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Unit 10: Informal Organization

Thus, as the enterprise grows, the structure undergoes a change. The movement, in general, Notes
appears to be towards greater autonomy, flexibility, and informality and is conducive to
addictiveness and innovativeness that are keys to organizational effectiveness and success.

10.2 Importance of Informal Organization

In the informal organization, the emphasis is on people and their relationships; in the formal
organization, the emphasis is on official organizational positions. The leverage, or clout, in
the informal organization is informal power that is attached to a specific individual. On the
other hand, in the formal organization, formal authority comes directly from the position.
An individual retains formal authority only so long as he or she occupies the position.
Informal power is personal; authority is organizational.
Firmly embedded within every informal organization are informal groups and the notorious
grapevine; the following list offers descriptions of each:
Informal Group: Workers may create an informal group to go bowling, form a union,
discuss work challenges, or have lunch together every day. The group may last for several
years or only a few hours.
Sometimes employees join these informal groups simply because of its goals. Other times,
they simply want to be with others who are similar to them. Still others may join informal
groups simply because they want to be accepted by their co-workers.
The Grapevine: The grapevine is the informal communications network within an organization.
It is completely separate from and sometimes much faster than the organization’s formal
channels of communication.
Formal communication usually follows a path that parallels the organizational chain of
command. By contrast, information can be transmitted through the grapevine in any direction
up, down, diagonally, or horizontally across the organizational structure. Subordinates may
pass information to their bosses, an executive may relay something to a maintenance
worker, or employees in different departments may share tidbits.
Grapevine information may be concerned with topics ranging from the latest management
decisions to the results of today’s World Series game to pure gossip. The information may
be important or of little interest. By the same token, the information on the grapevine may
be highly accurate or totally distorted.

The informal organization of a firm may be more important than a manager realizes.
Although managers may think that the informal organization is nothing more than rumours
that are spread among the employees, it is actually a very important tool in maintaining
companywide information flow. Results of studies show that the office grapevine is 75
per cent to 90 per cent accurate and provides managers and staff with better information than
formal communications.
Rather than ignore or try to suppress the grapevine, managers make an attempt to tune in
to it. In fact, they should identify the people in the organization who are keys to the
information flow and feed them information that they can spread to others. Managers should
make as big an effort to know who their internal disseminators of information are as they
do to find the proper person to send a press release. Managers can make good use of the
power of the informal organization and the grapevine.

Draw the organizational structure of an informal organization.

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