Definition

An informal organization is the social structure of

the organization, as opposed to the formal structure
of an organization. It establishes how an organization
functions from a practical standpoint. The informal
organization can work in concurrence with the formal
organizational structure, parallel with it, or against it.

Concepts and Structure

You can best understand the concept of an informal
organization by comparing it to a formal
organization. Let's look at the formal organization
first since it's a bit easier to understand. The
structure and operation of a formal organization is
typically set forth in the official documents, rules, and
procedures of the organization (like a corporation's
articles of incorporation and bylaws). The roles,
authority and responsibilities of each member of the
organization are clearly defined. For example, a
limited liability company's operating agreement
outlines the scope of authority and responsibilities of
the managers of the company. A formal organization
is cold, sterile, and impersonal.
Now, let's take a look at an informal organization.
It's primarily a social creature - made up of the sum
total of social norms, relationships, and interactions
that affect how an organization works. While a formal

organization is cold and impersonal, an informal

organization is intensely personal. It's all about social
interactions and relationships between the members.
Members of an informal organization can certainly
hold official offices and have formal duties, but they
also bring their own values, personal interests and
assumptions into the equation of how they act.
Members develop friendships, alliances, enemies,
trusted sources of information, and preferences on
how tasks should be performed.
These social influences may cause a member of the
informal organization to work in conjunction with the
organization, in parallel with it, or even against it. In
some respects, you can think of an informal
organization as:
An organization within the formal organization
working with it
An organization beside the formal organization
working towards the same goals but not
necessarily together
Or an organization working outside the formal
organization and against it
The structure of an informal organization is usually
quite different from its formal counterpart. Its
structure is usually fluid and rather flat. Decisions are

often made collectively rather than unilaterally by

one leader. Cohesion is often established through
trust and reciprocity between members. An informal
organization is also able to be dynamic, responsive,
and adaptable to change, because formal rules and
hierarchy don't pin it down.