Difference Between Formal Organization and Informal Organization

Main Difference

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

Formal Organization vs. Informal Organization

The formal organization is goal-oriented. It built around the general principles or 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 deliberately created whereas informal organizations spontaneously formed. A formal organization has a definite and specially designed structure reflected in the organization whereas Informal organizations are structure-less groups. Formal organizations are created to achieve goals defined by management. On the other hand, the primary aim of an informal organization is to satisfy the individual intents of members. Formal organizations exist a rigid system of rules and regulations which all the members are supposed to follow. Informal organizations not tied to a rigid system of rules and regulations. With formal organizations, authority equated with influence. The person at the top is getting the most effective person. In sharp contrast, influence in the informal organization attached to the person. The informal group connects more value to that man who can satisfy the needs of the group members.

Comparison Chart

Formal OrganizationInformal organization
An organization kind in which the job of each member clearly defined, whose authority, responsibility and accountability fixed is a formal organization.An organization created within the formal organization as a network of interpersonal relationship, when people connect, is known as informal communication.
Nature
Formed for a particular purpose, it may be permanent or temporary.An informal group is a permanent group; members may join or leave the group with their interest
Authority
The top management gives authority structureThe people in the peer group give authority
Communication Pattern
A systematic communication pattern followed during communication in the formal organization.Members of the informal group impart according to the relationship what they maintain with others in the group.
Behavior of Members
The behavior of the members of the formal group is according to rules and regulations set by the management.The behavior of the members of the informal group is according to the individual and group interests.
Supervision
The task of managing the people in the formal organization is easy.The task of managing the people in the informal organization is difficult.
Superiors
The associates of the formal group face pressures from the superiors.The associates of the informal group have no pressures from superiors and have freedom.
Focus on
Work performanceInterpersonal relationship
Size
LargeSmall

What is a Formal Organization?

The creation of such an organization is deliberate by top level management. The organization has its kind of rules, regulations, and policies stated in writing. The essential objective of the establishment of an organization is the attainment of the organization’s goal. For this purpose, work assigned, and authorities delegated to each member, and the concept of division of labor and specialization of workers are applied, and so the work is assigned based on their capabilities. In addition to this, there exists a gradable structure, which determines a logical authority relationship and follows a chain of command.

Types

  • Line Organization
  • Line and Staff Organization
  • Functional Organization
  • Project Management Organization
  • Matrix Organization

What is Informal Organization?

An informal organization formed within the formal organization; that is a structure of interpersonal relationships among individuals working in an enterprise, that creates as a result of people meet, interact and associate with one another. 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, i.e., no rules and regulations imposed on them, their opinions, feelings, and views given respect. However, it is temporary, and it does not last long. In an informal organization, there are no definite channels of communication, and so members can interact with other members freely. They work together in their capacities and not professional. The organization featured by mutual aid, cooperation, and companionship among members.

Key Differences

  1. Formal Organization defined as such organization in which authority, responsibility, and accountability of each member are clearly defined. On the other hand, the informal organization defined as such organization in which authority, responsibility, and accountability of each member not clearly defined.
  2. The purpose or objective of establishing a formal organization is to achieve the Pre-determined goals of an enterprise. Whereas, the objective of establishing an informal organization is to fulfill the psychological and social needs of its members.
  3. The formal organization is usually more stable in comparison to the informal organization because it established according to suitable rules and regulations for achieving certain goals, On the other hand, the informal organization is not as stable as a formal organization, because it is established, in the lack of proper rules and regulations.
  4. The formal organization is generally too large, in comparison to the informal organization. On the other hand, the informal organization is normally too small, in comparison to formal organization.
  5. The formal organization established based on proper rule and regulation, where authority, responsibility, and accountability of each member are clearly defined. The informal organization established spontaneously. It doesn’t need any rule and regulation to emerge.
  6. Organization charts are needed to show formal organization, and there is no use of organization charts in the informal organization.
  7. With a formal organization, usually, authority flow from top to bottom vertically over the subordinates and responsibility departs from bottom to top over superiors. On the other hand, in an informal organization, everyone has equal rights and duties, so there is a horizontal flow of authority in this.

Conclusion

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