Informal Organization

An organization is nothing but a group of people who aim to achieve common objectives. One can look at it as a single entity as well. Each organization comprises of the human relationships between people who are a part of it. There may be either a formal or an informal organization depending on the nature of these relationships between people.

Suggested Videos

previous arrow
next arrow
previous arrownext arrow


Informal Organization

Contrary to a formal organization, an informal organization does not depend on relationships of ranks per se. Even functions of people do not define their position within the organization.

In informal organizations, personal attitudes, prejudices, likes and dislikes determine human relationships. People find a place in the organization depending on these informal factors.

Informal Organization

Informal organizations generally emerge by default. Policies, procedures or ranks do not play a role in establishing them. People end up creating them by interacting with each other.

An informal organization always exists in a formal one. Managers can prevent its creation but they can certainly regulate it.

Some scholars say that informal organizations basically emerge from joint personal activities. People always end up creating them subconsciously by interacting with each other. Thus, personal and social relationships are mainly responsible for creating an informal organization.

Features of Informal Organization

  • Informal organizations depict very peculiar features. Firstly, they emerge and develop spontaneously. Formal policies and procedures do not play a role in their creation as in the case of formal organizations.
  • Secondly, an informal organization emerges from social interactions between people. Ranks and functions of people have no relevance here. This is why personal prejudices and attitudes are so important in informal organizations.
  • People generally tend to interact more with those with whom they can relate. Hence, things like social, political, cultural, religious outlook are important in this regard.
  • Another feature of informal organizations is that they exist in each and every enterprise. This is because social interactions between people are inevitable.
  • Lastly, managers cannot prohibit informal organizations; they can only regulate them. This regulation is important because it can affect the productivity and morale of the people involved.
  • If employees do not gel with each other well, they may not work cordially with cooperation. This, in turn, affects the financial profitability of the organization itself.

Functions of Informal Organization

  • The primary function of informal organizations is basically to maintain cultural values of people. When people can associate themselves with each other socially, they always feel a sense of togetherness. Consequently, another function of informal organizations is to provide social satisfaction to members.
  • Finally, an informal organization also provides an effective means of communication to its members. They can interact with each other freely and efficiently. Managers can use it to send across messages quickly and directly.

Merits of Informal Organization

  • Informal organizations have several benefits. Firstly, they inculcate a sense of unity and togetherness among their members.
  • This happens because of the social interactions they indulge in with each other. This consequently leads to work satisfaction and stability in the organization.
  • Furthermore, a robust informal organization can be an effective means of swift communication. Both employees and well as managers can use this.
  • Managers also benefit from informal organizations by using them to understand the grievances of employees. Since employees freely interact with each other, they can unify and address their problems collectively.

Demerits of Informal Organization

  • The main problem of informal organizations is that they can make members averse to change. Their social interaction with each other creates lifestyles, cultures, and conventions. People do not positively respond to changes to these things easily.
  • For example, employees of many companies organize gatherings and functions for festivals. If the management suddenly decides to ban such social events, it will definitely face resistance.
  • Another problem with informal organizations is that members have to conform to a set of togetherness. This, in turn, can lead them away from the larger organizational objectives. A conflict of roles like of this kind can be detrimental to the organization.

Control of Informal Organizations

As we learned above, managers cannot create or prohibit informal organizations but they can regulate them. In order to do this, managers must first accept and acknowledge their existence.

Next, they should also strive to be a part of it in order to assert influence over the employees. Furthermore, managers should try to streamline objectives of the informal organization with those of the business itself.

Solved Examples on Informal Organization

Question: State the missing word in the following sentences.

(1) Informal organizations emerge from __________ interactions between people.

(2) Managers cannot create informal organizations but they can __________ them.

(3) Informal organizations can serve as an effective means of __________ for both employees as well as managers.

Answers:               (1) social               (2) regulate               (3) communication

Share with friends

Customize your course in 30 seconds

Which class are you in?
Get ready for all-new Live Classes!
Now learn Live with India's best teachers. Join courses with the best schedule and enjoy fun and interactive classes.
Ashhar Firdausi
IIT Roorkee
Dr. Nazma Shaik
Gaurav Tiwari
Get Started

Leave a Reply

Your email address will not be published. Required fields are marked *

Download the App

Watch lectures, practise questions and take tests on the go.

Customize your course in 30 seconds

No thanks.