The informal organizational structure is a network of personal and social relationships or friendships that arise as people associate with other people in the work environment. This network is not planned or official, but develops spontaneously. The network is not shown on the firm’s organizational chart.
Within any business there are two types of organization – the formal organizational structure and the informal organizational structure.
As we already know, business organizations have a formal organizational structure which is the way how the business is organized by those with responsibilities for managing the entire firm organization.
But every formal organizational structure that has been put in place by management has an accompanying informal structure. In addition to any formal arrangements, an informal organizational structure also has a considerable impact on the business success.
What is informal organizational structure?
An informal organizational structure is the network of personal relationships and social connections that develop within every single business organization.
The informal organizational structure, which crosses departmental lines, is used for many reasons including sharing information, giving assistance and advice to other employees, etc.
While management can fully control formal organizational structures, it is not able to control the informal structure. It is because informal structures are not easy to identify, have no written rules and regulations but unknown norms and standards of behavior, and become fluid without any boundaries.
Membership in informal groups at work has very vague guidelines as the conduct of individuals within these groups is regulated by specific social norms that are common to the rest of the group.
By being a member of an informal corporate structure within a business, the worker can obtain power and influence as the main focus of the informal organization is the employee as an individual person.
How informal organizational structures develop?
In most of the business organizations, an informal organizational structure develops based on the reality of daily interactions between employees. It is then different from that which is set out on paper.
This happens especially when the formal structure has been badly set out because the informal structure simply becomes more efficient at meeting organizational objectives.
Workers find new faster and easier ways of doing tasks. It is easier for them to work with informal structures. People like working with friends, so patterns of interactions are shaped by relationships rather than orders. Or simply people tend to forget what the formal structure is.
That is why business managers need to identify informal groups built on friendship to formalize the elements of the informal structure. This is done by adapting the formal structure to incorporate improvements which result from the day-to-day working of the informal structure.
As a result, it can lead to high levels of motivation for the employees involved.
Informal organizational structure – Evaluation
Informal organizational structures can be either beneficial or harmful to the business. Business managers need to learn to skillfully work with both formal and informal structures on daily basis.
The informal organizational structure may have the following advantages:
- Improved communication. Management can spread information quickly into the informal structure at very low cost. Feedback to the information can also be received quickly. Additionally, this form of communication gives people a sense of being in the know.
- Satisfy social needs. Social and belongingness needs of workers can be better satisfied. This can improve their effectiveness at work as they are positively affected by the employees around them.
- Support the formal organizational structure. Informal organizational structure can fill in the gaps in the formal structure, avoid personality clashes between workers in different groups and support teamworking, as well as reduce bureaucracy.
The informal organizational structure may have the following disadvantages:
- Rumors and misinformation. Informal organizational structure can turn a meaningless gossip into the ranks of the truth. Confidential information may be exposed at any time with management being clueless what information is flowing through the informal structure.
- Wasting time. Employees may waste a really great deal of time participating in spreading gossips or nurturing social small talks way too often.
- Informal cliques. When the informal structure conflicts with the formal one, the business will become less efficient at meeting business objectives. And when the informal group leader becomes influential, he can circumvent chain of command and gain more power than the formal team leader.
In short, while the organizational chart defines the formal organizational structure, the informal organization structure is all the other aspects such as personal relationships and social networks.
