Question

Distinguish between ‘Formal organization’ and ‘Informal organization’ on the basis of the following :

(i) Origin

(ii) Nature

(iii) Meaning

Hint:

Formal organisation comes from company rules, is rigid and is a structure of authority relationships. Informal organisation comes from social interaction, is flexible and is a network of social relationships.

Answer 1

Step 1: Know the two terms:
Every business has two layers of relationships. One layer is planned by the management, the other grows by itself. We compare them on origin, nature and meaning.

Step 2: (i) Origin:
Formal organisation: it arises as a result of company rules and policies. The management sets it up on purpose.
Informal organisation: it arises as a result of social interaction among the employees.

Step 3: (ii) Nature:
Formal organisation: it is rigid. Its roles and reporting lines stay fixed until the management changes them.
Informal organisation: it is flexible. It keeps shifting with the likes and dislikes of the group.

Step 4: (iii) Meaning:
Formal organisation: it is the structure of authority relationships created by the management.
Informal organisation: it is the network of social relationships that arises out of interaction among employees.

Final Answer:
A formal organisation is created by rules, is rigid and is a structure of authority relationships. An informal organisation arises from social contact, is flexible and is a network of social relationships.