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Distinguish Difference Between Formal and Informal Organisation

Formal Organisation differs from Informal Organisation in the following ways:-

Difference Between Formal and Informal Organisation

Image Credits © Sameer Akrani.

square 1. Meaning

Formal Organisation is formed when two or more persons come together. They have a common objective or goal. They are willing to work together to achieve this similar objective.

Formal Organisation has its own rules and regulation. These rules must be followed by the members (employees and managers). A formal organisation has a system of co-ordination. It also has a system of authority. It has a clear superior-subordinate relationship. In a formal organisation, the objectives are specific and well-defined. All the members are given specific duties and responsibilities. Examples of formal organisation are:- a company, a school, a college, a bank, etc.

Informal Organisation exists within the formal organisation. An informal organisation is a network of personal and social relationships. People working in a formal organisation meet and interact regularly. They work, travel, and eat together. Therefore, they become good friends and companions. There are many groups of friends in a formal organisation. These groups are called informal organisation.

An informal organisation does not have its own rules and regulation. It has no system of co-ordination and authority. It doesn't have any superior-subordinate relationship nor any specific and well-defined objectives. Here in informal organisation, communication is done through the grapevine.

square 2. Formed by Whom?

A formal organisation is formed by the top level management.

An informal organisation is formed by social forces within the formal organisation.

square 3. Rules and Regulations

The members of a formal organisation have to follow certain rules and regulations. These rules are available in writing (documented). They are made by a formal authority (superiors). If the members follow these rules properly, then they will be rewarded. However, if they do not follow these rules, they will be punished.

The members of an informal organisation do not have to follow any rules and regulations.

square 4. Duties and Responsibilities

In a formal organisation, the duties, responsibilities, authority and accountability of each member is well-defined.

In an informal organisation, there are no fixed duties, responsibilities, authority, accountability, etc. for the members.

square 5. Objectives or Goals

In a formal organisation, the objectives or goals are specific and well-defined. The main objectives of a formal organisation are productivity, growth, and expansion.

In an informal organisation, the objectives are not specific and well-defined. The main objectives of an informal organisation are friendship, security, common interest, individual and group satisfaction, etc.

square 6. Stability

A formal organisation is stable.

An informal organisation is not stable.

square 7. Channels of Communication

A formal organisation uses formal channels of communication.

An informal organisation uses informal channels of communication (i.e. grapevine)

square 8. Organisation Chart

A formal organisation is shown on the organisation chart.

An informal organisation is not shown on the organisation chart.

square 9. Superior-Subordinate Relationship

In a formal organisation, there exist a superior-subordinate relationship.

In an informal organisation, there is no such superior-subordinate relationship.

square 10. Benefits for Members

The members of the formal organisation get financial benefits and perks like wages or salaries, bonus, travelling allowances, health insurance, etc.

The members of informal organisation get social and personal benefits like friend circle, community, groups, etc.


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