Informal Organizations by Muhammad Iqbal Malik

1
Informal Organizationsby Muhammad Iqbal Malik
2
About Chester Irving Barnard(1886 1961)

• American business executive, public
  administrator, and sociological theorist who
  specialized in the nature of corporate
  organization
• His book, Functions of the Executive (1938), was
  widely influential in sociology and business
  theory

3
About Chester Irving Barnard(1886 1961)

• An employee of the ATT (1909)
• Became president of an ATT subsidiary in 1927
• During the Great Depression, directed the New
  Jersey state relief system
• Served as president of the United Service
  Organizations (1942 to 1945)
• Also served as chairman of the National Science
  Foundation (195254).

4
Preface

• A society is structured by formal organizations,
  formal organizations are vitalized and
  conditioned by informal organizations. If one
  fails the other disintegrates
• (Chester I. Barnard)

5
Informal Organizations

• The aggregate of the personal contacts and
  interactions and the associated groupings of
  people
• (Chester I. Barnard)

6
Informal Organizations

• The system of relationships and lines of
  authority that develops spontaneously as
  employees meet and form power centers that is,
  the human side of the organization that does not
  appear on any organization chart
• Understanding Business, 6/e, (William G. Nickels
  )

7
Basic Characteristics

• Involves two or more people
• Informal relationships, groupings interactions
• Repeated contacts but without any conscious joint
  purpose
• Involves the human need to socialize
• Includes both friendly and hostile relationships
  and interactions

8
Basic Characteristics

• Informal association precedes formal
  organization, as it requires preliminary
  (informal) contact and interaction before
  establishment

9
Scope of Informal Organizations

• Informal organizations exist within
• Organization
• Community
• State or
• Everywhere

10
Effects and Consequences

• Affects knowledge, beliefs, attitudes and
  behaviour, which may spread across the entire
  organization with a chain reaction
• Forms habits, norms, customs institutions
• Creates conditions that may lead to the
  establishment of a formal organization (e.g.
  families, societies, clubs, company etc.)

11
Effects and Consequences

• Formal and informal practices often diverge (e.g.
  failure of a policy or procedure due to
  nonacceptance by the people)
• Informal groups also act as window to formal
  organizations (all organizational contacts are
  based on few individual interactions)

12
Effects and Consequences

• Informal organization persists and expands with
  formal organization through continuity of
  interactions
• Repeated interactions imply common (unconscious)
  purposes such as social, professional
  (unofficial), material
• Lasting interactions are fundamentally based on
  human need for action.

13
Effects and Consequences

• Such personal relationships are often more
  intense and significant than institutional
  (individual vs. org. loyalty)
• Purposive cooperation a means of individual (or
  social) development
• All these purposes are indirectly fulfilled
  through formal organizations
• Thus formal organizations serve societal
  cohesiveness and social integration

14
Creation of Informal by Formal Organizations

• Formal systems of cooperation are inherently
  informal in nature
• Formal activities involve people and result in
  informal association through continuous
  interactions
• Formal organizations provide individuals the
  means to fulfill social and individual needs
  through social interaction

15
Creation of Informal by Formal Organizations

• All organizations host informal organizations

16
Functions of Informal in Formal Organizations

• Communication (which is largely informal)
• Creates cohesiveness and integration
• Facilitates in creating social conditions that
  encourage willingness to work, by adding social
  motives
• Creates a feeling of independence as informal
  interactions are not governed by formal rules and
  authority

17
Functions of Informal in Formal Organizations

• Protects individual personality and character
  against negative (or corrupt) organizational
  influences
• Informal organizations play a significant role in
  the development of an organizational culture,
  that is the aggregate of the values, norms and
  attitudes of its people

18
Conceptual Application and Related Themes

• A public administrator should understand and
  harness the social forces in the organization to
  the advantage of the system
• To shape and guide values in the system,
  utilizing informal organizational concepts
• Can fight against corrupt practices by
  encouraging developing positive informal
  organizations

19
Conceptual Application and Related Themes

• Human Relations Movement focus on human and
  group dynamics
• Trend towards organic vs. bureaucratic systems
• Organizing around values that drive people,
  rather than purely economic objectives
• Maslows hierarchy of needs - Social

20
Conceptual Application and Related Themes

• Systems theory recognizing the influence of
  components on each other, on the system and vice
  versa
• Reinforced by research in social-psychology and
  sociology
• Recognition in modern organizational theory, of
  the relatively informal roles of champions and
  agents for change for significant organizational
  purposes

21
Examples

• Six senior most supreme court judges refused to
  take oath under LFO. All were sacked. The
  informal organization protected their individual
  morality from the corrupt influences of the
  formal system

22
Examples

• Organizational workers in Australia as a protest
  vowed to strictly go by the book, paralysing
  business activity signifies the role of
  informal behaviour for organizational well being,
  even in routine formal matters.
• Informal cooperation in govt. institutions among
  corrupt public servants, protecting both
  individual and group interests

23
Examples

• The institution of prophethood, initially emerges
  as an informal organization within a social
  structure. After substantial growth, the
  institution becomes complex, and thus becomes
  formalized, thereby creating several other formal
  organizations and institutions - e.g. mosque,
  madrissa, shariah, fiqha, salat, zakat etc.

24
References

• Informal Organizations and Their Relation to
  Formal Organizations, Chester I. Barnard
• In Search of Excellence, Tom J. Peters
• Understanding Business, 6/e, (William G. Nickels
  )
• Encyclopædia Britannica