11 Key Difference between Formal and Informal Organization

A formal organization is one which position, responsibility authority, and accountability of each level is clearly defined. In every organization people forms into informal social groups.

difference between formal and informal organization
difference between formal and informal organization

The term informal organization refers to those personal and social relations which arise when people associate with one another.

Difference between Formal and Informal Organization

The Following are the key difference between formal and informal organization:

1. Formation

Formal organization results on account of a delegation of authority, while informal organization results on account of the social interaction of the people.

2. Emphasis On

Formal organization Emphasis on the term of authority and functions.

Informal organization Emphasis on people and their relationship.

Related:11 Advantages and Disadvantages of Functional Organizational Structure.

3. Creation

The formal organization is created deliberately and at the same time, the informal organization is created spontaneously.

4. Authority

In a formal organization, the formal authority is attached to the position, but in the informal organization, authority is attached to a person.

5. Well Defined Authority and Responsibility

In a formal organization rule, regulations, rights, and duties, etc. Are well defined. In an informal organization, it has unwritten rules and norms.

Related: 15 Essential Elements of Control Process in Management.

6. Hierarchical Authority

In the formal organization, formal authority passes in the Hierarchical way from top to bottom.

In the informal organization, authority flows upward or horizontally.

7. Size of the Organization

A formal organization may grow immensely in size whereas the size of the informal organization tends to be small.

8. Object

A formal organization is formed for the object of profits whereas informal integration arises from man’s quest for social satisfaction.

9. Stability

A formal organization exists permanently or it is stable in its existence.

The informal organization is not so stable and this dissolves at any time.

Related: 14 Elements of Good and Effective Planning.

10. Necessity

Formal organization satisfies the needs and wants of people, But the formation of informal organizations essential for every enterprise.

11. Position

A formal organization has the ideal form of position whereas informal organization has informal positions.

Thus, now you know the difference between formal and informal organizations.

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