Difference between Formal & Informal Organization

   Definition of Formal Organization

According to Chester Banard “an organization is formal when the activities are coordinated towards a common objective”. He found that the essence of formal organization is conscious common purpose and that formal organization comes into being when persons:

    Definition Of Informl Organisation

The informal organisation may be defined as “a network of personal and social relationships that arise spontaneously as people associate with one another in a work environment. It is composed of all the informal groupings of people within a formal organisation.”

Difference between Formal & Informal Organization

Basis of difference	Formal Organization	Informal Organization
Meaning	Formal Organization may be defined as such organization in which authority, responsibility and account-ability of each member are clearly defined.	On the other hand, informal organization may be defined as such organization in which authority, responsibility and account-ability of each member are not clearly defined.
Objectives	The purpose or objective of establishing formal organization is to achieve Pre-determined goals of an enterprise.	Where as, the objective of establishing informal organization is just to fulfill the psychological and social needs of its members.
Stability	Formal organization is generally more stable in comparison to informal organization, because it is established according to proper rules and regulations for achieving certain goals.	On the other hand, informal organization is not as stable as formal organization, because it is established, in the lack of proper rules and regulations.
Need	Formal organization is gene-rally more needful to every organization, in comparison to informal organization due to stability.	On the other hand, informal organization is not as essential to every organization as formal organization due to absence of proper suitability.
Size	Formal organization is generally too large in size, in comparison to informal organization.	On the other hand, informal organization is generally too small, in comparison to formal organization.
Establishment	Formal organization is established on the basis of proper rule and regulation, where authority, responsibility and accountability of each member are clearly defined.	On the other hand, informal organization is established spontaneously. It doesn't require any rule and regulation to emerge.
Use of Organization charts	Organization charts is needed to show formal organization.	There is no use of organization charts in informal organization.
Types of Communication	In formal organization generally written or formal communication takes place to express the orders, views and feedback etc.	On the other hand, in informal organization generally oral or informal communication takes place to express the orders, views and feedback etc.
Flow of authority	n formal organization gene-rally authority flow from top to bottom vertically over the subordinates and responsibility goes from bottom to top over superiors.	On the other hand, in informal organization everyone has equal rights and duties, so there is horizontal flow of authority in this organization.
Leader	In formal organization gene-rally managers are the leader of organization and so, each and every activity is done under their guidance.	On the other hand, in informal organization generally leader is elected by the members and so, each and every activity is done by members under his guidance.
Relationship	In formal organization each and every members has impersonal or formal relationship with each-other due to bound in rules.	On the other hand, in informal organization each and every member has informal or personal relationship with each-other due to equal rights.
Scope	The scope of formal organization is broader, in comparison to informal organization.	On the other hand, the scope of informal organization is narrow in comparison to formal organization.
No. of members	There is long list of members in this organization for achieving certain goals of organization.	On the other hand, in informal organization there is short list of members due to lack of certain goals.