Informal Groups in Organizations

Informal Groups

• Informal groups are formed spontaneously within an organization, with friendship as a primary reason for membership.
• They are not part of the formal organization and do not have a formal performance purpose.
• Informal groups are vulnerable to expediency, manipulation, and opportunism, and can cause harm to the company due to their low visibility.

Types of Organizational Structures

• Organizations can be classified into three types: functional, product or market, and matrix.
• Functional organization: departmentalization by functional activity, such as engineering or marketing.
• Product or market organization: organization by divisions based on product or customer type.
• Matrix organization: employees report to both functional/division manager and project/group manager.

Functional Organization

• Effective in smaller firms, especially single-business firms with well-defined skills and areas of specialization.
• Advantages:
  • Economies of scale and efficient resource use through task grouping.
  • Centralized decision-making with unified direction from the top.
  • Excellent communication and coordination within departments.
  • Promotes high-quality technical problem-solving.
  • In-depth skill specialization and development.
  • Career progress opportunities within functional departments.
• Disadvantages:
  • Poor communication and coordination between departments.
  • Delayed decision-making due to top-level involvement.
  • Routine, non-motivating tasks due to work specialization.
  • Difficulty in identifying responsible sections or groups.
  • Limited view of organizational goals by employees.
  • Limited general management training for employees.

Product or Market Organization

• Suitable for large corporations with multiple product lines in several related industries.
• Advantages:
  • Flexible and responsive to change.
  • High concern for customer needs.