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11, 12 - Comparison of Formal and Informal Organization and Conclusion

Formal organizations have clear rules and hierarchies to define roles and make decisions from top management, while informal organizations rely on social norms and collective decision making. Formal structures are stable and focused on performance, whereas informal groups are temporary and prioritize interpersonal relationships. Communication is official and top-down in formal settings but unofficial and multidirectional in informal settings. While formal organizations aim to achieve goals, informal groups fulfill social and psychological needs of members.

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455 views

11, 12 - Comparison of Formal and Informal Organization and Conclusion

Formal organizations have clear rules and hierarchies to define roles and make decisions from top management, while informal organizations rely on social norms and collective decision making. Formal structures are stable and focused on performance, whereas informal groups are temporary and prioritize interpersonal relationships. Communication is official and top-down in formal settings but unofficial and multidirectional in informal settings. While formal organizations aim to achieve goals, informal groups fulfill social and psychological needs of members.

Uploaded by

saif
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Comparison of formal and informal organization

There are many differences between formal and informal organization to look through. The key
difference between formal and informal organization is that rules, regulations and procedures
administrate formal organizations, on the other hand social norms, beliefs and values
administrate informal organization. If we look into in formal organizations, jobs of all members
are very well defined and authorities are assigned. But, in informal organizations, members
dealing with each other are interpersonal relationships, which are the basis of all tasks. Besides,
in formal organizations all the decisions are taken by top management, whereas decisions of
informal organizations are a collective approach.

The objective of a formal organization is to meet particular targets while the objective of an
informal organization is to fulfill the social and psychological needs of members. The nature of
the formal organization is stable while informal organization has a temporary nature. Another
major difference between formal and informal organization is that the structure of formal
organization is hierarchical, whereas informal organization has a flat structure. Furthermore,
formal organizations are driven by performance, whereas informal organizations are based on
interpersonal relationships and communication. Communication is another difference between
formal and informal organization. Communication in formal organizations is official and is
through a chain of command while communication in informal organization is unofficial and can
flow into any direction.

The table of comparison between formal and informal organization is given below-

Basis for Formal Organization Inormal Organization


comparison
It is formed deliberately as a It is not formed deliberately and is a
Formation
part of the organization’s rules result of social interaction.
and policies.
Authority arises by virtue of Authority arises out of personal
Authority
position in management. qualities.
Behavior is prescribed by the There is no set pattern for behavior.
Behavior
managers.
Communication takes place Communication takes place through
Flow of
through formal channels only. informal channels having no fixed
Communication
path.
It is rigid in nature. It is flexible in nature.
Nature

Person with maximum Person who has greater acceptance


Leadership
authority is the leader. by the group is the leader.
Authority flows from top to Authority can flow in all the
Flow of Authority
bottom. direction.
It is more stable as it exists till It is relatively less stable as
Stability
the survival of the organization. employees can change their social
group based on their desire.
It is created to work It is created to provide social
Purpose
systematically and achieve satisfaction to employees.
organizational goals.

Conclusion

Informal or a formal organization can be recognized by how the organization ran its affairs.
While some are formed to generate profit, others are formed for social reasons. As we can say
formal organizations are established to provide services to individuals and society in general.
The employees of a formal organization serve to render services toward the achievement of the
set goals of the organizations. In formal organizations employment involves a contract between
employers and employees, there are obligations and expectations from both sides. In an informal
group the needs and interests of employees are given priorities otherwise it is referred as an
informal organization within the formal organization, to make demand on behalf of their
members.

It is proved that operation of informal organization is not harmful for the growth and progress of
the formal organization. The operation through the informal communication network or
grapevine, can have bad outcome or good outcome or unpleasant consequences if it is not well
handled by the management. Informal organization’s activities are beneficial for management as
they play complementary roles in motivational and social needs of workers for maximizing
productivity.

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