THE INFORMAL ORGANIZATION

The Informal Organization:

Recognition and Alignment with the Formal Organization

Michael C. Bratley

Chesapeake, Virginia

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The Informal Organization: Recognition and Alignment with the Formal Organization

Organizations are composed of a formal hierarchy to govern and administrate their tasks

and output. There are various structures, and methods, for developing and organizing a group to

best meet its challenges, and function most efficiently to achieve its goals. These structures can

be conveniently arranged on an organization chart with blocks for each position, and an

associated position description, inside the overall structure of the organization. The

organization, at this academic level, formally defines each person’s position, as well as implying

the strategy to execute its mission. A fundamental error in defining an organization solely by the

“chart” and assuming it will function as planned, is that it does not take into account the

individuals filling the positions, their potential, their capacity for performance, their limitations,

talents, goals, biases, personal preferences and their ability to develop social networks (Farris,

1979).

Even with the best strategy, organization and direction, an organization is ultimately

made up of individuals with their own motivations, biases, and strategies for completing tasks,

executing roles and competing for resources. Power structures and social networking within the

formal organization invariably develops and functions as a parallel power structure to the formal

organization (Reingold & Yang, 2007). Although most people recognize a separate structure

exists, few know how to use it or leverage it to better the organization. People will ignore the

rules to get something done if they find a better way and people are three times more likely to

report their work environment as positive if management works with the informal organization

and its structure (Reingold & Yang, 2007). The informal organization is a powerful entity that

can inform and drive formal organization strategy and structure.

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Organizational theory and organization charts do not take into account the informal

organization and communication (or lack thereof) that takes place within (or outside) the defined

structure which stems from the natural inconsistency and variation in human performance and

personality types. Personal biases and agendas, communication issues (collective or individual),

rigid adherence to organizational channels and procedures (to state a few examples) can stymie

information flow or create group think, partially or severely degrading an organizations ability to

operate, and therefore affecting its output (regardless of form). The same personal biases, if

identified and leveraged, can create a synergistic relationship between nodes within the

organization increasing communication and production. A key tool, which runs parallel to the

formal organization chart, is the organizational social networking chart. By plotting out the

informal network, informal and invisible connections between employees, not apparent on a

formal chart, can be readily visualized. The informal chart allows for a manager to “see” who in

his organization is consulted most frequently, who is acting as a conduit or bottleneck, where

“silos” have developed, and areas which are isolated.

Collectively or individually, frictional factors within the informal organization if not

considered and acted upon, in worst case scenarios, can lead to disaster. Several examples

readily present themselves, the Space Shuttle Challenger explosion and Space Shuttle Columbia

breakup, the Bay of Pigs incident, the climbing deaths on Mt Everest of May 1996, and the

ENRON scandal. These events took place within established organizations, with defined

structures and channels for information flow (Chun 2005), yet disaster still ensued. Although

these examples illustrate the extreme to which problems can develop, the norm to which

problems can demonstrate themselves within an organization could be; lowered morale, rigidity

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of thinking and action, perceived “turf” between different areas, unofficially developed

workarounds and ad-hoc procedures.

People are gregarious they form relationships and alliances with coworkers whose goals

and personalities align with their own, and avoid (or confront) coworkers whom they feel do not

share the same goals, values and personality traits. The ease, or friction (lack of synergy),

caused by these human biases can radically skew an organizations planned operational schema.

Although some mangers view an organization as an elaborate machine, with each person

comprising one of the cogs (with a defined role and assumed performance level), inherent biases

and differing levels of performance possessed by those “cogs”, if not considered and acted upon,

can, and probably will, lead to less than optimal production.

The ability to organize and administrate a team on paper is an important ability to possess

for a manager – but the ability to recognize and define an organizations informal structure, is

critical to adapting to change and personnel issues that could impact the overall organization’s

direction and climate, and ultimately its success or failure. The best organizational plan takes

into account many factors to derive a strategy to achieve organizational goals. However, an

organization is made of people whom pursue personal goals, not organizational goals (Farris,

1979). Managers have to possess the ability to organize the “machine” and its “cogs” to meet

overall goals, with its structure aligning in the most efficient and effective way to solve the

problem set, be it managing a large corporation such as Enron, launching and recovering a Space

Shuttle or removing a dictator. More importantly, the manager has to realize each “cog” does

not fit a template and must identify the variations imparted on the “machine” and use the

knowledge and insight gained to “tune” the structure as required from that knowledge.

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Individual goals stem from a vast array of motivations, personal values, monetary gain,

prestige, emotional or professional validation, and other intangible reasons. Strategic decision

making must take into account personal goals to leverage, or mitigate their impact. The

incongruence of individual goals and organizational goals is the behavioral root and primary

cause of development of informal organizations, as well as the incongruence between formal and

informal processes. People with similar motivations, biases or personality types tend to form

coalitions – these coalitions, or lack thereof in the case of individuals that do not identify with

each other, skew the planned organizational structure. The informal organization may also

develop from a need to “resist” the formal organization because of disagreement over strategic

direction, management style or some other fundamental difference. Whereas the formal

organizations structural unit is a position, the structural unit within an informal organization is a

role (Farris, 1979). Knowing that an informal organization exists, and the way it is organized, is

critical knowledge a manager requires to lead, direct and most importantly - realign his

organization.

“Leadership is the art and science of influencing and directing people to accomplish the

assigned mission” (AFDD 1-1, 2006). The science of leadership is the formal academic process

of arranging, planning, measuring and administrating an organization. The art portion speaks to

the difficult process of motivating and managing people, understanding how the informal

organization develops, and how it works. This knowledge can be used to great advantage to

bolster moral and hence productivity, by aligning organizational goals with individual goals.

