CAT / FIA FBT Syllabus B. Business Organisation Structure, Functions - Impact of informal organisation on the business - Notes ^{2 / 2}

Social forces of various types from the wider community outside the business infiltrate into the organisation and influence the relationships of its members and the way it works.

It is obviously important that such informal relations shall not conflict with those established by the formal structure.

Informal organisations can become detrimental or beneficial to the formal organisation depending on how it is managed.  Informal organisations are loosely structured, flexible and spontaneous.

The benefits of an informal organisation can be:

1. Employee commitment

2. Knowledge sharing

3. Speed

4. Responsiveness

5. Co-operation

Managerial problems of informal organisation

1. Social groupings may act collectively against organisational interests

2. Morale-damaging rumours

3. Employees may suffer if they excluded from the social grouping