Page 49 - F1 - AB Integrated Workbook STUDENT 2018-19

Organisational culture in business

The informal organisation and its

relationship with the formal organisation

3.1 The informal organisation

The informal organisation is the network of relationships that exist
within an organisation. This network evolves over time and tends to
arise through common interests and friendships between members of
staff. These relationships are often across divisions. An informal
organisation will be present to some degree within all formal
organisations.

The advantages and disadvantages of informal organisation are:

 Advantages Disadvantages

 better motivation  inefficient organisations

 better communication  opposition to change can be
intensified
I  provision of social control
 the ‘grapevine effect’, where

potentially inaccurate
information or rumours spread

through the informal
organisation

 conformity

The informal organisation can either enhance or hold back the business.

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