An informal organization is a network of personal and social relationships that spontaneously arise among employees working in an organization. This is unlike a formal organization, which is sanctioned with clear roles and responsibilities and an officially sanctioned hierarchical reporting structure. Unlike the formal organization, these relationships have no sanction from the organization but are seen to influence considerable employee behavior, communication, and decision-making. Informal organizations exist within formal organizations that often support and influence work culture, collaboration, and information flow.
What is an Informal Organization?
An informal organization is one in which unwritten, unofficial relations spontaneously arise among the workers within the set formal organizational structure. Their relations are based on personal likings or dislikes, common hobbies or other social activities/interests rather than an official position and title. It will automatically arise and may, therefore, impact the manner in which work will be delivered in an otherwise formal workplace.
An informal organization might not have the structural framework or regulation of a formal organization; however, it acts as an essential tool for creating communication, social networks, and collaboration. There is sharing of information, emotional support, and even decisions influenced within the framework by members of an informal organization.
- Spontaneous Formation: Informal organizations are not planned or officially sanctioned; they form naturally based on social interactions.
- No Organizational Chart: In contrast to formal organizations, no organizational chart or defined hierarchy exists in informal organizations.
- Impact on Decision Making: Informal leaders tend to arise on the basis of respect, expertise, or charisma and not position.
- Flexibility: Informal organizations are flexible and dynamic, frequently changing depending on interpersonal relationships or the organization’s setting.
Concept and Types
Informal organization means that besides the forms of an organization, there are informal, unofficial social networking systems of people involved, which determine the feasibility of how things get done. Such informal structures complement the formal ones and are one of the requirements for a healthy work environment.
Types of Informal Organizations
Understanding these types helps managers recognize the influence of informal networks on the overall functioning of the organization.
- Interest Groups: These are groups of employees who come together based on shared interests, whether personal or work-related. They might form to discuss hobbies, common problems, or specific issues in the workplace.
- Friendship Groups: Friendship groups are informal organizations formed through friendships. These groups provide emotional support, promote a feeling of community, and have the potential to boost job satisfaction.
- Cliques: Cliques are exclusive, small groups of workers who frequently have a close relationship. Cliques can help members trust each other more, but they can also cause problems if they become too exclusive or take over decision-making.
- Horizontal Relationships: These informal organizations develop among peers or colleagues at the same level within the formal structure. They help promote the free flow of information and collaboration, which hierarchical barriers might hinder.
- Vertical Relationships: In some cases, informal organizations can include relationships between superiors and subordinates, often based on mutual respect or trust outside the formal reporting structure.
Example of Informal Organization
Generally, informal organizations are found in most workplaces where employees tend to beget close groups for support, to pass on information, or even to socialize. A classic example could be as follows:
In such a large corporation, the working style of employees is very formal, strictly with reporting and organizational lines. Even so, there will be an informal group of people across departments who get together over lunch frequently. The group that started as a catch-up social gathering to know what was happening in the lives of the individuals has mushroomed to become a support network through which they reach out to find industry insights, brainstorm work-related problems, and provide emotional support.
One day, an employee of this informal group had a problem with a project. Instead of going through formal channels, she looked for a colleague from another department within the informal group to help her quickly solve the problem. As indicated by the example here, informal organizations facilitate communication and problem-solving by saving time for employees at work and avoiding formal reporting lines.
Difference Between a Formal and Informal Organization
There are differences between a formal organization and an informal organization. Understanding these differences is one of the keys to managing these organizations properly. Although both formal and informal organizations work well toward achievement, they function basically in different ways. Informal organizations are helpful and flexible, whereas formal organizations are organized and effective.
Structure
- Formal Organization: Having a well-defined hierarchy of roles and responsibilities.
- Informal Organization: Unplanned, devoid of a formal hierarchy or structure.
Rules and Regulations
- Formal Organization: Operates based on established rules, policies, and procedures.
- Informal Organization: Operates without official rules or guidelines based on social interactions.
Formation
- Formal Organization: Intentionally created by management to achieve organizational goals.
- Informal Organization: Forms naturally through personal relationships and social networks.
Communication
- Formal Organization: Communication follows formal channels, such as emails, reports, or meetings.
- Informal Organization: Communication is more casual and occurs through personal conversations, chats, or social gatherings.
Leadership
- Formal Organization: Leadership is based on authority and official positions.
- Informal Organization: Leadership is often based on personal traits such as charisma, respect, or expertise.
Functions of Informal Organization
Informal organizations are a must for the proper running of any organization. Therefore, all the functions that help to run the workplaces are informal. Even though informal organizations are not officially recognized, positive contributions are still made to the morale, productivity, and communication of the employees. If informal organizations are managed well, they can complement the formal structure and thus contribute toward the success of an organization as a whole.
- Encouraging Communication: Informal organizations are the real channels of communication that probably do not exist in formal structures. In informal forums, employees tend to share information freely, which facilitates fast solutions to most problems and adoption in decision-making.
- Fostering Teamwork: Employees can collaborate among departments or levels through informal organizations. These networks usually yield progress in teamwork and new solutions.
- Augmenting Socialization Support: Informal organizations normally provide emotional and social assistance to employees. They increase the sense of belonging and friendship, which in turn lowers stress in the workplace and increases job satisfaction.
- Organizing Culture: These informal organizations may shape workplace culture. They affect employee behaviour, values, and attitudes, but they are usually positive and unite among staff, which helps in achieving organizational goals.
- Bridging Gaps in Formal Structure: Where formal channels of communication lag or are inefficient, informal organizations can also fill the gap and facilitate the way toward doing the work in a better way.
- Promoting Employees’ Involvement: Membership with informal organizations would mean stronger involvement that indeed adds motivation to these workers, thus enhancing their morale and producing an active workforce for the company.
What are Informal Organization FAQs
Define Informal organization.
An informal organization is a network of personal and social relationships that develop organically among employees on the basis of mutual interest or social contacts.
What is the basic difference between an informal organization and a formal organization?
An example of an organizational structure and rules is found within the organization, which has a definite structure, functions, and rules. In contrast, an informal organization is spontaneous and works without official regulations.
What are the forms of informal organizations?
This refers to interest groups, friendship groups, cliques, and those at work involving horizontal and vertical relations.
What are some of the functions of an informal organization?
Informal organizations help facilitate communication, provide social support, foster cooperation, influence workplace culture, and help complete formal structures.
Do informal organizations influence formal decisions?
Yes, since employees might seek recommendations from their peers before enforcing a new policy in an informal network. Therefore, an informal organization has an overall impact on formal decisions.
