Organizational communication involves the flow of information within a company through both formal and informal channels. Formal communication includes downward communication from managers to employees, as well as upward communication from employees to managers. Informal communication occurs through the grapevine, which spreads rumors and information quickly but can distort or exaggerate details. Effective organizational communication requires understanding different communication styles, providing clear and timely information to address issues, and utilizing both formal and informal channels to supplement each other.