Throughout the paper, an attempt was made to provide a summation of the broad area of the topic – the importance of communication in organizations, especially business organizations. With this goal in mind, a definition of communication is presented, in order to familiarize the reader. The communication process and its participants were also described. During the aforementioned process, participants need to keep in mind potential obstacles that prevent the recipient from receiving information in its original form, i.e. the form it had when the speaker sent it. Furthermore, a description of possible flows of communication in an organization is provided. Communication can travel from higher levels of hierarchy to the lower levels, which is the most common form of formal communication, used by managers to give tasks needed to reach set goals. The line of communication from the bottom up mostly consists of feedback on reached goals. Lateral communication is also important, as it occurs as a result of cooperation of employees on the same hierarchical level. Aside from formal communication, in formal communication occurs in organizations, as well as external communication that connects one organization with other organizations. The style of communication in an organization defines the organizational climate, culture, and interpersonal relations of employees. Communication also helps to define the style of leadership, which provides the possibility to predict potential reactions of managers in some of the most common situations in communication, such as negotiation or conflicts. Communication is the most important tool in an organization. Its effect on employee motivation is unquestionable, and, through that, reaching the set organizational goals as well.