brings to their ways factor like
experience, thoughts and feeling, unexpected response and reactions to
communication event.

Communication is both interaction and transaction. The two participant of

communication process exchange ideas and information and influence each
other in the process. They also become aware of each other’s.

Communication is systematic and continuous. It goes in a proper way without

stopping in some way or other. Silence, body language and facial expression
contributes to the continuous process of communication

Communication can be intentional or unintentional. It takes place whether we

have plan to do or it is done up continuously. Very often we communicate what
we had no intention of saying. Meantime we are not able to say what we want
to (Namta, 2004).
2.3 Process of Communication
Communication process involves certain distinct steps. In its simplest from it
involves stimulus and response. The stimulus arises from a communicator and
the receiver responds. Communication is not complete until the message
conveyed by the sender is properly understood by the receiver. The process of
communication starts from sender and the information (message) will flow
(transfer) throng medium to the receiver (Murphy, 2008).

Every communication has a distinct purpose which determines the message.

The stimulus emanates from the sender and the receiver comes up with the
response. The transmission of idea from sender to receiver through medium
and the back ward flow of feedback from receiver to sender constitute the
major part of communication process. As clearly stated above the essential
elements of communication process include sender, receiver, medium of
communication, message and feedback from the receiver (Murphy, 2008).

Sender is the source of information who passes information to the other party;
the receiver. Receivers is the one to whom information is passed on. Medium of
communication is used to transmit the message. Message is a set of
information which are encoded by the sender and transmitted to the receiver.
The feedback is response of the receiver.

2.4 Objective of Communication

Communications have numerous objectives depending on the group context.
Communication within the family class from, church, in war, seminar, in the
board form has different objective. The objective of communication is defined
based on the purpose and objective that the groups deserved to achieve. Each
of this group has different set of goals and objectives. In each of group, the
dominant objective of communication would be to inform, connect, educate,
entertain, motivate, integrate resource and persuade (Madhukar, 2004, P.2)
Information transfer is one of the basic objective of communication in business
organization (Kreps, 1990).

2.5 Methods of Communication

Communication takes place in two ways. These are verbal communication and
Non-Verbal communication.
2.5.1 Verbal Communication
It is the ability to communicate by using word that separates human beings
from the rest of animals. Verbal communication include oral and written
communication. (L. Hilter 2008, P.250).

• Oral communication

Oral communication refers spoken words. Any communication which we hear

through lecturing in the rooms, speeches of politicians at election, instruction
and evensong, poetry, recitation etc.

Business involves an extensive use of oral communication technique. People

have to deal with other people. This is very frequently done in face to face
informal plan i.e. talk to each other. This occurs in situation like conversion,

Telephone talk interviews, presentation and meeting.

• Written Communication

Written communication takes place in written form on paper, boards charts

etc. written communication is used for many purposes. Letters, memos,
reports, notices and circulars are most commonly used form of written
communication. They are used mostly in informal communication between
members of the same organization and usually relates to day to day work. It
is used mostly to convey information and instruction (Murphy, 2008).

2.5.2 Nonverbal Communication

Nonverbal communication is the process of communicating through sending
and receiving wordless message. It is closely associated with the power of
observation. The receiver of the communication should be in position to see,
hear and even feel communication. The receiver of the communication
should be in position to clearly see the face, gesture, the tone, the dress,
hear the voice of communication. Nonverbal communication relies on
observation and interpretation. It takes place along with verbal and oral
communication by the speaker. Body language and nonverbal
communication can supplement and complement each other. They together
can make the message loved, clear and forceful. On the contrary if they are
 not consistent, the message that comes out will be ambiguous and garbled
(Ibid, 2004).

2.6 Channels of Communication

In organization the communication network has two primary and equally
important channels. The formal or officials channels of communication and
the informal channels usually called grapevine. Both channels carry
message from one person or group to another in organization downward,
upward and horizontally ( Lesley, 2008).

2.6.1 Formal Communication Channels

Formal communication channels are primarily used by the formal
organizational structure. The vertical formal communication can be visualized
through the line of authority from top level down through organization to lower
level employees.

• Down ward Communication

Down ward communication flows down ward from individual in higher levels of
the hierarchy to those in lower levels of the hierarchy. The most common down
ward communication are job instruction, official memories, policy statements,
procedures, manuals and companies publication. (Ivancevich, 1990) managers
must try to improve downward communication to make effective use of it.

