Interaction among people at work gives rise to a ‘network of social relationships among employees’ called the informal organization. Informal organization emerges from within the formal organization when people interact beyond their officially defined roles. When people have frequent contacts they cannot be forced into a rigid formal structure.
Advantages: The informal organization offers many benefits. Important among them are given below:
(a) Prescribed lines of communication are not followed. Thus, the informal organization leads to the faster spread of information as well as quick feedback.
(b) It helps to fulfill the social needs of the members and allows them to find likeminded people. This enhances their job satisfaction since it gives them a sense of belongingness in the organization.
(c) It contributes towards the fulfillment of organizational objectives by compensating for inadequacies in the formal organization. For example, employees reactions towards plans and policies can be tested through the informal network.
Disadvantages: The informal organization has certain disadvantages. Some of them are as follows:
(a) Informal organist ion may become a disruptive force when it spreads rumors. This may work against the interest of the formal organization.
(b) The management may not be successful in implementing changes if the informal organization opposes them. Such resistance to change may delay or restrict growth.
(c) It pressurizes members to conform to group expectations. This can be harmful to the organization if the norms set by the group are against organizational interests.