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


An informal organization is the social structure of the organization, as opposed to the formal structure of an organization.

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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 – made up of 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:

  • An organization within the formal organization working with it
  • An organization beside the formal organization working towards the same goals but not necessarily together
  • Or an organization working outside the formal organization and against it

The structure of an informal organization is usually quite different from its formal counterpart. Its 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.


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, D.C. You are one of 26 new associates, making for a total of 467 lawyers in the firm. A formal mentor has been selected for you, 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.You spend the next several months figuring out the informal organization of the firm. If you fail to do so, you will never survive to be a senior associate, let alone make partner. You discover that your mentor is not really the best source of information. You find another partner that connects with you much better and takes a personal interest in your professional development.

He helps you figure out all the firm rivalries and varying interest groups.You come to form some friendships and try as much as possible to avoid making enemies that could destroy your career at the firm. You also develop some strategic alliances with a group of junior associates. You learn which senior associates can be trusted and which cannot be trusted. You figure out that one of the worst things to do is tick off a secretary because one clerical ‘mistake’ could end your career at the firm.You also figure out which of the formal rules and values of the firm really matter and which can be bent and by whom.

Just as important, you learn about the informal rules and values that must be followed or you will risk being ostracized by your colleagues and the partners. Making alliances and enemies, while integral to the informality of the organization, aren’t necessarily conducive with the organization’s adaptability to change. Within a few months, you begin to get a handle on the firm’s informal organization and realize that its interests do not always align with the interests of the formal organization of the law firm.

Lesson Summary

An informal organization is basically the social structure of an organization, which focuses on social interaction and relationships between its members. Common characteristics of an informal organization include fluid and flat structures that utilize collective decision making and are usually dynamic and capable of quickly adapting to change. An informal organization can work concurrently with the formal organization, parallel to it, or even against it.

Learning Outcomes

After you’ve reviewed this video lesson, you will be able to:

  • Describe what an informal organization is
  • Identify common characteristics of an informal organization
  • Explain three ways that the informal organization can work with the formal organization

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