What is Informal Organization?
The informal organization is the interlocking social structure that governs how people work together in practice. It is the aggregate of behaviors, interactions, norms, and personal/professional connections through which work gets done and relationships are built among people. It consists of a dynamic set of personal relationships, social networks, communities of common interest, and emotional sources of motivation. The informal organization evolves organically in response to changes in the work environment, the flux of people through its porous boundaries, and the complex social dynamics of its members.
Key Characteristics of Informal Organizations
The nature of the informal organization becomes more distinct when its key characteristics are juxtaposed with those of the formal organization. The informal organization is characterized by constant evolution; grass roots; being dynamic and responsive; requiring insider knowledge to be seen; treating people as individuals; being flat and fluid; being cohered by trust and reciprocity; and being difficult to pin down.
Functions of Informal Organizations
Keith Davis suggests that informal groups serve at least four major functions within the formal organizational structure.
First, they perpetuate the cultural and social values that the group holds dear. Certain values are usually already commonly held among informal group members. Day-to-day interaction reinforces these values that perpetuate a particular lifestyle and preserve group unity and integrity. For example, a college management class of 50 students may contain several informal groups that constitute the informal organization within the formal structure of the class.
Second, they provide social status and satisfaction that may not be obtained from the formal organization. In a large organization, a worker may feel like an anonymous number rather than a unique individual. Members of informal groups share jokes and gripes, eat together, play and work together, and are friends—contributing to personal esteem, satisfaction, and a feeling of worth.
Third, the informal group develops a communication channel to keep its members informed about what management actions will affect them in various ways. Many astute managers use the grapevine to "informally" convey certain information about company actions and rumors.
Finally, they provide social control by influencing and regulating behavior inside and outside the group. Internal control persuades members of the group to conform to its lifestyle. For example, if a student starts to wear a coat and tie to class, informal group members may convince the student that such attire is not acceptable and therefore to return to sandals, jeans, and T-shirts.
Under rapid growth business approach, Starbucks, which grew from 100 employees to over 100,000 in just over a decade, provides structures to support improvisation. Under the Learning Organization model, following a four-year study of the Toyota Production System, Steven J. Spear and H. Kent Bowen concluded in Harvard Business Review that the legendary flexibility of Toyota's operations is due to the way the scientific method is ingrained in its workers—not through formal training or manuals but through unwritten principles that govern how workers work, interact, construct, and learn.