• Upward Communication

Upward communication flows from lower level employees to higher level

personnel. It is used to provide managers with feedback about current
organization issues and problems and information about day today operation.
It is management primary sources of feedback for determining effectiveness of
its down ward communication. It relieves employee’s tensions by allowing lower
level organization member to share relevant information with their superior. It
encourages employees’ participation and involvement thereby enhancing
organization cohesiveness (Ibid 2000)

• Horizontal Communication

Horizontal communication is lateral communication among members of the

organization who are at the same level of the hierarchy. This types of
communication is necessary for the coordination and integration of the
organization functions. It promotes supportive organizational climate and
enable employees to perform their activities without referring all matters to
their superiors. It is also important for problem solving, sharing relevant
information and conflict management among the members of organization.
(Sters, 1985).

2.6.2 Informal Communication

Informal communication channels, commonly referred to as a grapevine, are
informal and causal grouping of people, communication on the job, their social
interaction and other affairs. Every organization has its own grapevine. This is
perfectly natural activity because every human being would prefer to
communicate with each other on many different bases. The grapevine offers
members of an organization an opportunity to express their feeling in the form
of rumor. (Raymond, 2008, P.56-62)

2.7 Transparency and open Communication

Transparency in communication has two parts. One is being open and reviling
about yourself to yours partner. It include letting go of inhibitions or defensive
feelings you might be harboring about, what you haven’t revealed and
acknowledging your reluctance to do so. The flipside is being open and
receptive to your partner’s reality, his or her feelings, wishes, desires, fears and
difference from you. If means openly encouraging your partner to express them
to you. (http:// huffing ton post .com)

Systems and process at companies are often not known to employees.

Employees trust increases the more they understand how and why things are
done. The philosophy behind a company’s management should be as clear and
as consistent as possible. When practices are not clear, it leaves employees
wondering that went into decision making process. Lack of transparency by
company’s leadership can directly impact employee’s effectiveness and
productivity. To create transparent communication manager, should develop a
cadence of communication, be honest, be as open as possible, about company ,
have open forums and engage in management by walking around (http://
work. Com) Transparency is useful to build trust, to give information that
people need , to avoid surprises, it provides follow up for concern that are
raised, creates expectations that are then carried out (http: // Collaborate at
work .Com ).

2.8 Business Communication

According idea of Namta and Gold, 2004, P.15- 16 business communication is
classified into two broad categories. This is internal and external
communication

• Internal Communication

Internal communication is a communication inside of the organization who talk

to each other when a supervisor or give instruction to subordinates or when
inter departmental memos are passed around, internal communication takes
place. It is important to promote harmony within the organization.
Communication with supervisors, reporter and any other information that is
passed within the company from the juniors to seniors will be a part of internal
communication (Gopal and Namta, 2004).

• External Communication

External communication is communication with external agencies both

government and private. It is an essential features of all business. This external
communication have long range impact. This include dealing with government
agencies and department, interacting with customer and dealing with public.
Above all dealing and interacting with customer is the most important part of
any business. Dealing with public many times happens when the business
organization violate certain environmental regulation (Gopal and Namta, 2004,
P.15-16).

2.9 Barriers of Communication

At every stage of communication process, there are barriers that hinders or
dilute the flow of communication in an organization. The barriers of
communication at organizational level may arise out of behavioral difference,
difference in skill and understanding as well as physical factor. While some
factors like behavioral difference and difference in skill may be commonly
applicable to all method of communication, barriers arising out of physical
factor may be specific to the method of communication adopted. Some barters
which are of specific to written communication are hard writing, spelling,
legibility. Similarly barriers to oral communication would include an absence of
felicity of expression, accent, speed of delivery and appropriate to all method of
communication, barriers arising out of physical factor may be specific to the
method of communication adopted. Some barriers which are specific to written
communication are hard writing, spelling, legibility. Similarly barriers to oral
communication would include absence of felicity of expression, accent, speed of
delivery and appropriateness of language (Namta, 2004, P.20)

• Poor Expression

The power of expression of communication determines communication

effectiveness. The message have to be properly developed. Poor expression is
likely to occur when the person is ill, fatigued, under severe stress and under
influence of alcohol. Obviously such poor expression of thoughts and ideas
leads to incorrect incomplete and incoherent message.

• Faulty Transmissions

The process of transmission of message is essential for communication in

organization context the person who transmit the intent and purpose of the
message may not remain in same as it moves from the originator to transmitter
.Not only that, the person transmitting the message may bring in his own bias,
feelings and perception which the originator of the idea or the message would
not have intended (Madhukar, 2004, P.22)

• Physical Factors

The process of communication especially transmission of message make use of

numerous channel, instruments and gadgets such as telephone , microphone ,
projector printing, photo copying , telex , fax radio , film, cassette and floppy.
All of those are very useful when they function smoothly. At the same time they
act as barriers when they fail to perform their functions efficiently. As a result,
communications fail to reach the target Audience. Shaping of the telephone
multimedia equipment and disturbance of power supply may lead to delays in
transmitting the message to the intended recipients (Madhukar, 2004, P.23).
2.10 Making Communication Effective
Good communication is hardly over accidental. Not all communication is
effective. Most of the time the recipient of the communication does not get the
message as meaningfully as communicator intended to be. The process of
communication pervades over everyday lives and experts tremendous
influence. Good, meaning full and effective communication can take place
when there is a clear understanding of various factors which affect
communication. The essentials of effective communication, the significance of
language and the manner in which people read messages and give meaning.

