B Y C A A N U S H R I A G R A W A La n u l o h i a . a g r a w a l @ g m a i l . c o m

w w w . a n u s h r i a g r a w a l . c o m

INFORMAL ORGANIZATIONS( everything you need to know )

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B Y C A A N U S H R I A G R A W A La n u l o h i a . a g r a w a l @ g m a i l . c o m

w w w . a n u s h r i a g r a w a l . c o m

CA ANUSHRI AGRAWAL

WHAT

Unofficial and unauthorized relationships thatinevitably occur between individuals and groupswithin the formal organization,

Complex web of relationships, influences,interactions and judgment calls. Arises out of informal communication

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Unofficial and unauthorized relationships thatinevitably occur between individuals and groupswithin the formal organization,

Complex web of relationships, influences,interactions and judgment calls. Arises out of informal communication

CA ANUSHRI AGRAWAL

Features

Natural and spontaneous Shadow organization and within the confines of

formal authority Unofficial and unauthorized relationships By product of human nature among individuals and

groups Grapevine communication It is not designed, established and desired by

organization It can take any shape

SOCIOGRAM

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Natural and spontaneous Shadow organization and within the confines of

formal authority Unofficial and unauthorized relationships By product of human nature among individuals and

groups Grapevine communication It is not designed, established and desired by

organization It can take any shape

Cohesion

GroupNorms

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WHY

Necessity is the motherCreation of psychological fatigue or vacuum by

routine tasksDesire to socialize with othersProtection of internal and external human valuesCommonality will start surfacing when they interact

SAFTY VALVE

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Necessity is the motherCreation of psychological fatigue or vacuum by

routine tasksDesire to socialize with othersProtection of internal and external human valuesCommonality will start surfacing when they interact

All this makes the informal organization an energizedand essential element of high- performing

organizations.

Karl Marx also pointed out that when diversepeople have the same interest they become

friends.CA ANUSHRI AGRAWAL

•Rigid division of work - monotony•Centralization- you versus me•Strainful & mechanical nature of work – absence of belongingness•Lack of freedom- lack of creativity

Generic Elton Mayo Pffiner &Sherwood

• need toexpress•Need to

seekinformation

•Because ofweakness informal and

officialinteraction

•Sociometricoverlay•Knowledgeoverlay•Informationoverlay•Power overlay•CommunicationOverlay

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Theory of overlays

An overlay is unplanned, unofficial and unstructured pattern of relationshipwhich lies over and above the planned , official and structure pattern of

relationship.

A transparent sheet which is superimposed over a planned formalorganization structure such that below the informal interaction, formal

pattern of interaction is still visible.

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A transparent sheet which is superimposed over a planned formalorganization structure such that below the informal interaction, formal

pattern of interaction is still visible.

Informal org should supplement the formal organization and should not tryto replace the formal organization.

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ADVANTAGES

Motivating people to aboveand beyond their job duties

Job satisfaction throughhuman dimension

.maintain social controland provides security andstrength.

(trade unions are the refinedversion of informalorganization)

Safety valve Learning platform

Supplementing plans andpolicies of formalorganization, particularlyin changing times. It fillsmanagerial gaps of doingwork.

Communicatinginformation quickly. It actsas additional channel ofcommunication

Engaging employees incollaborative work

Lower attrition rate Helps in change

management

8 Motivating people to above

and beyond their job duties Job satisfaction through

human dimension .maintain social control

and provides security andstrength.

(trade unions are the refinedversion of informalorganization)

Safety valve Learning platform

Supplementing plans andpolicies of formalorganization, particularlyin changing times. It fillsmanagerial gaps of doingwork.

