The Informal Organization

So far we have talked only about formal aspects of internal organization, the structures that are designed to accomplish a group's goals. These structures let all employees know how they fit into the company; they spell out reach employee's responsibility and authority. This is desirable. But there is more to a business firm than its internal organization. Every company of any size also has an informal organization, a network of social interactions among employees that cannot be specified by a formal structure or demonstrated on an organization chart.
          Employees may work in one department, but they develop relationships with people in other departments, too. They make new friends in the cafeteria, or on the company bowling team, or in the credit union. An employee's friends or acquaintances in other departments may help to solve business problems or provide needed advice or information. Such relationships make work more pleasant in many cases, and they go a long way toward maintaining employee's morale--how they feel about their jobs. Everyone is happier when they work with people they know and care about.
          On the other hand, the informal organization may also create problems for management and other workers. For example, an unhappy employee may use the informal organization to spread complaints about another workers or about the firm. The gossip and misinformation that often are spread through the "grapevine" can break down the morale among employees and can turn a firm into a "rumor factory."
          Effective business managers recognize that they are dealing with an informal organization as well as a formal one, and they use it to help accomplish the group's stated objectives.