Within any company, there are two types of organization – Formal Structure and Informal Structure. Both effect the organization and relationships between staffs.
- The formal Organization refers to the formal relationships of authority and subordinates withing a company. While the informal organization refers to the network of personal and social relations that is developed spontaneously between people associated with each other.
- The primary focus of the formal organization is the position of the employee/manager holds. While the primary focus of the informal organization is the employee as an individual person.
- Power is delegated from the top levels of the management down to the organization. In an informal organization power is derived from the membership of the informal groups within the organization.
- In formal Organization, each position has rules governing what can be done or what cannot be done. There are rewards and penalties for complying with these rules and performing duties as well. While in an informal organization, the conduct of individuals within organization is governed by norms that is social rules of behavior.