What is Formal and Informal Organization?

To business management to take place there should be an organization, in my previous article I have discussed it. If you want to learn more about it then you can follow the link given here. And the organization is classified as a formal and informal organization.

In this article of mine, I will tell you about the features, advantages, and disadvantages of these classifications. So without wasting much of your time let us get started and learn about it.

Formal Organization and Informal Organization

Formal Organization

It represents the classification of activities within the organization or enterprise. It clearly indicates who is to report to whom and connects the chief executive officer to the ordinary worker.

In other words, it is a kind of organization in which the roles, responsibilities, duties, and relationship with the top level management are clearly defined.

In case of the formal organization, the employees are organized into formal groups to achieve certain objectives of the firm. And these groups are dispersed once the objectives are achieved.

Features of Formal Organization

  1. The things are properly planned in this type.
  2. It makes provision for division of work.
  3. Unity of command is always maintained in the enterprise.
  4. Responsibility and accountability of each employee are clearly defined.
  5. Organizational charts are often drawn.
  6. It makes provision for the scalar chain of communication.

Advantages of Formal Organization

  • A sense of security arises from the classification of the tasks.
  • Overlapping of activities are avoided.
  • There is no chance for favoritism in the evaluation of the employees.
  • It makes the organization less dependent on the single person.
  • It brings coordination between the employees and also the departments.

Disadvantages of Formal Organization

  • It does not consider the sentiment and emotions of the employees.
  • It is time-consuming.
  • The time taken in the process of decision making is more.

Informal Organization

It is an organizational structure which is established on the basis of likes, dislikes and the relationship of the employees without considering any rules and regulations.

The friendship and the mutual understanding between the employees are some of the reasons for the establishment of the informal organization.

Features of Informal Organization

  1. It comes into establishment automatically without any external cause.
  2. It is established voluntarily by the employees working there.
  3. There is no proper and definite structure to the organization.
  4. It is one of the parts of the total organization.

Advantages of Informal Organization

  • It gives the satisfaction of work to the employees and maintains the stability of work.
  • This is a very useful and important channel of communication.
  • It fills up the gap created by the formal organization.

Disadvantages of Informal Organization

  • It can make way for lack of productivity in the employees.
  • Spreads unnecessary rumors about the functioning of the organization.
  • More importance is given to the individual interest of the employees.


So this was all about the formal and informal organization which you need to know. I hope you are clear with all the information mentioned in this article. If you have any kind of doubts then you can comment down below.