An organisational chart displays the direction of formal communication flow. It identifies the several transmitters and receivers, and the channels through that they must communicate. The authority relationships imply the direction of communication flow in an organisation. A formal communication takes place among a superior and subordinate within the form of instructions and directions. Such a flow takes place in the downward direction.
Another formal communication takes place from the subordinate to the superior while reporting on performance. Since the subordinate initiate's communication to the superior, the flow is upward. We call this upward communication. The upward communication could take the form of progress reports, profit and loss statements, budget reports, requests for grants and etc.
Formal communication could also take place among one division of an organisation and another. This could be lateral or diagonal. For example there could be formal communication among the technical and accounts divisions of your utility. Formal communication might pass across organisational levels and could help in coordination and quality control. For instance, communication between maintenance and financial units helps the utility to serve its customers better and earn better image.
At last, formal communication might also arise among the organisation and outside parties, e.g., suppliers, customers, Government and etc. This might happen while the management is required to give information on certain aspects of the working of the organisation. Communication of this type is usually one-way.