This series include Organising function of management for XII Business Studies students for AISSCE preparation.

1. Organising
XII Business Studies
Informal Organisation
Session : 7 Vikash Residential School

2. Prepared by Pratap Naik
Informal Organisation
Learning Objectives
 Concept
 Features
 Advantages
 Quick Communication & feedback
 Fulfilment of social needs
 Contributes to organisational objectives
 Disadvantages
 Creates rumuors
 Resistance to change
 Priority to group interest
 Comparative View: Formal Organisation and Informal Organisation

3. Prepared by Pratap Naik
Informal Organisation
What is Informal Organisation?
 Informal organisation refers to the natural grouping of people on the basis of some similarity.
 It arises out of personal interaction among people at work.
 The basic motive of such organisation is to satisfy the social and psychological needs of the employees.
 The organisation is featured by mutual aid, cooperation, and companionship among members.
 Informal organisation has no written rules, is fluid in form and scope
There are no defined channels of communication, and so members can interact with other members
freely.
 They work together in their individual capacities and not professional.
 Thus the relationship pattern in informal organisation may be more complex than the formal one.

4. Prepared by Pratap Naik
Informal Organisation
Features of Informal Organisation
1. It originates from within the formal organization as a result of personal interaction among
employees.
2. It has no written rules and regulations.
3. Group norms decided the standards of behaviour of people
4. It does not have fixed lines of communication.
5. It is emerges spontaneously and not deliberately created by the management.
6. It has no definite structure at it is a complex network of social relationships among people.
7. Behaviour are coordinated and controlled by group norms

5. Prepared by Pratap Naik
Advantages
1. Quick Communication & Feedback
 Informal organisation leads to faster spread of information as well as quick feedback.
 Because no prescribed lines of communication are followed.
 One can easily communicate any one within the organisation freely.
2. Fulfillment Of Social Needs
 It helps to fulfill the social needs of the members as it allows them to interact like minded people.
 Thus enhances their job satisfaction and gives them a sense of belongingness in the organisation.
3. Contributes Towards Fulfillment Of Organisational Objectives
 It contributes towards fulfillment of organisational objectives
o by compensating for inadequacies in the formal organisation.
Informal Organisation

6. Prepared by Pratap Naik
Disadvantages
1. Spread Rumuors
 Informal organisation may become a disruptive force when it spreads rumuors.
 This may work against the interest of the formal organisation.
2. Resistance To Change
 If the informal organisation may opposes the implementation changes
 Such resistance may delay or restrict growth.
3. Priority To Group Norms
 Behaviour are coordinated and controlled by group norms.
 This can be harmful if the norms set by the group are against organisational interests.
Informal Organisation

7. Prepared by Pratap Naik
Comparative View:
Formal and Informal Organisation
Basis Formal Organisation Informal Organisation
Meaning
Structure of authority relationships created
by the management.
Network of social relationships arising out
of interaction among employees.
Origin
Arises as a result of company rules and
policies.
Arises as a result of social interaction.
Authority Arises by virtue of Job Position. Arises out of personal qualities.
Behaviour It is directed by rules. There is no set behaviour pattern.
Flow of
Communication
Communication takes place through
Scalar Chain.
Does not Flow through a planned route. It
can take place in any direction.
Nature Rigid Flexible
Leadership Managers are leaders.
Leaders may or may not be managers. They
are chosen by the group.

8. Prepared by Pratap Naik
Informal Organisation
 Features
 Advantages
 Quick Communication & feedback
 Fulfilment of social needs
 Contributes to organisational
objectives
 Comparative View:
Functional and Divisional Structure
 Disadvantages
 Creates rumuors
 Resistance to change
 Priority to group interest
Recap

9. *No plagiarism please. Reproduction and re-use of this presentation is prohibited.
This presentation is the property of the author.
Thank you !!!
Session Complete Vikash Residential School
XII Business Studies