Difference Between Formal Organization and Informal Organization

The main difference between the Formal Organization and the Informal Organization is that the Formal Organization is an organization in which the work of each member is clearly defined, whose authority, responsibility and accountability are fixed, and the Informal Organization is formed within the formal organization as a network of interpersonal relationship when people interact with each other.

Formal organization versus informal organization

The formal organization is goal-oriented. It was based on the general principles of the organization and the members of the formal organization are fully aware of these principles. An informal organization, on the other hand, develops automatically and spontaneously. In other words, formal organizations were created deliberately, while informal organizations formed spontaneously. A formal organization has a definite and specially designed structure reflected in the organization, while informal organizations are groups without structure. Formal organizations are created to achieve goals defined by management. On the other hand, the main objective of an informal organization is to satisfy the individual intentions of its members. Formal organizations have a rigid system of rules and regulations that all members are supposed to follow. Informal organizations not tied to a rigid system of rules and regulations. With formal organizations, authority is equated with influence. The person at the top is becoming the most effective person. In stark contrast, it influences the informal organization attached to the person. The informal group attaches more value to that man who can meet the needs of the group members. The person at the top is becoming the most effective person. In stark contrast, it influences the informal organization attached to the person. The informal group attaches more value to that man who can meet the needs of the group members. The person at the top is becoming the most effective person. In stark contrast, it influences the informal organization attached to the person. The informal group attaches more value to that man who can meet the needs of the group members.

Comparison chart

What is a formal organization?

The creation of such an organization is deliberate by top management. The organization has its kind of rules, regulations and policies laid down in writing. The essential objective of establishing an organization is the achievement of the goal of the organization. For this, the assigned work is applied, the powers delegated to each member and the concept of division of labor and specialization of the workers, for which the work is assigned based on their abilities. In addition to this, there is a scalable structure, which determines a logical relationship of authority and follows a chain of command.

Types

• line organization
• Line and staff organization
• functional organization
• Project management organization
• Matrix organization

What is the informal organization?

An informal organization formed within the formal organization; which is a structure of interpersonal relationships between individuals working in a company, which is created as a result of people meeting, interacting and associating with each other. There is no defined category of rules and regulations that manage the relationship between members. Instead, it is a kind of social norms, connections and interaction. The organization is personal, that is, rules and regulations are not imposed on them, their opinions, feelings and points of view are respected. However, it is temporary and does not last long. In an informal organization, there are no defined communication channels, so members can interact with other members freely. They work together in their capacities and not professionals.

Key differences

1. Formal organization defined as an organization in which the authority, responsibility and accountability of each member are clearly defined. On the other hand, the informal organization is defined as that organization in which the authority, responsibility and accountability of each member are not clearly defined.
2. The purpose or objective of establishing a formal organization is to achieve the predetermined goals of an enterprise. Whereas, the goal of establishing an informal organization is to meet the psychological and social needs of its members.
3. The formal organization is usually more stable compared to the informal because it is established according to proper rules and regulations to achieve certain goals. On the other hand, the informal organization is not as stable as a formal organization, because it is established, in the absence of appropriate rules and regulations.
4. The formal organization is generally too large compared to the informal organization. On the other hand, the informal organization is often too small compared to the formal organization.
5. The formal organization established on the basis of adequate rules and regulations, where the authority, responsibility and accountability of each member are clearly defined. The informal organization was established spontaneously. It does not need any rule or regulation for it to arise.
6. Organization charts are necessary to show the formal organization and organization charts are not used in the informal organization.
7. With a formal organization, authority generally flows from the top down vertically over subordinates and responsibility flows from the bottom up over superiors. On the other hand, in an informal organization, everyone has the same rights and duties, so there is a horizontal flow of authority in this.

Final Thought

The main difference between these two is that all members of a formal organization obey a chain of command, which is not the case in an informal organization.