Informal Organisations

When looking at the subject of organisational structures, most people assume we are focussing on formal structures - i.e. those that have been designed by management to try and ensure that an organisation can meet its goals. However, within a formal organisation, an informal organisation will also be present and all organisations have some mix of the two.

Informal organisation evolves over time and is a network of relationships that exist within an organisation. The relationships arise due to common interests or friendships. These relationships can be across divisions and it is through these relationships that daily interactions between members of staff take place.

Reasons for informal organisation

There are many reasons for the informal organisation, including.

• individuals' goals may differ from the organisations - workers with the same goals gravitate together.
• personal relationships may arise between individuals.
• a group of individuals may share common interests, e.g. football and so form an informal group.
• certain members of the organisation may be natural leaders and so lead a group, even though they have no formal managerial place.
• workers find new ways of doing things which save them time.

Advantages and disadvantages of informal organisation

Advantages

• If managers can work with the informal groups within their department, there should be higher levels of motivation and productivity.
• Interdivisional communication should be better through the informal network. This could lead to increased innovation which should help the company succeed.

Disadvantages

• If the formal structure is in conflict with the informal structure, the organisation may end up being inefficient at meeting its objectives. This can arise due to, e.g. formal lines of communication being blocked as informal lines of communication are more efficient and become more important.
• If managers try to implement change, they may find opposition from not only the formal but also the informal organisation e.g. change in one division, may lead to companywide unrest as word of the changes spread through the informal network, and other divisions start to be concerned that 'they will be next' (the grapevine effect).

The impact of the informal organisation on the business

The informal organisation can either enhance or hold back the business. Managers need to be aware of the informal structure and ensure that they

• adapt the formal structure to complement the informal one.
• maintain a looser formal structure so that the informal structure can thrive.
• at the very least take account of the informal structure in decision making.

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Tags:	informal organisation