Informal Organization

Knowledge Center

What is an Informal Organization?

The Informal Organization (IO) is a concept in management practice that denotes the (social) networks, relationships, communication channels, and social interactions among employees that develop outside the firm's official, formal authority structure. It includes the aggregate of personal and social relationships that arise spontaneously as people associate with one another in the work environment. It is the complex of social interrelationships in habitually recurring patterns, collaborations or mutual assistance associations, arising from the combination or cooperation of persons within the framework of a given activity or organization.

The IO can make its counterpart, the formal organization, more effective by providing support to management, by adapting quickly to changes in the environment, and by improving communication. Here is a more comprehensive list of the various pros and cons of the IO:

Benefits of the Informal Organization

1. Flexible and Adaptable: The IO can adapt to change faster than formal systems. Employees can avoid and bypass bureaucracy to quickly make a decisionn or share some information, promoting innovation and responsiveness.
2. Fast and Open Communication: Informal (social) networks typically provide open communication, allowing employees to freely share information, ideas, and feedback. This can lead to faster problem-solving and decision-making, especially in situations where formal communication is slow or problematic.
3. Collaboration and Teamwork: The IO can foster strong interpersonal bonds and collaboration that formal structures may not address. Informal networks often also transcend hierarchical boundaries and encourage cross-departmental collaboration and a sense of camaraderie.
4. Morale and Engagement: Employees in informal networks can feel more connected and supported by their colleagues, which can improve job satisfaction and overall morale by providing emotional support and a sense of belonging, which increases motivation.
5. Quick Problem Resolution: Informal networks can sometimes identify and solve problems more quickly than formal channels, especially when the problem requires creative thinking that formal structures might hinder.
6. Information Access: Social connections in the IO can increase "social capital", giving employees more influence and access to resources or information that might not be available through formal channels.

Disadvantages of the Informal Organization

1. Lack of Accountability: As the IO operates outside of formal structures it lacks clear accountablity and there can be confusion about who is responsible for what.
2. Groupthink and Bias: Informal groups can reinforce homogeneity, with members sharing similar opinions, experiences, and biases. This can lead to groupthink, which discourages critical thinking and dissent, ultimately limiting innovation or effective problem solving.
3. Favoritism and Exclusion: The IO sometimes creates in-groups and out-groups, leading to cliques or favoritism. Employees who are not part of certain networks may feel excluded, which can damage morale and create divisions within the company.
4. Undermines Formal Authority: If employees turn to informal channels instead of following official procedures, this can lead to conflict or confusion about who has decision-making authority.
5. Rumors and Misinformation: When communication is neither structured nor controlled, this can can contribute to the spread of rumors or misinformation. This can lead to misunderstandings, mistrust, and can harm the organizational culture.
6. Lack of Long-Term Stability: While the IO is flexible and fluid, it is less stable and reliable than formal structures and can collapse or change quickly and unnoticed, potentially leaving the organization vulnerable.

Forum Start a new topic about the Informal Organization Write here. Ask a question or explain something. Forum about the Informal Organization. 🔥 Shadow Systems in Organizations In every organization, there's the official way things are done, and there's the real way. The latter often partly lives in the shadows: undocumented workflows, informal networks, and improvised solut... 15   5 comments Functions of Informal Organization Hi every one..... What are the Functions of an informal organisation?... 12   1 comments Rumors and Informal Communication Inside the Organization How does the appearance and spreading of rumors affect communication inside an organization? And what can a manager do to address this kind of situation?... 3   1 comments

Courses about the Informal Organization. Beginners Course Advanced Course Course for Experts

Expert Tips Advanced insights about the Informal Organization. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips

Information Sources Various sources of information regarding the Informal Organization. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Overview of the Informal Organization Informal Organization Presentation that elaborates on the concept of informal organization. The presentation includes the following sections: ... Formal and Informal Organizational Concepts Organizations, Networks, Formal Organization, Informal Organization, Organizational Concepts Presentation about formal and informal organization networks. The presentation includes the following topics: 1. Formal... Types and Functions of Organizational Communication Communication Functions, Communication Structures, Network Organization, Communication Networks Presentation about Organizational Communication Networks and related concepts, including the following sections: 1. Fun...

Tools Useful tools regarding the Informal Organization. News Videos Presentations   Books Academic More

Compare also: Organic Organization  |  Organization Chart  |  Decentralization  |  Chaordic Organization

Return to Management Hub: Change & Organization  |  Communication & Skills  |  Decision-making & Valuation  |  Human Resources

More on Management  |  Return to Management Dictionary

This ends our Informal Organization summary and forum.