Assessing The Formal And Informal Cultures Commerce Essay

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Firstly informal organization structure will be examined. Keith Davis has described the informal organisation as, ''a network of personal and social relations not established or required by the formal organisation but arising spontaneously as people associate with one another". Basically informal organization structure is system of social relation which allows to employees to meet cultural and social needs in organisation. There is not well-defined structure for informal organizations because it is a complex network of social relations of employees. Employees who work in formal organizations interact among themselves while performing the duties and develop friendly relations and small social groups to meet social and cultural needs. Actually this is what it is called informal organisation. So informal organization structure is the part of formal organization structure because meeting social and cultural needs are for the employees who work for formal organization. There is no organization which has totally formal or totally informal structure. They can not be separated to each other because they are related and both of them are affected by each other. There are nine characteristics of informal organisation which are Creation, Purpose, structure, Authority, Degree of Flexibility, Use of Grapevine, Chain of command, Leadership, Membership. According to Tulsian (2008) will be explained one by one.

Creation :

Purpose: The purpose of informal organization is to provide cultural and social for the members of the company.

Structure: As it has mentioned above there is not a clear structure because it a network of social activities.

Authority: The authority is given by group members and it is completely personal.

Degree of Flexibility: It is flexible when standards of behaviour are evolved by group members.

Use of Grapevine: Informal channels of communication are used more which are also known as Grapevine. Informal communication is faster than formal communication and the biggest danger is it might cause rumours which can affect company badly.

Chain of command: Informal organizations may or may not follow chain of command.

Leadership: Leaders are chosen voluntarily and grade of leader is not important.

Membership: In informal organizations a employee can be more than one group also he can be leader in one group at the same time he can follow another one.

Informal structure has a very significant role for organization. That is why informal structure is existed within the framework of formal organization. Informal structure provides social satisfaction to members and it can be considered as a source of getting feedback. Formal organization doesn't gives opportunity like sharing experiences and personal views but informal organization provides sharing experiences and personal views. Informal organizations help to reduce workload f manager and develop effective organizational system. Also informal organizations allows to employees to express their problems and reduce employee turnover. Informal organizations help employees to cooperate and it get works done quickly. Another benefit of Informal organizations is managers act and plan more carefully because informal groups are likely undermine their project and they should plan carefully and be careful before they introduce changes in their groups. They want to be successful in their project otherwise if they fail they must answer to formal authority. Informal organizations help to employees stick together and rely on each other so it directly affects to productivity also it increases the performance of employees. In addition informal organization provides satisfaction to work groups which gives sense of belonging and security. Also it helps to reduce turnover. Employees in informal organizations can help or managers or fill gaps in their abilities or mistakes informally. Usually if the manager is weak about planning it works perfect. One of the most important benefits of informal organizations is improves communication a lot. Communications has very significant role in the company because it helps to keep in touch with their colleagues, learn more about their work and gives chance to find out what is going on in their envoriment.

In spite of these benefits; informal organisations are likely to causes many negative aspects such as blocking the organizational change and it may cause conflicts between members of the informal organisation. Generally it stems from self interests and when employees give of their thought and opposing others.Also it is possible to members in informal organizations conflict each other because of diverse roles which they have to play.

According to Richard M. Hodgetts, Kathryn W. Hegar major problems caused by informal organizations will be explained.

Resistance to change: One of the biggest negative aspects of informal organizations is resistance to change. Usually companies ignore or sometimes carry out directives related to changes like new york procedures or rules. The most important philosophy for many informal organizations is "live and let live". They don't want to exchange the status. This behaviour generally called homeostasis which is sense of maintaining things as they are. But change is necessary. Organizations adapt their operations to face technological changes, variety problems and competitive developments in external environment. If change process is developed that will reduce operating cost by 33 per cent. A company must purchase it. However it may cause personal reduction. That is why informal organization is fighting against to change. Also work quotas or standards causes resistace to change in informal organizations. In many cases change brings jobs needs; In all cases it brings higher performance.

Goal conflict: If some is asked to track two objectives which works against to each other, goal conflict happens. For instance one of the employee wants to be member of the informal organization at the same time he/she wants to meet work quota assigned by management. But he can not be loyal to two of them because quota is only 80 per cent in informal organizations.


As it has mentioned before Grapevine is the communication channel of informal organizations. Grapevine has a significant role when people interact to each other and want to be active in the stress time period. In grapevine person's job and his personality is very important because it affects his role in grapevine. In recent years, companies overlooked the Grapevine. Now however, many companies consider Grapevine to track the information and detect the key players.

Grapevine also causes rumours. Sometimes these two terms are used in same meaning but they don't have same meaning. Rumour means incorrect information. Generally it stems from misunderstanding and interest. Rumours can cause big damages to company so to control the rumours the management needs to pay attention. Also they can look for support from union leaders.

On the other hand formal organizations are structure of activities