INFORMAL ORGANIZATIONS

INFORMAL
ORGANIZATIONS
Chapter 16 :
Informal
Organizations
Nature of Informal
Organizations
Benefits and Problems
of Informal
Organizations
Informal Communication
Essential
Features of the
Grapevine
Factors
Responsible for
Grapevine
Patterns of the
Grapevine
Management
Response to the
Grapevine
Difference
between a
Grapevine and a
Rumor
Managing Informal
Organizations
Chapter Summary
An informal organization
refers to all the channels
of interaction that are not
defined by the formal
organizational structure.
As opposed to the formal
organization, the various
relationships in an informal
organization arise
spontaneously as people
interact with one another
and discover common
areas of interest. There
are various differences
between a formal and an
informal organization. In a
formal organization, the
primary focus is on the
official position, held by an
individual while in an
informal organization; it is
on the relationships
between people. Another
significant difference
between formal and
informal organizations is
that power in a formal
organization is derived
from the position held in
the organization, while, in
an informal organization,
the personality of the
individual provide him with
power.
According to J. L. Gray and
F. A. Starke, formal and
informal organizations also
differ from each other on
the parameters of
organizational structure,
position terminology, goals
of the organization, basis
of influence, control
mechanisms, channels of
communication, charting of
member relationships, and
mixed characteristics.
Members of an informal
organization differ from
one another in their
experience, seniority,
salary, educational or
technical qualifications,
personality, birthplace and
the nature of their
workplace. These
characteristics not only
differentiate the members
of an informal organization,
but also accord status to
them. The informal leaders
are chosen on the basis of
the status ascribed to them
by the other members of
the informal organization.
These leaders wield a
considerable amount of
personal power and can
affect the productivity of
the organization either
positively or negatively.
Although it is not
necessary for an informal
organization to have only
one informal leader, the
person who exercises a
greater degree of control
over the other members of
the informal organization is
generally considered the
primary leader. The
management of an
organization should
identify these informal
leaders and develop a
good professional
relationship with them to
facilitate the smooth
functioning of the
organization.
Informal organizations
benefit the organization in
many ways. They help in
the development of an
effective organizational
system and reduce the
workload of managers.
Informal organizations also
provide employees with an
outlet to express their
anxieties and problems,
improve job satisfaction,
and reduce employee
turnover.
In spite of its merits,
informal organizations, at
times, also create many
problems. It may act as a
barrier to organizational
change. Conflicts may also
arise between the members
of the informal
organization. Sometimes,
its members may
experience a conflict due
to the diverse roles they
have to play as members
of the formal work group
and the informal group.
The biggest problem an
informal organization faces
is to ensure that the
members conform to its
norms and the use of
penalties and sanctions to
punish those who deviate
from these norms.
The communication channel
in an informal organization
is called the grapevine.
The grapevine thrives in
all those places where
people interact with one
another and tends to be
active in periods of stress
or insecurity. The nature
of a person's job as well
as his personality affects
the role he plays in a
grapevine. Earlier, the
management ignored the
grapevine. Now however,
in many organizations, the
management acknowledges
the presence of the
grapevine. It tries to
identify the key players in
the grapevine and how
information travels along
the grapevine.
Rumors are so strongly
associated with the
grapevine that these two
terms are often used
interchangeably. However,
they do not mean the same.
A Rumor is incorrect
information that is not
supported by substantial
evidence. It generally
arises out of ambiguity and
interest in a particular
situation. Various types of
rumors may spread in an
organization and the
management can control
rumors by paying heed to
them, identifying the
causes, and above all, by
releasing the facts behind
the rumors. The
management can also seek
the support of union
leaders to prevent the
damage caused by rumors.
The management should
realize that informal
organizations cannot be
done away with. They
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