When individual goals are aligned with organizational goals, communication and information

flow is maximized. According to Chun (2005) information difficulties, or lack of information

flow, prevented the identification, or dismissal of, warning signals that were apparent prior to

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organizational failures. Unidentified, unrecognized or ignored problems tend to build and

intensify, leading to systematic failure.

Realigning individual goals to build synergy within the organization, and therefore

creating improved information flow can take the form of several strategies and human resource

initiatives. Identifying and re-organizing the organizations structure is also critical to creating a

synergistic relationship between the formal and informal organization.

Individual goals can vary greatly based on the individual and his or her personality.

Identifying the individual motivations and goals is vital information required to inform the

process of leveraging the informal organization to make changes to the overall organization. A

manager’s ability to recognize and understand the strengths, weaknesses, goals, personality and

needs of the people whom are filling the “cogs” within the “machine” is one aspect contributing

to the development of the informal organization. The second piece for managers is observing the

daily interactions between employees and nodes within the organizational structure; are there

bottlenecks, have ad-hoc procedures and workarounds developed? Are there areas where

production and efficiency is higher or lower as compared to the expected level? Are there areas

where morale is above or below an expected standard? Are some employees or nodes working

longer or harder than others? Capturing this information, along with a network nodal analysis

and synthesizing it into an aggregate analysis of the informal organization can develop insights

which will lead to changes that may need to be made, reorganization, training, counseling, new

or modified work schedules, processes or administrative tools.

Initial management theories developed during the Industrial Revolution focused on the

science of managing people as “cogs” within the “machine” – Taylorism (Scientific Theory of

Management) and Administrative Theory are prime examples. The Human Relations movement

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and Behavioral Management Theory developed as a way to take into account the needs of the

individual and humanize the workplace. Recent management theory has grown beyond just the

basic needs required by the individual (adequate environment and work hours, for example) as

espoused in Behavioral Management theory, to initiatives to improve Quality, leading to the

formation of Quality Management Theory, Total Quality Management (TQM) and Six Sigma are

subsets of this theory. The challenge for Management and Management Theory is to combine

the aspects of Behavioral and Quality theory, as well as social network analysis into a system

which aligns and leverages informal organizational structure and the associated individuals’

goals and strengths into a coherent strategy to drive organizational development and

management.

Chun (2005) recommends several strategies to overcome and socialize informal group

interactions and practices to inform and align goals of the formal versus informal organizations.

Based on his research and investigation into organizational disasters he has identified several key

process areas that should be investigated. Although not specifically a coherent strategy, Chun’s

recommendations do work towards informing management on key areas to focus upon which

bring informal organizational machinations to light. Firstly, leadership should encourage

openness to discuss problems and solutions, as well as personnel problems, in an open and frank

environment. Possible venues could include a question and answer session, one-on-one

meetings, establishment of an issue resolution representative or possibly mounting an

anonymous suggestion box. Secondly, as leaders within the organization, managers should

clearly and unambiguously convey standards of performance, strategic direction and provide an

opportunity to openly receive inputs and suggestions, be it critical or complimentary, without

fear of reprisal. Striving to reduce pressure (actual or perceived) to conform to the majority’s

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view, or the leadership’s preference should also be emphasized. Thirdly, inviting consultants or

experts from outside the organization to share or present information, to challenge the groups

views, collaborate on solutions or present new information can be a constructive way to engage

and shape the workforce.

Synthesizing information amongst groups and increasing information redundancy

between organizational units is another critical management task (Chun, 2007). It can be

frustrating for employees to work within a vacuum. All members of the workforce need the

majority of the information available to make informed decisions. Even ancillary or peripheral

knowledge may not seem pertinent, but the more information provided, the more empowered and

informed the workforce. This will lead to improved communications, increased understanding of

motivations between groups, and improved decision making capability.

Management should encourage error reporting, examine near-misses, and communicate

the message to resist complacency. High risk organizations such as combat units, aviators, and

nuclear reactor operators are trained to recognize events that are out of the norm, or not part of

the normal habit pattern. Examining errors and near-misses allows for the organization to

recognize protocols or processes that need to be reviewed, refreshed or eliminated.

The management and operation of an organization requires two separate skill sets. First,

a manager must possess the ability to academically analyze a problem or situation, and derive an

organizational plan and strategy to accomplish the organizational goals. Secondly, once the

organization is in place, the manager must have the ability to manage the personnel within the

organization and the informal organization that develops based on individual personal goals.

Identifying, analyzing and employing strategies to manage the workforce and the informal

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organization created, is a critical skill to possess, allowing the manager to reconcile his

employees personnel goals with organizational goals.

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References

Air Force Doctrine Document 1-1 (2006). Leadership and force development. Retrieved from
http://www.dtic.mil/doctrine/jel/service_pubs/afdd1_1.pdf

Chun, W. (2005). Information failures and organizational disasters. MIT Sloan

Management Review, 46(3), 8-10. Retrieved http://mitsloan.mit.edu/smr/

Chun, W. (2007). Organizational disasters: Why they happen and how they may be
prevented. Management Decision, 46(1), 32-45. doi: 10.1108/00251740810846725

Farris, G. F. (1979). The informal organization in strategic decision-making.

International Studies of Management & Organization, 9(4), 37-62. Retrieved from
http://www.mesharpe.com/mall/results1.asp?ACR=IMO

Reingold, J., Yang, J. L. (2007, July). The hidden workplace. Fortune. Retrieved from
http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100135706/index.h
tm?postversion=2007071811The

The office chart that really counts (2006, February). Business Week. Retrieved from
http://www.businessweek.com/@@4pDSSIUQ5Pw0mB0A/magazine/content/06_09/b39
73083.htm

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