Informal Networks

David Krackhardt and Jeffrey R. Hanson

Managers should restructure formal organizations to complement

informal structure and to rewire networks to converge with company
goals.
Rather than restricting informal organizations; managers need to identify and
direct them towards company goals using network analyses.

Informal Networks:
Informal organization, the network of relationships that employees form across
functions and divisions to accomplish tasks fast.
+ Cut through reporting procedures to meet extraordinary deadlines
-

Blocking communication

Some managers would make strict rules to restrict informal networks but they can
be identified and directed using network analysis which are as follows:
1. Advice networks: Show prominent players on whom others depend to solve
problems and provide technical information
2. Trust Network: Tells which employees share delicate political information and
back one another in a crisis.
3. Communication network: People who talk about work on a regular basis.
Example
David Leers, CEO of the company felt that the company was losing its
competitive edge therefore required some changes that were not popular among
the employees. Leers decided to involve the employees in the planning process
to get their support and made a strategic task force which was to be led by Tom
Harris (a credible and a proven performer). After a month of the formation of
the task force Leers saw that there was little progress.
Leers studied the trust and advice network and found that:
i)
ii)

Harris had central position in the advice networks People depended on

him for technical information.
Harris had only one trust link which caused the task force to a standstill
position.

Leers saw the trust networks and saw that Bill Benson had a central position
and therefore made a decision to appoint him as a second head of the task force.
After three months, the task force was making lots of progress.
Second example:
Calder was appointed as a manager by Leers because of his performance in the
past; not knowing that he didnt know how to deal with people. On studying the
trust networks Leers found out that people Calder did not trust other people in

his team. After studying the networks Leer cross promoted Calder to directly
report to the CEO regarding sophisticated clients. Leers made Fleming the head
of the field design who had a central role in the trust network.

Communication Network:

It is common to see that people are pushed towards more communication

but more is not always better. Studies have showed that quality of the
communication (two way communication) determines success.
Example of a bank supervisor who said that her employees talked to her on a
regular basis, on work related matters. But she would talk to only half of them.
Later it was found out that she was disliked because of the one-way
communication. In another branch there was little one way communication and
more mutual communication therefore this branch reported more employee
satisfaction.

The management studied the communication network and held mini

seminars to improve two way communication. Surveys were held at
regular basis to see if supervisors were communicating effectively.
Example: When the communication network was studied in a bank branch, it
revealed that there were two distinct groups the branch divided itself into. One
was the main branch and the other was a sub-branch. Both groups did not
interact much because the main branch used to work in peak hours and the subbranch, non-peak hours.
Customers started complaining about the sub branch, because the sub branch
people didnt feel part of the organization, they were rude to the customers at
times. The sub branch was excluded from the staff meetings and had little
contact with the branch manager.
On studying the branchs communication network the problem was diagnosed
and the manager started exposing people from both groups to meet to promote
gradual, neutral interactions and communication. When somebody from the
main branch called in sick he would replace them with a sub branch member.
This help solve the problem and customer satisfaction was improved.

Network Holes and Other problems:

There are five common configurations. None of these are good or bad, functional
or dysfunctional. What matters it the fit, whether networks are in sync with
company goals.
i)

Imploded relationships: When there are few relationships with other

groups. Employees in a department spend all their time talking among
themselves and neglect to cultivate relationships with other colleagues.
To counter this, use mentor system where senior employees make their

ii)

iii)

iv)

v)

apprentices meet with other groups. Another means is the power

breakfast.
Irregular communication patters: When employees only communicate
with members of other groups and not among themselves.
To counter this, sponsored seasonal sporting & staff meetings
Fragile Structures: When groups talk among themselves and with one
other division only.
Can be countered by meetings and cocktail parties.
Holes in the network: Network maps help find holes in the network
which are crucial for the operation of an organization.
Can be countered by making both groups to be assigned a task so they
can work collaboratively.
Bow-Ties: Where many players are dependent on a single employee but
not on each other. If the persona that everybody is depending on leaves,
connections between isolated groups can collapse. If the person in the
center stays, processes can become slow and rigid.
To counter this, one manger self-consciously cultivated a stronger
relationship with the person at the center, diffusing some of his power.

Managers who want to anticipate organizational change should look into networks
maps and if there are changes, can redesign the maps.
All the network maps (advice, trust and communication) need to be considered
before making strategic decisions.