Answer:
Formal Organisation
‘Formal organisation’ is deliberately and consciously created for the accomplishment of the enterprise objectives. It provides for official relationships between the individuals. The communication channel in a formal organisation is also formal or official. It has well-established rules and procedures.
Informal Orgnisation
Informal organisation arises from the personal and social relations of people. It is not formally designed. It is developed spontaneously out of interactions between persons. It is influenced by personal attitudes, likes and dislikes. Informal relations occurs among individuals. According to Barnard, ‘informal organisation is joint personal activity without conscious common purpose though contributing to joint results’.
Difference between formal and informal organisations
| S. No. | Formal Organisations | Informal Organisations |
| 1. | It is consciously and deliberately created | It arises spontaneously |
| 2. | Authority and responsibility are vital for its functioning | It is only personal factors such as friendship, affinity, trust and confidence that are important. |
| 3. | Rules and procedures are important | Personal relationship between individual is more important. |
| 4. | It can be shown on the organisation chart | It cannot be shown |
| 5. | Authority flows downwards and responsibility flows upwards. | There is no flow of authority and responsibility. |
| 6. | It is deliberately created only to attain the enterprise objectives. | It is created to fulfill the social needs of an individual. How-ever, it may also contibute to the enterprise goal. |
| 7. | Designations and official positions are very important | Designations and official positions are unimportant. |
| 8. | It is permanent and stable. | It is unstable. |
