FORMAL AND INFORMAL ORGANIZATION

The classical theory describes the formal organization while the human relations theory highlights the informal organization. A formal organization is that which is depicted in organizational charts; diagrams, manuals, service books etc.


By formal organization we mean the organization as deliberately planned, designed, and duly sanctioned by competent authority. It is organization as it appears to the observer from outside. But an informal organization is not written and is depicted by social relationships in the organization.

In an organization there continually occur interactions, contacts and relationships which are not part of or governed by formal organization. These contacts may be incidental or accidental to organized activities or may arise from some personal desire or even gregarious instincts. Contacts may be friendly or hostile.

These contacts make an informal organization which in the words of Chester Barnard, prefers to the aggregate of the personal contacts and interactions and the associated groupings of people.

An important attribute of an informal organization is that it is indefinite, structure less and has no definite sub-division. Informal organization could be seen as the pattern of the actual behaviours of the personnel in it. This actual behaviour often differs from the behaviour as expected in the formal organization.

A discussion of organizations commonly includes some examination of their “formal” and “informal” attribute. The “overlays” or informal attributes (collectively called by the name informal organization), it should be noted, are based on and could not exist without the formal. Five will be described here - (I) Socio-metric overlay, (2) functional over1ay, (3) decision overlay, (4) power overlay and (5) Communication overlay.

The Socio-metric overlay describes the pattern growing out of the feelings of social attraction or rejection that people have for each other. Person - to person contacts between any levels of the organization regardless of the more formal arrangements are encouraged or discouraged by the personal feelings. Another, the functional overlay refers to contacts such as those between the staff specialist, who has a specific expertise, and those through out of organization who directly seek his guidance or cooperation outside the formal channels. 

Pfiffner and Sherwood’s decision overlay describes the relationships based on going directly to the people who have the real influence in reaching a decision and by-passing the formal lines. A power overlay would indicate the key people who can accomplish something because they know the roles. They are in intimate touch with the formal decision makers, or they are highly respected in spite of their relatively low position in the organization. The communication overlay reveals the actual pattern of pathways which information such as correspondence takes in moving through the organization.

Informal organizations are necessary to the operation of formal organizations as a means of communication, of cohesion, and for protecting the personality and integrity of the individual. The informal patterns developed over and beyond, but not in total disregard of the more formally structured organizational arrangements which allow the organization the flexibility which such a social grouping requires. 

Thus, informal organizations serve to:
·        help attain personal objectives,
·        provide social satisfaction,
·        provide channel of communication; grapevine – rumour; and
·        exercise social control of behaviour - internal and external. 

Informal organization produces effects which may fall into two classes. Firstly, it establishes certain attitudes, understandings, customs, and habits. Also it creates the condition under which formal organization may arise, The most general direct effects of informal organization are customs, mores, folklore, institutions, social norms and ideals. These customs and norms are very powerful  as much as, if there is a clash or conflict between a practice establ4shed by legal enactment and a custom, the latter usually prevails. Secondly, informal organization is a condition which necessarily precedes formal organization.

The possibility of accepting a common purpose, of communicating, of attaining a state of mind, of producing a willingness to co-operate requires prior contact and preliminary interaction. It must also be remembered that informal organization compels a certain amount of formal organization. This flows from the thought that similarity of needs and interests which continuation of contact implies must persist, which in turn requires formal organization. 

The attitudes, institutions and customs of the informal society affect and are partly expressed through formal organization. As Chester I. Bernard puts it, the formal and informal organizations are interdependent aspects of the same phenomenon - as society is structured by formal organization; formal organizations are vitalized and conditioned by informal organization. What is asserted is that there can not be one without the other.

If one fails the other disintegrates; Formal organizations arise out of and are necessary to informal organization, but when formal organizations come into operation, they create and require informal organizations.
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