Professional Documents
Culture Documents
OAM 11 - Informal Organizations
OAM 11 - Informal Organizations
OAM 11 - Informal Organizations
Lesson 4.4
Informal Organizations
Introduction
Organization refers to the structure of relationships among positions and jobs created to
achieve certain objectives and goals. It is the mechanism developed by management to
unite the efforts of the people to realize the objectives set forth.
But an organization is not only about the lines and boxes in the organizational chart. There
is an entirely different organization beneath its surface. This organization is called an
informal organization. Unlike the organization that we knew as formed with formal
authority, this is formed voluntarily and through personal relationships by individuals in an
organization.
4.4. Informal Organizations 1
Unit 4: Management Functions: Organizing
________________________________________________________________________________________
2. What characteristics do the groups you classified as informal organizations share?
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
3. In what ways do formal and informal organizations differ from each other?
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
Discover
An organization is a group composed of people who work effectively toward the attainment
of a common goal. Previously, we discovered that organizations are no more or less than
relationships between similar functions, physical factors, line of authority, and personnel.
Organizations are set up primarily for promoting cooperation and coordination and
facilitating effective exercise of executive leadership.
There is also what we call informal organizations that arise from the formal organization.
Unlike formal organizations, informal organizations have no written or predefined rules. We
can imagine this as a complex web of social relationships among members in a particular
organization.
4.4. Informal Organizations 3
Unit 4: Management Functions: Organizing
Formal versus Informal Organization
There are two types of organization: the formal and the informal. Both types are necessary
for group action and an organization to function.
A formal organization is formed to accomplish a common purpose. All of the members are
consciously and systematically combining their efforts to achieve a common goal. In a
formal organization, the structure is well-defined and jobs have a definite measure of
authority, responsibility, and accountability. These jobs are interconnected and assigned to
each member of the organization based on authority, responsibility, and organizational
relationships.
On the other hand, informal organizations are formed by individuals in the organization
who have or share the same personal attitudes and values, emotions, prejudices, likes,
dislikes, friendships, and other characteristics. These organizations are not developed
according to rules and regulations as implemented in a formal organization but are
naturally formed. This type of organization is not planned and is automatically developed
within a formal organization.
Table 1. Examples of formal and informal organization
Features of Informal Organizations
Unlike formal organizations, informal organizations are formed even without a conscious
effort and a clearly defined joint purpose of the members. The authority in an informal
organization is earned from the trust of group members rather than delegation. There is no
chain of command to follow and it is more likely to have peers than superiors.
4.4. Informal Organizations 4
Unit 4: Management Functions: Organizing
Because informal organizations are more personal in nature, it is not subject to
management control in the way a formal organization is. Moreover, informal organizations
have the following features that set them apart from formal organizations.
● They are unplanned structures that arise naturally out of formal interactions within
the formal organization.
● They often arise to meet the social and personal needs of individuals working in the
organization through sharing common thoughts, feelings, and interests.
● The relationships of the members are not visually shown in the organizational chart
since these are socially formed. Hence, there is no formal structure. Members may
come from all levels of the formal organization.
● Leadership is informal. The members gain authority through interaction with
fellow members and bear little significant responsibility for them.
● The absence of a chain of command in this type of organization indicates an
informal communication system. The direction of communication is free-flowing
and enables every member of the organization to be connected with one another.
● Formal rules and regulations are essentially non-existent and are based on the
convenience of the group members.
● As it is formed naturally, the organization can be dissolved at the will of the
members. There is no fixed tenure and no specific or legal procedures as to how
the informal organization is dissolved.
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
4.4. Informal Organizations 5
Unit 4: Management Functions: Organizing
Impact of the Informal Organization
When people frequently interact with each other, a bond over shared interests fosters social
interactions, which eventually forms a group. Thus, informal organizations arise out of the
formal organization.
Advantages of Informal Organization
An organization can benefit from the existence of informal organizations through the
following ways:
1. Communication is faster relative to formal organizations.
2. There is socialization within the organization.
3. Employees experience a sense of belongingness and job satisfaction.
4. Informal organizations can serve as a safe space where employees can express and
share their emotional problems.
5. Through informal organizations, other limitations of a formal organization like
getting true feedback from employees are easier.
6. The existence of informal organizations creates the necessary environment for
innovation and creativity.
7. Informal organizations help control and correct behavior and impose discipline.
Informal groups provide their members a set of norms or standards of correct
behavior wherein members are expected to adhere to those norms. Most likely,
these standards of behavior are aligned with the organizational policies, rules, and
regulations.
8. It serves as a check and balance on the unlimited use of authority by the
management.
Disadvantages of Informal Organization
On a side note, there are also disadvantages of having informal organizations in an
organization:
1. The speed of communication in informal organizations may result in the spread of
rumors or false information. Management may find it hard to control the spread of
the information and may result in chaos within the organization.
2. Informal organizations hold influence on their members. Without the support of the
4.4. Informal Organizations 6
Unit 4: Management Functions: Organizing
information organizations, it is impossible for a formal organization to grow and
affect changes in the organization. This may result in a decline in organizational
growth.
3. There is also a risk when the group standards set in the informal organization are
against the organizational interests and goals. This may lead to a disruption in
the organization.
4. This may bring negative results whenever the informal organization opposes the
policies and changes in management.
5. Informal groups give more emphasis on individual interest than organizational
interest.
In Philippine Context
The Philippines is a democratic country where the government’s power is equally divided
among its three branches: executive, legislative, and judicial. These branches carry out
different functions according to the constitution. The legislative branch makes the laws,
the executive branch enforces the law, and the judicial branch interprets the law. These
branches serve different functions, and just like large organizations, these divisions are
very important as they draw a line between the distinction of their duties and
responsibilities, and their scope and limitation. More importantly, this creates a more
organized structure of a particular organization. Within these branches of the government,
a specific structure is followed. They are not formed naturally but planned and based on
the Constitution. Because of this, the government can be considered a formal group.
4.4. Informal Organizations 7