how can improved communications between functions can improve overall performance in a company?

Answer 1

Communication is indeed a big problem in large companies ..

Essentially it stems from separating the companies systems into 'departments'.

Since individual departments have little or no knowledge of the overall business needs, each Department operates like a 'small company'. Managers focus on their own departments (internal) priorities and building their own 'empire' (instead of building the overall company).

In theory if departments had more knowledge of the overall business needs they would operate more in the interests of the entire company .. however in practice each manager will be judged only on the performance of his own department (which is 'easy' to measure) and not on his contribution to the overall results (which is much more difficult to measure) so in practice, after any (Director identified and assigned) 'critical' company issues are addressed, the managers focus reverts to building their own empire again.

If the Directors REALLY want to improve overall results they have to set targets and measurements for individual departments that will motivate them in the 'right' direction ..

Example - most Sales Managers are measured on the performance of their sales staff in terms of quantity of product sold - so they implement commission systems with quantity targets and sales staff recognition ('top seller of the month') and reward (bonus for exceeding targets) based on quantity.

IF however the Company wants to incease PROFITS (rather than turn-over) then the Sales Managers need to be judged on the total profits achieved (and not on the quantity sold). They will then implement commission systems with payment linked to margin and recognition for sales staff that exceed 'list price' and 'total margin' targets ..