Know the Key Parameters of the Difference Between Formal and Informal Organisation

Know the Key Parameters of the Difference Between Formal and Informal Organisation

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Syed Aquib Ur
Syed Aquib Ur Rahman
Assistant Manager
Updated on Jun 12, 2023 18:06 IST

Find out what is an organisation to understand the difference between formal and informal organisation

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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 

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. 

  1. Formal 
  2. 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. 

Check out management courses too.

Further Reads

Know the Difference Between Organised and Unorganised Sectors
Know the Difference Between Organised and Unorganised Sectors
Discover the key differences between the organised and unorganised sectors in the economy. Understand the contrasting structures, regulations, and working conditions that define each sector.
Difference Between Group and Team – Top 5 Ways to Compare
Difference Between Group and Team – Top 5 Ways to Compare
Groups and teams are different in a variety of ways. Find the difference between groups and teams today through goals, types, characteristics, advantages and disadvantages.

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.

About the Author
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Syed Aquib Ur Rahman
Assistant Manager

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