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'Informal organizations affect decisions within the formal organization "but either, are omitted from the formal scheme or are not consistent with it". They consist of interpersonal relationships that are not mandated by the rules of the formal organization but arise spontaneously in order to satisfy individual members' needs'
Ever since the Hawthorne Studies (Mayo, 1949) and the development of the Human Relations school of thought, there has been a widespread tendency towards adopting a less scientific view of organisations. There has also been a relaxation of the assumption of rational behaviour by employees and behaviour that is strictly in tune with the goals of management and the rest of the organisation. As Mayo states:
'In every department that continues to operate, the workers have, whether aware of it or not, formed themselves into a group with appropriate customs, duties, routines, even rituals; and management succeeds (or fails) in proportion, as it is accepted without reservation by the group as authority and leader'
This indicates that individuals in organisations do not stop being social beings while at work. This in turn relates to the very core of the essential question of how to define an organisation. The underlying assumption in this paper will be that organisations are basically a web of coalitions and that coalition building is an important dimension of all organisational life (Morgan, 1997). In consequence, various approaches have been undertaken in order to try and understand organisations. By mainly focusing on communication as the vehicle of social structures, sociologists have described organisations as structures of social interactions in a specific organisational context or culture (White, 1970). Psychologists relaxed and redefined the assumption of rational behaviour in order to understand and describe the needs of individuals in organisations. This has led to a multitude of ways to describe organisational structures, often through metaphors (Morgan, 1997). There has been a shift in the traditional view of the role of the manager and his or her workday (Mintzberg, 1973). By not relying on the normative division of work into planning, organising, coordinating and controlling, Mintzberg suggested that the workday of a manager was much less structured and based on intuition rather than formal decision making processes. What becomes apparent regardless of the method of analysis of the underlying premise is that no organisation can be described or mapped in a satisfactory manner using just formal organisational methods, let alone be managed on that basis.
The Structure of Informal Networks
It is important to present the concepts associated with intra-organisational social networks. The optimal terminology to describe the informal organisation depends on the purpose of the analysis. There is no one best way to interpret informal networks (Mintzberg, 1989). Informal networks in organisations are likened with the nervous system of a living organism, whereas the bones represent the formal organisation (Krackhardt and Hanson, 1993). Staying with the analogy of the human body, a superficial comparison can be made between the skeleton and the nervous system, and informal/ formal networks within organisations to help understand the function of these networks. The formal organisation is compared to a skeleton which is a strong and rigid frame and the informal organisation is compared to the nervous system which is fragile yet flexible. The skeleton is visible, whereas the nervous system is an entity with no structure without definite subdivisions. Without determined, close observation, it might be difficult to recognise (Han, 1983).
Why do Informal Networks Exist?
Informal networks exist in every organisation and are an inevitable function within them. Individuals do not stop being social beings when placed in a formal work setting. When highlighting some of the motives for the creation and maintenance of informal networks within organisations, it is important to distinguish between unconscious and conscious reasons for their existence.
Affiliation needs: To satisfy the need for belonging to a group, individuals will tend to join networks of friendship and support. As a result, a part of one's individuality is sacrificed to conform to group norms.
Identity and self-esteem: Belonging to a group or informal network can develop, enhance and confirm an individual's sense of identity as a result of the personal interaction.
Social needs: Traditional formal networks within organisations often offer little room for emotions, feelings or sharing of personal thought, informal networks serve as an agent for structuring and supporting a shared social reality. By relying on this social reality, individuals can reduce uncertainty and stress. 'Informal groups also help members to compensate for feeling of dissatisfaction with the formal leader, organization or official communication system (Han, 1983).
Defence mechanism: In the face of perceived threat or general uncertainty, group cohesion can act as a defence mechanism to reduce (perceived) uncertainty and strengthen each individual's ability to respond to the threat.
Risk reduction: Through diluting blame and aggregating praise, a group of workers perceive risk to a lesser extent than they would as individuals. Thus unconscious efforts of individuals to control the conditions of their existence will lead to the creation of informal groups.
In addition, often more practical and very clear unambiguous conscious reasons for the creation and development of informal networks also exist.
The need to know: One of the primary characteristics of the informal structure within organisations is their communications network, often referred to as the grapevine. Studies have shown grapevine communication to be both fast and surprisingly accurate (Crampton et al., 1998). And in situations when information is critically needed by an individual to perform the task at hand, the grapevine can prove and efficient vehicle for news and information, thus bypassing the formal channels of communication (Mintzberg, 1973).
Politics: One of the more conscious reasons for the use of informal networks within organisations is that employees might choose to use informal channels of communication to influence colleagues or superiors in order to gain an advantage in organisational politics.
'Politics refers to individual or group behaviour, that is informal, ostensibly parochial, typically divisive, and above all, in the technical sense, illegitimate, sanctioned neither by formal authority, accepted ideology, nor certified expertise (though it may exploit any one of these)'
What is the Informal Organisation?
Chester Bernard, a pioneering management theorist who studying organisational behaviour, in the classic The Functions of the Executive, described the informal organisation as any joint personal activity without conscious joint purpose, even though it contributes to joint results. Thus, the informal relationships established between groups of colleagues going for a drink after work on a Friday may actually help in the achievement of reaching organisational goals (Barnard, 1938). More recently the informal organisation has been described as 'a network of personal and social relations not established or required by the formal organization but arising spontaneously as people associate with one another' (Davis and Newstrom, 1985). Thus, informal relationships do not appear on the organisational chart but do include relationships such as chatting together, having lunch or even getting together outside of work hours to socialise together.
Informal Group Dynamics at Work
Managers are often not aware that within every organisation there are group pressures that influence and regulate employee behaviour, performance and motivation. Informal groups can form their own code of ethics and an unspoken set of standards in establishing acceptable behaviour. Manager needs to be aware of the power and influence informal groups have and that they will almost inevitably form if the opportunity arises. These groups can have an extremely powerful impact on the achievement of organisational effectiveness. However the influence of these groups can be controlled and resisted if handled efficiently. The impact of informal behaviour within the formal organisational setting depends on the norms that the group adheres to. As this is the case it can be surmised that the informal organisation can make the formal organisation either more or less effective depending on how it is managed and controlled and interacts within a company.
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