Communicatinginformation quickly. It actsas additional channel ofcommunication

Engaging employees incollaborative work

Lower attrition rate Helps in change

management

Informal groups also play a regulatoryrole.CA ANUSHRI AGRAWAL

LIMITATIONS

Role conflict / loyalty conflict / prioritization conflict Conformity caused by Group Think ( elton mayo, group norms can

be self defeating) Goal displacement Dominance of norms and feelings of group, which may go against

organizational goals. Use of pressure tactics and undesirable means for compliance Frustration and emotional problems due to gossiping, joke telling

and idle conversation. Spread of rumors, incomplete, inaccurate, distorted and destructive

information Resistance to change due to norms and culture of informal

organization.

Unplanned,unofficial andunstructured

Philip Selenick’s , “ fixation ofpersonal goals”

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Role conflict / loyalty conflict / prioritization conflict Conformity caused by Group Think ( elton mayo, group norms can

be self defeating) Goal displacement Dominance of norms and feelings of group, which may go against

organizational goals. Use of pressure tactics and undesirable means for compliance Frustration and emotional problems due to gossiping, joke telling

and idle conversation. Spread of rumors, incomplete, inaccurate, distorted and destructive

information Resistance to change due to norms and culture of informal

organization.

Grapevine communication

Selective InformationProcessing Approach

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BarnardExecutives may not know “ who is who”, “ what is what”, “ why is why”

Noone can predict what type of I.O. may get established.Whatever outcomes emerge- they emerge.

They are unstoppable.

Managers themselves are “ on the pitch”They are also part of I.O.

They cannot be objective observers..subjectivity prevails.10CA ANUSHRI AGRAWAL

Pfiffner and Sherwood Overlays should be transparent and not turn opaqueA supplementary set of formal and informal relationships is bestcombination( The best combination would be to have a predominant formal system tomaintain unity of objective and supportive informal system to maintain groupcohesiveness and group values)

KEITH DAVIS“just as management did not establish informal organization, it cannot

abolish it nor should it want to do so.” accept and understand informal organizationConsider the impact of possible informal interaction on formal action andvice-versa.Take steps towards integrating goals of formal and informal organizationand should stay away from unnecessarily threatening informal activities.

KEITH DAVIS“just as management did not establish informal organization, it cannot

abolish it nor should it want to do so.” accept and understand informal organizationConsider the impact of possible informal interaction on formal action andvice-versa.Take steps towards integrating goals of formal and informal organizationand should stay away from unnecessarily threatening informal activities.

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Steps for integration

Whenever informal norms are acceptable, they should beinstitutionalized.

Conversion of groups into teams Organizing outdoor activities Organizing weekend get together Use of informal communication Providing adequate formal space for psychological

success of workers such as autonomy, Bring your owndevice, casual wear at weekends etc

Not threatening I.O. values unnecessarily by F.O. Fair reward system

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Whenever informal norms are acceptable, they should beinstitutionalized.

Conversion of groups into teams Organizing outdoor activities Organizing weekend get together Use of informal communication Providing adequate formal space for psychological

success of workers such as autonomy, Bring your owndevice, casual wear at weekends etc

Not threatening I.O. values unnecessarily by F.O. Fair reward system

Modern approaches emphasize upon using formal structures as the mainmechanism of exercising control alongside permitting people to ask to work out

solutions th their problems creatively.CA ANUSHRI AGRAWAL

QUESTIONS-ANSWERS

1) “Informal Organization is detrimental to theinterest of formal organization and therefore it isan evil to be nipped in the bud itself.” Criticallyexamine this statement and explain howmanagement should handle informal organization.

2) Since informal organization arises spontaneouslyand is relatively fluid, how can it be called anorganization? How does it supplement the formalorganization?

3) How does informal organization affected thefunctioning of a formal organization? Explain.

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1) “Informal Organization is detrimental to theinterest of formal organization and therefore it isan evil to be nipped in the bud itself.” Criticallyexamine this statement and explain howmanagement should handle informal organization.

2) Since informal organization arises spontaneouslyand is relatively fluid, how can it be called anorganization? How does it supplement the formalorganization?

3) How does informal organization affected thefunctioning of a formal organization? Explain.

CA ANUSHRI AGRAWAL

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The birds of a feather flock together’

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