What is Informal Organisation: Definition, Features & Importance

An informal organization is a network of personal and social relationships that spontaneously arises 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, as well as information flow.

What is an Informal Organization?

An informal organization is those unwritten, unofficial relations which spontaneously arise among the workers within the set formal organizational structure. Their relations are based on personal likings or disliking, common hobbies or else 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 Defined Hierarchy: Unlike formal organizations, there is no defined hierarchy or organizational chart in informal organizations.
• Influence on Decision Making: Informal leaders often emerge based on respect, expertise, or charisma rather than position.
• Flexibility: Informal organizations are flexible and adaptable, often changing based on personal relationships or the organization’s environment.

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 offer emotional support, help foster a sense of belonging, and can lead to increased job satisfaction.
• Cliques: Cliques are small, exclusive groups of employees who often share a strong bond. While cliques can enhance trust among members, they can also create divisions if they become too exclusive or dominate 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 might be hindered by hierarchical barriers.
• 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 organization is found in most workplaces where employees at work tend to beget close groups for support, passing 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 out 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, to brainstorm work-related problems, and for 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 organization facilitates communication and problem solving by saving time for employees at work in order to avoid 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. Formal organizations are structured and efficient, while informal organizations are supportive and adaptive.

Structure

• Formal Organization: Clearly defined with a structured hierarchy, roles, and responsibilities.
• Informal Organization: Spontaneous, with no official structure or hierarchy.

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 in nature. Even though informal organizations are not officially recognized, positive contributions are still made to the morale, productivity, and communication of the employees. And if informal organizations are managed well, they can complement formal structure and thus contribute toward the success of an organization as a whole.

• Facilitating Communication: Informal organizations provide open channels of communication that may not exist in formal structures. Employees often share information more freely in informal settings, allowing for faster problem-solving and decision-making.
• Promoting Collaboration: Informal organizations encourage collaboration between employees from different departments or levels within the company. These networks often lead to improved teamwork and innovative solutions.
• Providing Social Support: Informal organizations offer emotional and social support to employees. By fostering friendships and a sense of belonging, they help reduce workplace stress and increase job satisfaction.
• Influencing Organizational Culture: Informal organizations can shape the culture of the workplace. They influence employee behavior, values, and attitudes, often promoting a positive and cohesive environment that supports organizational goals.
• Filling Gaps in Formal Structure: In cases where formal communication channels are slow or inefficient, informal organizations can step in to bridge the gap, ensuring that work gets done more effectively.
• Encouraging Employee Engagement: Employees involved in informal organizations tend to feel more engaged and motivated. This sense of involvement boosts morale and can lead to increased productivity.

Conclusion

Knowing what informal organization is means importance for both workers and managers. Informal organizations are spontaneously developed within a framework of formal structures, significantly contributing toward improving communication, social support, and cooperation. Apart from not having any formal recognition and structure, informal organizations can fill gaps which remain undiscovered or unexploited in case of formal channels, foster engagement among workers, and even influence organizational culture. informal organizations’ functions should be recognized by firms so that the potential of informal organizations may be employed for harnessing the benefit of optimizing the workplace dynamics and overall productivity.

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What is Informal Oganisation FAQs

An informal organization is as defined above.

An informal organization is the 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 where it has a definite structure and functions, and rules. In contrast, an informal organization is spontaneous in nature 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.