Explain the difference between a firm’s formal organization and its informal organization. Why are both types of organization important to managers? Provide examples.
Difference between a firm’s formal organization and its informal organization
Formal and informal organization are both important to run the operations of an organization. In a formal organization, there are designated duties and tasks that different people in an organization have to perform and the rules and procedures with which they interact with each other are defined. On the other hand in an informal organization, people from the organization engage in an informal communication process. They come together, sit together and discuss different issues.
For example in an organization, the people in one department would have designated duties and a formal way to communicate with each other. But they may be able to meet up with people from other departments informally to discuss different issues of mutual interest.