Formal and Informal Organization


Formal Organization –

                                        This is one which refers to a structure of well defined jobs each bearing a measure of authority and responsibility. It is a conscious determination by which people accomplish goals by adhering to the norms laid down by the structure. This kind of organization is an arbitrary set up in which each person is responsible for his performance. Formal organization has a formal set up to achieve pre- determined goals.



1. The informal organisation helps the organisational members to develop some cohesiveness among them and thereby it tries to create effective work teams out of them. It perpetuates cultural values which the group holds as important.

2. It satisfies the “belonging needs” of the organisational members. The individuals do feel that there are others in the organisation that can take care for them and who have got more concern towards compared to the management.

3. Even if the formal organisation structure is not developing interaction among the employees, the informal organisation makes the individuals to help each other in realizing their role expectations.

4. It helps the organisation members to develop interdependence among themselves and thereby it reduces their perceivable fear towards the top management.

5. The communication network of the informal organisation is more effective than the formal channel. It spreads very quickly since the channels in the informal setup are never doubted.



Informal Organization –

                                        It refers to a network of personal and social relationships which spontaneously originates within the formal set up. Informal organizations develop relationships which are built on likes, dislikes, feelings and emotions. Therefore, the network of social groups based on friendships can be called as informal organizations. There is no conscious effort made to have informal organization. It emerges from the formal organization and it is not based on any rules and regulations as in case of formal organization.


 To employees

(i)       Sense of belonging: In a formal organization, there is lack of sense of belongingness and personal satisfaction.

(ii)      Value for emotional problems: In the daily work routine there are many opportunities for tension and frustration.

(iii)     Aid on the job: In case of accidents or illness, members of an informal group help one another.

(iv)     Innovation and originality: By enabling members to modify the job situation more to their liking, the informal organization creates the necessary environment for individual innovation and originality. The individual can experiment with his ideas.

(v)      Important channel of communication: News travels quickly via informal groups. They are the clandestine transmitters and receivers of information before it is officially released.

(vi)     Social control: Informal groups provide all its members a set of norms or guides to correct behaviour. Members are expected to conform to those norms.

(vii)    Check on authority: Informal group forces the manager to plan and act more carefully than he would otherwise. Informal organization is a check and balance on unlimited use of authority by a manager.

2.         To management

(i)       Less supervision: Informal group is self-policing. This relieves the management of much of the burden of supervision.

(ii)      An aid to management: The information gives the manager much feedback about employees and their work experiences thereby increasing his understanding of what he needs to do.


Effective Communication:

In the absence of any definite course, it is an effective system of communication. Messages can be quickly conveyed from one place to another with the help of this system.

 Fulfils Social Needs:

In the informal organisation, people having similarity of thoughts and ideas form a group of their own. All the people in the group stand by one another in all the organisational or personal matters.

 Fulfils Organisational Objectives:

Here there is no pressure of formal organisation. In the informal organisation, the subordinates put their ideas before the superiors without any fear or hesitation. It helps the superiors to understand their difficulties and immediate solution of the problem is sought out. Since the problems are easily solved it becomes easier to achieve the objectives of the organisation.



(i)        Resistance to change: An informal organization is bound by customs, conventions and culture.

(ii)       Role conflict and sub-optimization: In an informal organization, everyone works towards the same objectives. Members put their own group objectives ahead of organization’s objectives. Hence, the organization suffers.

(iii)      Rumour: An informal organization sometimes functions as a carrier of rumour.

(iv)     Group think philosophy: Workers become loyal to their groups.



Relationship between formal and informal organizations

For a concerns working both formal and informal organization are important. Formal organization originates from the set organizational structure and informal organization originates from formal organization. For an efficient organization, both formal and informal organizations are required. They are the two phase of a same concern.

Formal organization can work independently. But informal organization depends totally upon the formal organization. Formal and informal organization helps in bringing efficient working organization and smoothness in a concern.

Within the formal organization, the members undertake the assigned duties in co- operation with each other. They interact and communicate amongst themselves. Therefore, both formal and informal organizations are important.

When several people work together for achievement of organizational goals, social tie ups tends to built and therefore informal organization helps to secure co-operation by which goals can be achieved smooth. Therefore, we can say that informal organization emerges from formal organization.

formal and informal organization



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