Know the Key Parameters of the Difference Between Formal and Informal Organisation
Find out what is an organisation to understand the difference between formal and informal organisation
In a formal organisation, each member’s role, authority, hierarchy, and accountability are clear. An informal organisation, on the other hand, consists of members who share similar traits, interactions, and responsibilities that are not necessarily hierarchical. So, the main difference between formal and informal organisation is based on the structure of relationships between senior management and members, and among members themselves. Each of them serves different purposes.
Difference Between Formal and Informal Organisation
Have a look at the key parameters of the difference between formal and informal organisation.
| Parameter | Formal Organisation | Informal Organisation |
| Structure Based on | Procedures and policies | No policies or procedures but attitudes or similar work roles |
| Communication | From top to bottom in a formal manner | Group consensus |
| Purpose | Specific to organisational objectives | Non-specific and is related to serve the purpose of employees’ social satisfaction |
| Nature | Rigid | Flexible |
| Authority | Provided by management | Provided by the group |
| Decision-making | Slower | Faster |
| Advantages | Each member is aware of the roles and responsibilities assigned to them | Adaptable to changes |
| Disadvantages | May make members disconnected from their roles | May take the wrong decisions that do not benefit the organisation |
Check out the difference between group and team
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What is an Organisation?
An organisation can be a company or institution that consists of individuals who have specific goals to fulfil a bigger objective. It is a social system with a defined structure of formal and informal relationships, and hierarchies.
There are two types of structures in an organisation.
- Formal
- Informal
As you can now tell, the difference between formal and informal organisation is based on the structure.
Formal Organisation
A formal organisation is defined by the senior management. In this structure, the members have specific roles to maintain so that the goals of the organisation are achieved.
For that to happen, the communication, flow of authority, and supervision are important factors to consider.
Elements of Formal Organisation
- Functional Organisation Structure – Here an employee works under various managers for different areas
- Linear Organisation Structure – Every member has one superior and the superior has a team
- Matrix Organisation Structure – There are two types of command here – the project team has a horizontal line of command while the other departments have a vertical line of command
Informal Organisation
In informal organisation, the communication occurs across different teams who may together operate to temporarily achieve desired objectives. But as the structure is more informal, they are grouped together as per their beliefs and attitudes.
Members in an informal organisation have more or less the same influence and are not supervised or mentored by a superior. If there is any decision to be made, it is more based on group consensus.
Decision-making becomes faster in an informal organisation. In contrast, decision-making in a formal organisation flows down from top to bottom, which is why, it takes more time.
There are also no guidelines for communication in an informal organisation, as is the case with a formal organisation.
Parting Thoughts
Hope you now know the difference between formal and informal organisation. Both are necessary for an organisation to function to its fullest, as solely focusing on one over the other will bring out the disadvantages as mentioned above.
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Further Reads
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FAQs
How does the structure of a formal organisation differ from that of an informal organisation?
The structure of a formal organisation is characterized by a clear hierarchy, predefined roles, and reporting relationships. In contrast, an informal organisation lacks a formal hierarchy and roles, and its structure is based on social connections and personal relationships.
What factors contribute to the stability and persistence of formal organisations versus informal organisations?
Formal organisations tend to be more stable and enduring due to their established mechanisms for decision-making, problem-solving, and adaptation. Informal organisations, being more fluid, can emerge and dissolve spontaneously based on the needs and interests of individuals or groups.
Aquib is a seasoned wordsmith, having penned countless blogs for Indian and international brands. These days, he's all about digital marketing and core management subjects - not to mention his unwavering commitment ... Read Full Bio
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