FORMAL AND INFORMAL ORGANIZATION

A formal organization typically consists of a classical mechanistic hierarchical

structure. In such a type of structure, the position, responsibility, authority,
accountability and the lines of command are clearly defined and established. It is a
system of well-defined jobs with a prescribed pattern of communication,
coordination and delegation of authority. The informal organization, similar to
informal groups, on the other hand, comes into existence due to social interactions
and interpersonal relationships and exists outside the formal authority system without
any set rigid rules. Though unrecognized, it exists in the shadow of formal structure
as a network of personal and social relations, which must be understood and
respected by the management.
The informal work groups, constituting the informal organization as a whole,
comprise a loosely structured organization of interpersonal relationships, which
affect decisions within the formal organization, but are either omitted from the
formal scheme or are not consistent with it. These interpersonal relationships create
a bond of friendship among the members of such an informal organization and
these bonds are very strong so that there is a sense of belonging and togetherness.
This togetherness can have a powerful influence on productivity and job satisfaction.
The members help and motivate each other. For example, during a busy period,
one employee may turn to another for help instead of going through the supervisor.
Similarly, an employee in the sales department may ask another employee in the
production department, who also belongs to the informal organization, for
information about product availability and receive this information faster than through
the formal reporting system.
The informal organization is a powerful instrument in all organizations and
sometimes it can mean the difference between success and failure of the
organization. When the group members want to do a job, it is always done better
than when they have to do it because of instructions from supervisors. A cooperative
group makes the supervision easier, thus lengthening the effective span of
management. Informal groups also make sure that the basic principles of the formal
organization are not violated. For example, if a manager misuses his authority and
promotes an unqualified person, the informal group may use its influence in making
sure that this does not happen. The informal group also serves as an additional
channel of communication to the management about conditions at work, which
may not be available through official channels.