OER for a Post Graduate Programme in HRM
Module 1 :
Principles of Management
Module Content Map
All the above theories are chiefly related to the formal organization. Informal organization refers to the network of individuals to establish personal as well as social relations. These relations are not established by formal authority but natural formations as people connect with one another.
The emphasis within informal organization is on people and their relationships whereas formal organization emphasizes official positions in terms of authority and responsibility.
Since this informal networking of persons happens everywhere, we can also see informal organizations within all formal organizations. The inadequacy of the formal organization to meet certain social and psychological needs is the basic reason behind the formation of informal organizations. The Hawthorne experiments revealed that membership in informal groups give people psychological benefits in every respect as important as the salary paid to them by the employer.