Informal Organizations
Lourvina E. Landagan
Preface “A society is structured by formal
organizations, formal organizations are vitalized and conditioned by informal organizations…. If one fails the other disintegrates”
(Chester I. Barnard)
About Chester Irving Barnard(1886 – 1961)
American business executive, public administrator, and sociological theorist who specialized in the nature of corporate organization
His book, Functions of the Executive (1938), was widely influential in sociology and business theory
About Chester Irving Barnard(1886 – 1961)
An employee of the AT&T (1909) Became president of an AT&T subsidiary
in 1927 During the Great Depression, directed
the New Jersey state relief system Served as president of the United
Service Organizations (1942 to 1945) Also served as chairman of the National
Science Foundation (1952–54).
Informal Organizations The aggregate of the personal contacts
and interactions and the associated groupings of people
(Chester I. Barnard)
Informal Organizations “The system of relationships and lines
of authority that develops spontaneously as employees meet and form power centers; that is, the human side of the organization that does not appear on any organization chart”
Understanding Business, 6/e, (William G. Nickels )
Basic Characteristics Involves two or more people Informal relationships, groupings &
interactions Repeated contacts but without any
conscious joint purpose Involves the human need to socialize Includes both friendly and hostile
relationships and interactions
Basic Characteristics Informal association precedes formal
organization, as it requires preliminary (informal) contact and interaction before establishment
Basic Characteristics
evolving constantly grass roots dynamic and responsive excellent at motivation requires insider knowledge to be seen treats people as individuals flat and fluid cohered by trust and reciprocity difficult to pin down essential for situations that change quickly or are not yet fully understood
Formal Organization Characteristics
enduring, unless deliberately altered top-down Missionary Static excellent at alignment plain to see equates “person” with “role” Hierarchical bound together by codified rules and order easily understood and explained critical for dealing with situations that are known and consistent
Scope of Informal Organizations
Informal organizations exist within: Organization Community State or Everywhere
Functions of Informal in Formal Organizations
They perpetuate the cultural and social values that the group holds dear.
They provide social status and satisfaction that may not be obtained from the formal organization.
They promote communication among members.
They provide social control by influencing and regulating behavior inside and outside the group.
Functions of Informal in Formal Organizations
Creates cohesiveness and integration Facilitates in creating “social”
conditions that encourage willingness to work, by adding social motives
Creates a feeling of independence as informal interactions are not governed by formal rules and authority
Functions of Informal in Formal Organizations
Protects individual personality and character against negative (or corrupt) organizational influences
Informal organizations play a significant role in the development of an organizational culture, that is the aggregate of the values, norms and attitudes of its people
Benefits of Informal Organizations
Blend with formal system Lighten management workload Fill gaps in management abilities Encourage improved management
practice Understanding and Dealing with the
Environmental Crisis
Benefits of Informal Organizations
Rapid growth Learning organization Idea generation
Business Approach
Disadvantage of Informal Organizations
Resistance to change. Perpetuation of values and lifestyle causes informal groups to become overly protective of their "culture" and therefore resist change.
Role conflict. The quest for informal group satisfaction may lead members away from formal organizational objectives.
Cont.. Rumor. The grapevine dispenses truth
and rumor with equal vengeance. Ill-informed employees communicate unverified and untrue information that can create a devastating effect on employees.
Conformity. Social control promotes and encourages conformity among informal group members, thereby making them reluctant to act too aggressively or perform at too high a level.
Effects and Consequences Affects knowledge, beliefs, attitudes and
behaviour, which may spread across the entire organization with a chain reaction
Forms habits, norms, customs institutions
Creates conditions that may lead to the establishment of a formal organization (e.g. families, societies, clubs, company etc.)
Effects and Consequences Formal and informal practices often
diverge (e.g. “failure” of a policy or procedure due to “nonacceptance” by the “people”)
Informal groups also act as window to formal organizations (all organizational contacts are based on few individual interactions)
Effects and Consequences Informal organization persists and
expands with formal organization through continuity of interactions
Repeated interactions imply common (unconscious) purposes such as social, professional (unofficial), material
Lasting interactions are fundamentally based on human need for action.
Effects and Consequences Such personal relationships are often
more intense and significant than institutional (individual vs. org. loyalty)
Purposive cooperation a means of individual (or social) development
All these purposes are indirectly fulfilled through formal organizations
Thus formal organizations serve societal cohesiveness and social integration
Conceptual Application and Related Themes
A public administrator should understand and harness the social forces in the organization to the advantage of the system
To shape and guide values in the system, utilizing informal organizational concepts
Can fight against corrupt practices by encouraging developing positive informal organizations
Conceptual Application and Related Themes
Human Relations Movement – focus on human and group dynamics
Trend towards organic vs. bureaucratic systems
Organizing around values that drive people, rather than purely economic objectives
Maslow’s hierarchy of needs - Social
Conceptual Application and Related Themes
Systems theory – recognizing the influence of components on each other, on the system and vice versa
Reinforced by research in social-psychology and sociology
Recognition in modern organizational theory, of the relatively informal roles of champions and agents for change for significant organizational purposes
Examples Six senior most supreme court judges
refused to take oath under LFO. All were “sacked”. The informal organization protected their individual morality from the corrupt influences of the formal system
Examples Organizational workers in Australia as a
protest vowed to strictly “go by the book”, paralysing business activity – signifies the role of informal behaviour for organizational well being, even in routine formal matters.
Informal cooperation in govt. institutions among corrupt public servants, protecting both individual and group interests
Examples The institution of prophethood, initially
emerges as an informal organization within a social structure. After substantial growth, the institution becomes complex, and thus becomes formalized, thereby creating several other formal organizations and institutions - e.g. mosque, madrissa, shariah, fiqha, salat, zakat etc.