The Difference Between Formal and Informal Organization: A Comprehensive Understanding
Organizations can be classified into two broad categories; formal and informal organization. Formal organizations follow a clearly defined structure and have established rules and regulations. In contrast, informal organizations lack clearly defined structures and have no set rules and regulations. Let’s delve further to understand the difference between the two:
Formal Organization
Formal organizations are structured organizations that have a designed hierarchy, decision-making process, and procedures. The organization chart is the basis of authority and responsibility allocation, roles and responsibilities, which are officially documented. In formal organizations, the roles and responsibilities of employees are clearly stated, and employees are expected to follow the established protocol.
Formal organizations are widely adopted in industries, such as manufacturing, education, and government. For example, in a university, there is a clearly defined hierarchy where the Vice-Chancellor is at the top, followed by the Deans, Directors, and other academic staff. Each employee has a specific role, duties, and obligations, and the employee’s performance is measured according to those defined roles.
Informal Organization
Informal organizations, on the other hand, are loosely structured organizations that are not based on written rules and regulations. The power structure of informal organizations is decentralized, and the employees have more freedom to make decisions. In an informal organization, the relationships between employees are shaped by shared beliefs, socialization, and informal communication channels.
Informal organizations are commonly found in social groups, such as clubs, and in small businesses that do not have a formal structure. For example, a coffee shop that has a close-knit team working in a comfortable environment may have an informal organization structure.
Key Differences
There are several key differences between formal and informal organizations. Firstly, formal organizations have a clear structure and hierarchy, whereas informal organizations do not. Secondly, formal organizations have a set of clearly defined rules and regulations to govern employees’ behavior, while in informal organizations, employees behave based on social norms and shared beliefs. Thirdly, formal organizations assign clearly defined roles and responsibilities to their employees, while informal organizations may have a looser and more flexible approach to roles.
Conclusion
To sum up, although both formal and informal organizations have their unique features, the key difference between them is the structure. Formal organizations have a structured framework and focus on the efficient management of resources, while informal organizations are more flexible in their approach and are conducive to fostering employee relationships. In today’s modern workplaces, most organizations have a combination of both formal and informal structures, which are designed to optimize organizational effectiveness and employee satisfaction.
Table difference between formal and informal organisation
| Formal Organization | Informal Organization |
|---|---|
| Has a defined structure and hierarchy | Has an undefined structure and hierarchy |
| Rules and regulations are clearly defined | Rules and regulations are not clearly defined |
| Communication follows a formal chain of command | Communication is informal and may bypass the official channels |
| Decision-making is centralized and formal | Decision-making is decentralized and more flexible |
| There is a clear division of labor and roles | Roles and responsibilities can be fluid and overlap |
| Focuses on achieving specific goals and objectives | Focuses on social relationships and informal networks |
| Actions are governed by policies and procedures | Actions are influenced by social norms and group dynamics |
| Performance is measured through established metrics | Performance is measured through informal feedback and relationships |