What is the difference between formal and informal organization?
An organization comprise a group of people who come together to achieve a certain objective. The structure of the organization can either be formal or informal. The article provides a detailed insight into the difference between a formal and informal organization with a comparison table.
Definition of Formal Organization
A formal organization is a collection of persons who follow a formal relationship, rules and policies to accomplish a common objective. It is formed based on compliance and there exists a system of authority.
The formation of the type of organization is deliberated by top-level management. The main objective is to accomplish organizational goals.
Main Types of Formal Organization
- Matrix Organization
- Line Organization
- Project Management Organization
- Line and Staff Organization
- Functional Organization
Definition of Informal Organization
The informal organization is a group of people where they interact informally and develop connections through mutual interactions.
The structure of the organization depends on the norms, relation and affiliation of the people. Members work together in their individual capacities and not professional.
Comparison Chart: Formal Vs Informal Organization
|Basic Terms||Formal Organization||Informal Organization|
|Formation||Account for delegation of authority||Account for social interaction of the people|
|Emphasis On||Terms of authority and functions||People and their relationships|
|Control Structure||Set rule, regulations, rights, and duties||Has unwritten rules and norms.|
|Hierarchical Authority||From top to bottom||Flows upward or horizontally|
|Size of the Organization||Large||Comparatively small|
|Objective||Earn profit||Social satisfaction|
|Necessity||Satisfies needs and wants of people||Essential for every enterprise|
|Position||Has an ideal form of position||Has informal positions|
|Focus on||Work performance||Interpersonal relationship|
Differences between Formal and Informal Organization
- The primary nature of the formal organization is to gain fixed definitive goals while that of the informal organization is to gain individual social and psychological needs of its sharers.
- A formal organization is formulated from a formal plan and proposal whereas informal organization is spontaneously and abruptly formed.
- The working mechanism of formal organization is governed by a set of rules and regulations of actions while the informal organization has no rules.
- The formal organization has official communication whereas informal organization has grapevine communication.
- The size and scope of the formal organization are large while that of the informal organization is small.
- The chain of command informal organization is clear and explicit unlike that of informal organization.
- The authority in formal organization flow from top to bottom whereas in the informal organization from all sides.
- The formal organization show organizational charts, unlike informal organizations.
- Formal organization tend to be quite stable when compared to an informal organization.
- Formal organization focus on work performance while informal organization on interpersonal relationship.
- The main objective of formal organization is to earn a profit while the informal organization is to promote social interaction.
- The formal organization has an ideal position whereas informal organization has informal positions.
- The control mechanism of formal organization is based on rules and regulations whereas informal communication on norms, values and beliefs.
- Supervision of members informal organization is quite easy whereas in informal communication is difficult.
- Top management gives authority in the formal organization whereas in the informal organization is the peer group.
The informal organization is simply the opposite of formal communication. The core difference between formal and informal organization is based on the size and method of formation.
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