2.11 Factors Affecting Communication

Modern communication is undoubtedly a complex process. It involves human
being as well as instruments and gadgets. (Madhukar, 2004, P.19). Important
factors that affect the process of communication includes conceptual clarity,
language, moods of receptivity and timelines

• Conceptual Clarity

Conceptual clarity is a very important factor affecting communication.

Whatever the method adopted the communication must be clear about what
the sender wants to convey. They have to give proper shape to their thoughts
and should develop the idea meaningfully. If one is not clear about ones
thoughts and ones ideas the message formulation also gets affected.
Communication is all about transmission of information and ideas that seek to
translate thoughts into actions.

• Language

The process of communication is both oral and written. People however, speak
and understand different language for both oral and written communication.
Languages become the vehicle of thought. Therefore the sender should ensure
that the message reaches the receiver in language that he can understand. As
long as the sender and the receiver of communication speak, write read and
understand the same language there is direct communication. In written
communication the literacy level of recipient, assumes significance. In verbal
communication too, the depth of communication understanding of spoken
language makes difference. If there are vast difference between the sender and
receiver in terms of mastery over the language of them while sending the
message, communication get affected. Every language has its own vocabulary
and quality of communication is influenced by the word power of both parties
(Madhukar, 2004, P.19)

• Moods of Receptivity

Communication becomes purposeful when the communication show

enthusiasm and receiver shows receptivity. Both of them are influenced by the
moods. The moods of the person refers to the person’s state of mind of the
inclination and willingness to send and receive message. So the mood of
communicator and listener affects the process of communication.

• Timeliness

Most message have a time values. Action can flows only if the communication
reaches in the time. This is pertinent to individuals as well as business.

2.12 Essentials to Effective Communication

Effective communication calls for coordinated effort. Good communication
like other high quality output is very much the result of hard work. Good
communication does not occur accidentally. It calls for proper planning
understanding human behavior, choice of physical facilities, mechanical or
electronic devices and the organization context. It is necessary to understand
essentials of good communication and work toward achieving them. The first
essential for effective communication is to be clear about the purpose of
communication. Every communication has an objective. It is a means to an
end. The objective of any communication is not just to receive or convey
message. The communicator has to insure that the message reaches the
receiver. Any message is not backed by a clear and well developed idea
becomes purpose less communication entailing wastage of time and effort
(Murphy, 2008).
 CHAPTER THREE
METHODOLOGY
3.1 Research Design
The research design was descriptive because such types of study tries to
describe the characteristics of population and define the problem effectively. In
addition to that it enables us to answer the question like who, what, when and
how in relation to the study.

3.2 Data source

The researcher would collect data both from primary and secondary sources.
Primary sources were workers and manager of organization and secondary
sources would be published and unpublished materials, records and document
of organization concerning communication between managers and workers.

3.3 Data Collection Method

The primary data would be collected from the respondents by preparing open
ended and close ended questionnaire because it is expected that the
respondents are educated to fill the designed questionnaire properly as
intended by the researcher. Structured interview method would be used to
collect data from manager of organization. Secondary data would be from
different published and unpublished materials, records and documents of
organization concerning communication between managers and workers.

3.4 Sampling Method

Since the number of population in commercial Bank of Ethiopia, Yirgalem
branch was only 61 the researcher would used census method than limiting
the sample size.
3.5 Sample Size
The total population of the organization was few. So, the researcher would take
all of them as sample size.

3.6 Data Processing and Analysis

After collecting data with the help of questionnaire and interview, the data
would be analyzed. This would be done first by editing the collected data to
avoid some errors during data collection or responses which are not in parallel
to each other. The processed and analyzed data would be presented in the form
of percentage, pie chart, bar graph and table which is based on their
appropriates to the processed data and descriptive method of data presentation
would be used hand in hand with a above methods in order to clarify and
describe quantitative data. In data presentation, qualitative data would be
translated and grouped into categories.

From the analyzed and processed data interpretation, the researcher would put
conclusion by summarizing the main points about the study and also would
forward his own recommendations based on some important comments given
by respondents