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Informal Organization: Definition, Structure & Examples

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Shawn Grimsley

In this lesson, you will learn about informal organizations, including what they are, how they differ from formal organizations and will be provided some examples along the way. You'll have a chance to take a short quiz after the lesson.

We also recommend watching Computers and Information Controls in Organizations and Characteristics of Informal Organizations: The Grapevine & Informal Groups

Definition

An informal organization is the social structure of the organization as opposed to the formal structure of an organization. It establishes how an organization functions from a practical standpoint. The informal organization can work in concurrence with the formal organizational structure, parallel with it or against it.

Concepts and Structure

You can best understand the concept of an informal organization by comparing it to a formal organization. Let's look at the formal organization first since it's a bit easier to understand. The structure and operation of a formal organization is typically set forth in the official documents, rules and procedures of the organization (like a corporation's articles of incorporation and bylaws). The roles, authority and responsibilities of each member of the organization are clearly defined. For example, a limited liability company's operating agreement outlines the scope of authority and responsibilities of the managers of the company. A formal organization is cold, sterile and impersonal.

Now, let's take a look at an informal organization. It's primarily a social creature -- the sum total of social norms, relationships and interactions that affect how an organization works. While a formal organization is cold and impersonal, an informal organization is intensely personal. It's all about social interactions and relationships between the members. Members of an informal organization can certainly hold official offices and have formal duties, but they also bring their own values, personal interests and assumptions into the equation of how they act. Members develop friendships, alliances, enemies, trusted sources of information and preferences on how tasks should be performed.

These social influences may cause a member of the informal organization to work in conjunction with the organization, in parallel with it or even against it. In some respects, you can think of an informal organization as:

  1. An organization within the formal organization working with it,
  2. An organization beside the formal organization working towards the same goals but not necessarily together, or,
  3. An organization working outside the formal organization and against it.

The structure of an informal organization is usually quite different from its formal counterpart. It's structure is usually fluid and rather flat. Decisions are often made collectively rather than unilaterally by one leader. Cohesion is often established through trust and reciprocity between members. An informal organization is also able to be dynamic, responsive and adaptable to change because formal rules and hierarchy don't pin it down.

Example

This example will help you understand an informal organization. Let's say you're a recently hired associate attorney fresh out of law school. You were fortunate enough to be hired by one of the top law firms in Washington DC. You are one of 26 new associates making for a total of 467 lawyers in the firm. A formal mentor has been selected for and you have access to a common pool of legal secretaries and paralegals to assist you as necessary. Your job duties and responsibilities are clearly outlined in the firm's associate's manual. You quickly learn, however, that this is just half of the story.

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