Business Management, Ethics and Entrepreneurship

What is Informal Organization and its Functions?

The informal organization refers to the relationship between people that is not based on procedures but on personal attitudes, prejudices, likes, and dislikes. There always exists an informal organization in a formal organization and every manager has to recognize this fact. Barnard viewed the informal organization as joint personal activity without being conscious of the joint purpose, even though possibly contributing to joint results.

Keith Davis regards the informal organization as the network of personal and social relationships which is not established or required by the formal organization. Thus informal organization comprises the whole set of customs, social norms, and ideas by which people are influenced.

Features of Informal Organisation

The informal organization is characterized by the following features:

(i) It develops spontaneously and is not established by formal managers.

(ii) It is based on informal authority attached to the person and not the position. Informal authority is earned and not delegated. This authority under informal organization largely flows either upwards or horizontally.

(iii) Informal organization represents human tendency to cut across formal channels communication informally with other parts of the enterprise.

(iv) It is all-pervasive and exists in every enterprise.

(v) Informal organization is not always destructive, though, at times, it can make the job of management more difficult. Because of its powerful influence on productivity and job satisfaction, formal management would do well to derive benefit from the study of informal organization.

(vi) Informal organization cannot altogether be abolished. It is not created at the will of the formal managers.

Moreover, the formal managers can not do without the conventions, customers, and culture the informal organization is strongly bound with.

Functions of Informal Groups

(i) These groups maintain and continue the cultural values and lifestyle of the group.

(ii) They provide social satisfaction.

(iii) The group develops a system of communication in order to meet wants and to keep its members informed about what affects them.

(iv) They exercise social controls by which the behavior of others is influenced and regulated.

Problems Associated with Informal Organisation

(i) Resistance to Change: There is a tendency that the group may become overly protective of its lifestyle and stand like a rock in the face of change. They are strongly bound by conventions, customs, and culture.

(ii) Role Conflict: The quest for social satisfaction may lead members away from organizational objectives. What is good for the employee is not always good for the organization. This would result in a role conflict. Workers want to meet the requirements of both, their group as well as of their employer, but frequently these requirements are conflicting each other.

(iii) Rumour: Communication in informal organizations leads to the problem of rumor.

(iv) Conformity: Social control of informal groups exerts strong pressures for conformity. The closer they are attached to it, the stronger its influence becomes.

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Shreya Kushwaha

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