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Informal Organizations

In general organizations are collections of individuals, collectives with collective tasks to perform. The collective tasks are dissected into subtasks and members are assigned to them, creating organizational positions. These positions prescribe the duties, activities and authority relationships of each organization member. The classical organization structure is built around positions and not around people. In reality, such a formal structure shows only one set of relationships, the officially planned relationships, between groups and individuals working together. Other important relationships exist, often, called the informal organization exerting a powerful influence upon productivity and job satisfaction. They blend with formal system to make a workable system for getting the work done in a smooth way other formal and informal relationships are necessary for group activity. As pointed out by Davis, they serve to preserve the organization from the self destruction that would result from internal obedience to rules and regulations.


30.7.1 Nature


The informal organization can be viewed as a shadow organization. It arises naturally, spontaneously from the interaction of people. It refers to unofficial and unauthorized relationships that inevitably occur between individuals and groups within the formal organization. It exists within the confines of the formal authority structure. However, the interactions that occur informally are not prescribed by the formal structure nor can they be completely controlled by the formal structure. It is by product of human nature and is affected by the formal structure.


30.7 .2 Formal and Informal Organization Compared and Contrasted


1.         Origin. Formal organizations are goal oriented. They are tightly built around the general principles of organization and are the result of conscious thought processes. Informal organization develops naturally. Informal structure reflects individual and group goals rather than organizational goals. Changes in informal organization structure occur through collective agreements between members. In contrast, changes in informal organizations occur through administrative policies.


2.         Basic structural components. Formal organizations have a definite structure reflected in the organization charts providing a pictorial representation of authority relationships. These organization charts are built around positions end exhibit officially blessed relationships. The organization tends to be mechanical and impersonal. Informal organizations are built around people. They are structure less. Moreover, they are initiated by the workers themselves to serve the needs of workers. The basic purpose is to improve human relationships.


3.         Goals. Formal organizations are wedded to well define goals created by management. These goals may be to skim mercilessly an exploitative surplus from out of the GNP or to increase the market share of efficiency etc. Whereas the basic purpose of an informal organization can be broadly defined as the social satisfaction of its members. It is the primary duty of every manager to provide meaningful goals to organizational participants so that there is no conflict between individual (informal) and organizational (formal) goals.


4.         Influence Processes. In formal organizations, ‘positions conferred on individuals are the centres of power and influence. Authority is equated with influence. People enjoying authority are supposed to be powerful. In contrast, influence in the informal organization is attached to the person. The individual with the most influence is the person who is most able to satisfy the needs of the group. The stamp of approval from the relevant group is necessary to enjoy power and influence in the informal groups.


5.         Control Process. Formal organizations are tied to a rigid system of rules and regulations. Control points are established to constrain behavior, restrain the members from going off the track. Informal organizations are not glued to any rigid system of rules but are governed by group norms. Norms are standards of behavior designed to regulate social behavior along acceptable lines. Formal rules may be so much of a waste paper once they are not ‘approved’ by the informal groups.


6.         Communication. Formal organizations depend on formal, official channels of communication. These officially blessed instruments are employed scrupulously to convey the feelings of management to workers. Communication, thus, largely is a oneway traffic. The informal organization designs its own channel of communication, popularly known as ‘grapevine’ for both organizational and social communication purposes. The grapevine can spread rumors and false information as rapidly as it can ‘spread facts. It tends to outstrip formal channels on speed.


7.         Size. Formal organizations can balloon to gigantic, unmanageable proportions depending on the degree of success enjoyed by them in the market. In contrast, informal organizations tend to be small and manageable.