An informal organisation is a system of social relations, which naturally emerges on its own within the formal organisation to meet the cultural and social needs of the members of the organization. An informal organisation does not have a clear and well-defined structure because it is a complicated network of social relations among members.
Members of formal organisations interact or communicate among themselves while performing the duties assigned to them and develop friendly relations and form small social groups to meet social and cultural needs. Thus, the network of these social groups, called an informal organisation, naturally emerges on its own within the formal organisation. Since the informal organisation emerges within the formal organisation, the informal organisation is considered to be a part of the formal organization.
An informal organisation is a part of the formal organisation because an informal organisation originates from and within the formal organisation to meet the social and cultural needs of the workers.
Whatever the type of an organisation or its formal structure, an informal organisation will always be present. The informal organisation arises from the interaction of people working in the organisation, their psychological and social needs, and the development of groups with their relationships and norms of behaviour, irrespective of those defined within the formal organisation structure.
Characteristics of an Informal Organisation
The characteristics of an informal organisation are as follows:
1) Creation: It naturally emerges on its own as a result of social interactions among people.
2) Purpose: It emerges to fulfil the cultural and social needs of the members of the organisation.
3) Structure: It does not have a clear and well-defined structure because it is a complicated network of social relations among the members.
4) Authority: The authority in an informal organisation is personal and is given by group members of an organisation.
5) Degree of Flexibility: It is more flexible in the sense that standards of behaviour are not officially prescribed, but are evolved by mutual approval of group members. Deviation from the mutually agreed behaviour is permitted to some extent.
6) Use of Grapevine: It makes more use of info faster than for communication (which is popularly known as Grapevine”). Informal communication is faster than formal communication but the greatest trouble is that it may give rise to rumours. Rumours may prove to be destructive to the interests of the organisation.
7) Chain of Command: Informal Organisations may or may not follow the official chain of command.
8) Leadership: Leaders are chosen willingly by the group members. An informal leader may or may not be the superior under whom the group members operate.
9) Membership: A person can be a member of one or more than one groups according to his choice. He may be a leader of one group and a follower of another.
Advantages of Informal Organisation
1) To Employees
i) Sense of Belonging: In a formal organisation, there is a lack of a sense of belongingness and personal satisfaction.
ii) Value for Emotional Problems: In the daily work routine, there are many opportunities for frustration and tension.
iii) Aid on the Job: In case of casualties or illness, members of an informal group help one another.
iv) Innovation and Originality: By enabling members to modify the job situation more to their liking, the informal organisation creates the required environment for personal innovation and originality. The person can experiment with his ideas.
v) Important Channel of Communication: News travels fast via informal groups. They are the clandestine transmitters & receivers of information before it is officially released.
vi) Social Control: Informal group provide all its members with a set of norms and guides to correct behaviour. Group members are expected to correspond to those norms.
vii) Check on Authority: Informal groups force the manager to plan and act more carefully than he would otherwise. An informal organisation is a check and balance on the limitless use of authority by a manager.
2) To Management
i) Effective Communication: In the lack of any definite course, it is an effective system of communication. Messages can be fastly conveyed from one place to another with the help of this system.
ii) Fulfils Social Needs: In the informal organisation, people having similarities in thoughts and ideas form groups of their own. All the individuals in the group stand by one another in all personal or organisational matters.
iii) Fulfils Organisational Objectives: Here there is no pressure of formal organisation. In an informal organisation, the subordinates put their views before their superiors without any fear or hesitation. It helps the superiors to understand their difficulties and immediate solution to the problem is sought out. Since the problems are smoothly solved, it becomes easier to achieve the goals of the organisation.
iv) Less Supervision: Informal group is self-policing. It relieves the management of much of the burden of supervision.
v) Aid to Management: The information gives the manager much feedback about employees and their work experiences thereby improving his understanding of what he requires to do.
Disadvantages of Informal Organisation
1) Resistance to Change: An informal organisation is bound by customs, conventions, and culture.
2) Role Conflict and Sub-Optimisation: In an informal organisation, everyone works towards the same objectives. Members put their group objectives ahead of the organisation’s objectives. Hence, the organisation suffers.
3) Rumour: An informal organisation sometimes functions as a carrier of rumour.
4) Group Think Philosophy: Employees become loyal to their groups. They believe that what they seek must be fine because the group has decided so. Thus, there develop delusions of righteousness.
5) It Resists Change: This organisation resists change and lays stress on adopting the old techniques.
6) Pressure of Group Norms: In this organisation, people are under pressure to observe group norms. Sometimes the people assembled in informal groups lose sight of their objective, and all decide to oppose their superiors unanimously. Such a situation adversely affects productivity.