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Managing Human Element at Work

Notes 10.3 Informal Group Formation

Reasons which account for the formation of informal groups are legion. A number of
theories have been advanced by social and organizational psychologists to explain the
formation of informal groups. These are as under:
Propinquity Theory: The most basic theory explaining the formation of groups is propinquity.
This means that individuals affiliate with one another because of spatial or geographical
proximity. In an organization, employees who work in the same area of the plant or office
or managers with offices close to one another would more probably form into groups than
those who are not physically located together.
Similarity Theory: According to Theodore Newcomb “birds of a feather flock together”.
People with similar attitudes, interests and work-related needs are attracted to one another.
Thus, employees may form a union for fighting indiscrimination or unilateral treatment of
the employer.

Complementarity Theory: According to Winch, “opposites attract each other”, i.e. people
with complementary needs and/or abilities are attracted to one another.
Social Comparison Theory: According to Festinger, an individual joins a group because he
suffers from the need for self-evaluation, i.e. he wants to “test” himself against other
members to determine whether or not his opinions, ideas, and judgements correspond to
those of others in the group.
Interaction Theory: According to George Homans, group formation is the result of activities,
interactions and sentiments. The more activities persons share, the more numerous will be
their interactions and the stronger will be their sentiments; the more interactions between
persons, the more will be their shared activities and sentiments; and the more positive
sentiments persons have for one another, the more will be their shared activities and
interactions.
Exchange Theory: The approach to group formation, receiving the most recent emphasis is
the exchange theory. It is based upon reward-cost outcomes of interaction. A minimum
positive level (rewards greater than costs) of an outcome must exist in order for attraction
or affiliation to take place. Rewards from interactions gratify needs while costs incur anxiety
frustration, fatigue or boredom.

10.4 Types of Informal Groups

John M. Pfiffner and Frank P. Sherwood have identified five types of informal groups that
function outside the formal organizational structure. They call these groups “overlays”.
These are as follows:
• Social overlays, comprising employees with similar work-related needs that bring
them together.
• Functional overlays, comprising employees who exert influence and affect the course
of action on account of an extraordinary amount of knowledge and know-how which
they possess. People respect them and solicit their assistance outside of formal channels.
They assume no responsibility when operating in this way but nevertheless affect the
course of action.
• Decision overlays, comprising employees who are respected and consulted on account
of their old age, mature judgement and wisdom over and beyond their position or
function in the formal hierarchy.

• Power overlays, comprising employees who have power as distinct from authority.
Thus, an executive’s confidential secretary may wield power far in excess of his actual

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