An organization is such an arrangement of people in which different individuals gather to perform different tasks together to achieve harmonious objectives. An organization can be of two types; formal organization and informal organization.

Definitions and meanings:

Formal organization:

A formal organization is an entity comprising of like minded people that accumulate to fulfill specific aims. This organization has different job structures, hierarchies, departments and functions which work together to obtain congruent goals and missions.

Informal organization:

An informal organization is a group of people that interact with each other informally and develop connections due to mutual interactions. The structure of such organizations depends upon the relations, affiliations and norms of people involved in it.

Difference between formal and informal organizations:

The main difference between formal and informal organizations is given below:

1. Primary nature:

A formal organization is basically such an organization which is formed under the influence of mutual consent of two or more people. These organization nurture formal work relations, which are governed by work place ethics and/or the policies and procedures of the organization. On the other side, informal organizations are mostly formed under the umbrella of formal organizations. These organizations are non-formal in nature and come into existence due to social norms and networks amongst the people operating within a formal organization.

2. Formulation:

A formal organization is formed intentionally and with a mutual agreement between all the participants involved therefore these organizations are formed with more goal-oriented and focused approach. However, an informal organization has no such origin and can be formed spontaneously and involuntarily. The individuals involved in a non-formal organization have no specific direction or purpose therefore such organizations come into existence on the basis of serving common interests.

3. Working mechanism:

A formal organization is a proper set-up in which people have clearly defined aims and targets which they have to achieve. All these targets are laid down in order to achieve a single vision of the organization. This is the reason these organizations are stable and sustainable in their working behaviors because, these are administered under a particular set of rules and regulations. An informal organization does not have a clear target to achieve and can proceed in any direction. These organizations do not have discrete work patterns and can adopt any style of work to attain the social requirements of its participants.

4. Communication Systems:

The communication systems followed in a formal organization are formal and red tape. The modes of communication used in such an organization are official and pass through a preset pathway which promotes standardization in the dissemination channels of the organization. The direction of this communication can be vertical (top-bottom and bottom-top) or horizontal.However, the communication channels used in an informal organization are informal. This communication can take place in any direction and is known as grapevine as it does not follow a pre-planned pattern for the exchange of information, thus is the fastest mode of communication in an organization.

5. Size and scope:

The size and scope of a formal organization is usually larger than an informal organization mostly due to its formal nature. Additionally, size and scope of a formal organization keeps on growing, whereas an informal organization usually remains small and confined because it does not have a fundamental ground to sustain and expand for longer periods.

6. Chain of command:

As a formal organization has fixed hierarchies, the chain of command is clearly defined. Due to this reason, the respective responsibilities and authorities are very comprehensively defined and maintained in such organizations. On the other hand, it is very difficult to define understandable differences amongst the members of an informal organization and their status. This makes it difficult to clearly delegate roles of the ultimate leadership.

Formal versus informal organization – tabular comparison

A tabular comparison of formal and informal organization is given below:

Formal organization vs Informal organization
Primary nature
Works to gain fixed definitive goals Works to gain the individual social and psychological needs of its sharers.
Is formulated in result of a formal plan and proposal. Is formulated spontaneously and abruptly.
Working mechanism
Are governed by certain rules and regulations of actions. Do not follow any specific rules or regulations.
Communication system
Communication systems are formal and precise. Communication systems are informal and scattered.
Size and scope
Size and scope of a formal organization is wider. Size and scope of an informal organization is narrow.
Chain of Command
Chain of command is clear and explicit. No specific chain of command is present.

Conclusions formal vs informal organization

Both formal and informal organizations are distinct from each other. Formal organizations which are the most common form of organizations in the world today work upon mutual synergies and formal task delegation systems. These tasks are designed to achieve the vision and mission of the organization. However, Informal organizations exist side-by-side with formal organizations and help in achieving professional goals of its members by adopting such attributes that contrast with the formalized framework of interactions and communications within a formal organization