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Home / Organization & Management (OM) / Discuss the Differences Between a Formal and an Informal Organization

Discuss the Differences Between a Formal and an Informal Organization

A formal organization is created deliberately by management to achieve organizational goals.

An informal organization develops naturally through interactions among employees.

The main differences are discussed below:

Formation

A formal organization is created intentionally by management.

An informal organization develops naturally among employees.

Purpose

A formal organization exists to achieve organizational objectives.

An informal organization exists to satisfy social and personal needs.

Structure

A formal organization has a planned and defined structure.

An informal organization has no fixed or planned structure.

Authority

In a formal organization, authority comes from official positions.

In an informal organization, influence comes from personal relationships.

Communication

Formal communication follows official channels.

Informal communication follows unofficial channels.

Rules and Procedures

A formal organization operates according to written rules and procedures.

An informal organization follows unwritten norms and customs.

Relationships

Relationships in a formal organization are official and impersonal.

But the relationships in an informal organization are personal and social.

Leadership

Leaders in a formal organization are officially appointed.

Leaders in an informal organization emerge naturally.

Documentation

A formal organization is shown in organizational charts and documents.

An informal organization is not officially documented.

Stability

A formal organization is relatively stable.

An informal organization changes as people and relationships change.

Conclusion

The formal organization is based on official authority, rules, and responsibilities. The informal organization is based on personal relationships and social interaction. Both play an important role in the success of an organization.

Md Monirul Islam

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  • JAIBB Courses
    • Business Communication in Financial Institutions
    • Principles of Economics
    • Monetary and Financial System
    • Laws And Practice of General Banking
    • Basic Accounting
    • Organization & Management
  • AIBB Courses
    • Risk Management in Financial Institutions (RMFI)
    • Credit Operations and Management (COM)
    • Trade Finance and Foreign Exchange (TFFE)
    • Information and Communication Technology in Financial Institutions(ICTFI)
    • Governance in Financial Institutions (GFI)
  • IBB Reading Materials
  • JAIBB Model Tests
  • AIBB Model Tests