Informal Organization: Definition, Features, Pros/Cons, and Vs. Formal Organization

What is an Informal Organization?

An informal organization refers to a group of people having the same interests and likes that are grouped in an organization. They are grouped to protect the rights of each other in the organization.

The informal organization is also known as unofficial relation or informal group. Meaning that this type of group is not formed by the management formally. It is just the opposite of a formal organization. It is developed within the framework of the formal organization due to social interactions and personal relations.

Man is a social animal and wants to maintain social relationships with many social elements. When a large number of people work together in a formal organization, they come into interaction with each other and develop personal and social relationships based on their likes and interests. The development of such relations among formal members is an informal organization.

Small informal groups are formed in the large formal organization that is informal group is a part of large formal organization. These groups may be based on caste, ideology, language, religion, emotion, tradition or culture, etc.

  • According to Chester I Bernard – Informal organization is joint personal activity without a conscious common purpose through contributing to the joint results.
  • Keith Davis – Informal organization is the network of personal and social relationships, not established or required by the formal organization.

The informal organization is not predetermined but it develops automatically among a limited group of people through friendship. This structure plays an important role in the effectiveness of organizational performance. The powerfulness of this relation can be seen from the fact that if one member is expelled, sometimes all workers go on strike in support of that member of the group.

This relationship is so much stronger, that it brings a sense of belonging and friendship. This belonging concept influences the productivity and job satisfaction of the members since members motivate each other and also share knowledge and workload.

Features of Informal Organization

The major features of the informal group are as follows:

  • It is created on the basis of friendship and some common interests.
  • It is not stable and built spontaneously over time.
  • It reflects human and social relationships among people.
  • It is based on common ideology, language, religion, culture, or tradition.
  • It has no prescribed position, responsibilities, and authority.
  • Membership in the informal group is voluntary.
  • It has no written rules and regulations.
  • The authority and responsibility are based on personal acceptance.
  • The informal group has its own leaders, goals, and standard.

Objectives of Informal Organization

The informal organization is a natural grouping of people in work areas. It represents the relationships between individuals working in the organization based on personal interests, personal attitudes, emotions, physical locations, age, the similarity of work, etc.

Also Read: Decentralization in Management: Definition, Meaning, and Pros/Cons

Let’s take a look at the objectives of informal organizations:

objectives of informal organization

To Socialize with Others

Man is a social being. He wants to associate with others rather than work alone. The informal organization allows individuals to satisfy their social needs on the job.

To Meet Common Interests

Common interests bring informal relations among individuals working in an organization. The employees face similar work problems as they perform similar jobs thus they want to join a group.

To Develop A Sense of Belonging

People want belonging and friendship in work areas. A shared experience among colleagues develops a sense of job satisfaction among employees. Informal interaction develops attachment among employees.

To Reduce Monotony

The greater degree of specialization routinizes the job and hence increases monotony among workers. The workers experience mental fatigue as they are unable to relate their jobs to the final output. They resort to informal interactions as an outlet for frustration from the job.

To Check On Authority

Informal group forces managers to plan and act more carefully. It serves as a tool to maintain balance on unlimited use of authority.

Related: What is Authority Delegation? Definition, Features, Barriers, and Pros/Cons

Advantages of Informal Organization

The benefits of informal organization are as follows:

benefits of formal organization

To Develop A Sense of Belonging

Informal organizations constantly emphasize the individual personality of members. This gives a sense of belonging and personal satisfaction among members.

Less Supervision

Informal groups are self-directed and self-controlled. They develop the norms themselves and all members are bounded by those norms. They perform their jobs without the instructions of the manager.

Innovation and Creativity

Individuals experience freedom in an informal organization. They can do jobs in their own ways. This helps to develop innovative and creative ideas in the organization.

Rapid Communication

Members pass information quickly and informally. There is no formal channel relay message. All members are the transfers and receivers of the information.

Check On Authority

This organization forces managers to plan and act more carefully. Members check and balance the ultimate authority vested in the manager. Managers can not use the authority for individual benefits.

Disadvantages of Informal Organization

  • Members of the informal group can resist changing the instructions provided by the managers.
  • Sometimes an informal group of people may give pressure on the manager in such questions that is out of the organizational structure.
  • It increases the conflict between the members where everyone tends to be a leader in their group.

Also Read: What is Resistance To Change?

Difference Between Informal and Formal Organization

Formal and informal organizations differ in their structure, purpose, and nature of relationships. A formal organization is deliberately established by management to achieve specific objectives through predefined rules and regulations. It operates with a clear hierarchy, where authority and responsibility are assigned, and communication follows official channels.

On the other hand, an informal organization emerges spontaneously based on personal connections, interests, and emotions among individuals working together. It lacks formal rules and authority, relying instead on social bonds and shared values.

In a formal organization, roles are specialized, and tasks are assigned based on expertise, promoting efficiency and productivity. Written rules provide guidelines for decision-making and ensure consistency. The focus is on achieving goals and objectives, with a clear line of communication and a task-oriented approach.

In contrast, an informal organization forms around friendships, common interests, or shared experiences. It is fluid and adaptable, lacking a prescribed hierarchy or defined roles. Communication flows informally, often through personal interactions, and the group’s objectives may be unwritten and flexible.

Overall, formal organizations emphasize structure, specialization, and goal achievement through established rules and authority. Informal organizations, on the other hand, thrive on personal connections, shared interests, and the bonds formed through social interactions.

Both types of organizations play important roles within an overall organizational framework, contributing to the effectiveness and well-being of individuals and the collective.

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