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Human Resources

Informal Organizational Structure: Characteristics, Advantages, Disadvantages

By Ahmad Nasrudin ·

Informal Organizational Structure Characteristics Advantages Disadvantages

Table of Contents

What’s it: An informal organizational structure is an organizational structure without written guidelines for operating but is based on norms and systems developed by members. So, there are no formal and written rules, procedures, or chain of command. If a formal organization pours its structure into an organization chart, it is not with an informal organization.

Why is the informal organizational structure important?

Informal structures often develop within formal organizations such as companies. They grow through the day-to-day interactions between organizational members, which often arise based on interpersonal relationships and shared interests.

Informal organizational structures are important for several reasons. First, members have the opportunity to build strong bonds with their peers. It increases cohesion between them, allowing them to collaborate more effectively to achieve goals.

Moreover, such a bond boosts their morale. Thus, they can often perform better if they have good relationships at work.

Second, the informal structure allows members to stay informed. Communication and information flow quickly between members. It provides an effective line of communication for them. Thus, they have more control over their environment.

Third, satisfaction is another reason. Members are social beings. They need other people to thrive and survive. They cannot live alone. And, the informal organizational structure provides opportunities for them to satisfy these social needs.

How does the informal organizational structure develop?

Informal organization in a company develops because employees interact with each other. For example, they are not one hundred percent discussing work. Instead, they may associate with each other socially.

For example, they may form small groups because they have a common interest, such as a hobby. Eventually, it leads to togetherness and informal relationships beyond those developed by the company.

In other words, informal organizations are formed spontaneously by members. It contrasts with formal organizations, which are deliberately created by top management.

In other cases, employees work together and find new ways to do things more easily and save them time. Those are often beyond what could be developed through a formal structure. Thus, they find it easier to work with an informal structure.

What are the characteristics of an informal organizational structure?

Formation. Informal structures emerge from personal relationships and social interactions in the workplace. They are formed unplanned or officially as formal structures by top management.

Organizational structure. The organization does not have a clearly defined structure or communication channel. Thus, interactions can be completely random, with communication flowing independently. Therefore, there is no organizational chart.

Goals. Members may not have a written vision and mission as the company does. However, they may have the same goals and interests.

Power. Group leaders, called informal leaders, often result from personal characteristics, not official appointments. They have the power to lead and direct members toward a common goal, even without an official leadership title.

Official rules and procedures. Organizations operate guided by social norms, not by established rules as formal structures. Their relationship just flows, so there are no written rules or standards for it.

In addition, compliance and control are not through financial rewards or punishments. But, it is through expulsion. Those who deviate are threatened with expulsion from the organization.

Relationship bond. The relationship of each member can be very long. In fact, it can last even if the members have left the company.

What are the advantages of an informal organizational structure?

Informal organizations are often formed outside the company’s official structure. However, it contributes to satisfying employees’ social needs such as friendship, love, and support.

In addition, the bonds formed can strengthen relationships and collaboration within the company. They develop a sense of belonging to each other. So, they can work together to achieve the company’s goals.

Other advantages of an informal organizational structure are:

Fast communication. Communication need not follow a chain of command. Instead, it just flows. Thus, it can be much faster than can be done in a formal organization.

Faster troubleshooting. For example, employees might congregate after normal business hours. They discuss their work and other non-work issues. They give each other constructive feedback and find solutions to each other. So, they can solve it themselves without waiting for instructions from their superiors.

More adaptive. Management can get higher support when, for example, introducing change through a new target or strategy, which requires employees to adapt. And approaching informal groups within the company is important to reduce employee resistance.

More creativity. Employees are freer to explore and express their creativity and ideas. And it may be difficult in the formal structure due to fewer opportunities, possible punishment, or pessimism from being rejected by their superiors.

What are the disadvantages of an informal organizational structure?

Hard to survive. Informal organizations are easy to form but also easy to break up. For example, when the leader leaves, there is a void. And, it can cause the organization to disband because the person who replaces it doesn’t have the same qualities.

Interpersonal and intergroup conflicts. The incompatibility often arises between members and against other organizational groups. It can worsen interpersonal relationships, resulting in chaos within the company.

Unsystematic work. There is no official structure. The organization does not divide the roles, authorities, responsibilities, and duties into several units. Thus, it is more uncoordinated.

Low control. There are no official rules or ways to bind member compliance. It does not rely on the encouragement of rewards or punishments. Thus, it is difficult to manage and control the organization.

Negative information. Rumors and misleading information often spread more quickly through informal organizational structures.

More concerned with individual interests. Although, the members have common interests. But, it is less important than individual interests. And, there is no obligation for members to achieve common interests above individual interests.