Business Studies

Six Mark Question:
What is meant by 'Informal organisation'? State any three advantages and any two disadvantages of this form of organisation. 


SOLUTION
The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.”

Informal organisation has the following merits:
1. Promotes social and cultural values: Members of informal organisation share common thoughts, social and cultural beliefs. Their interests are promoted which strengthens the organisation and promotes commitment to accomplish its formal goals.
2. Relief to top managers: Social interactions lead to cooperation and coordination amongst people of different groups. It helps top managers achieve the formal goals efficiently. They do not have to officially inspire the workers to work.
3. Supplement to managers’ capacities: Sometimes managers are unable to take official decisions without the support of members. People of informal organisation help managers by providing them the help and support that cuts across official chain of command.

Limitations of Informal Organisation:
1.Role conflict: As members of formal and informal organisation, people face role conflict. If group goals are different from formal goals, members conform to group goals. If the organisation allows lunch break of 30 minutes but group extends it to 45 minutes to socialize, members face conflict in their formal and informal roles.
2. Rumour: “Rumour is grapevine information that is communicated without secure standards of evidence being present.” It means spreading false information. Information flows virtually in all directions, to every individual at every level of the organisation. False information (rumor) spreads in informal organisation at a very fast speed.

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Subjective Medium Published on 18th 09, 2020
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