Some of the main differences between formal and informal organisation are: (i) origin (ii) Structure (iii) Purpose (iv) Control (v) Influence process (vi) Communication (vii) Size!

(i) Origin:

A formal organisation is created to fulfil some objectives.

Hence, a formal organisation is basically goal-oriented. It is built around the general principles or organisation and the members of formal organisation are fully aware of these principles. Informal organisation, on the other hand, develops automatically and spontaneously. In other words, formal organisations are deliberately created whereas informal organisations are spontaneously formed.

(ii) Structure:


A formal organisation has a definite and specially designed structure reflected in organisation chart rendering a pictorial representation of the authority relationships. The authority structure is rigid and defined. Informal organisations are structure less groups. These are initiated by the workers themselves to serve the needs of workers.

(iii) Purpose:

Formal organisations are created to achieve goals defined by management. Normally, profit maximisation or wealth maximisation are the fundamental objectives of a formal organisation. On the other hand, the basic aim of an informal organisation is to satisfy the individual goals of members. Social satisfaction is the fundamental objective of an informal organisation.

(iv) Control:

In formal organisations, control points are established to constrain behaviour, restrain the members from going off the prescribed track. Thus, there exist a rigid system of rules and regulations which all the members are supposed to follow. Informal organisations are not tied to a rigid system of rules and regulations. However, every informal group outlines specific norms which the entire members are not supposed to violate in order to continue their membership.

(v) Influence process:

In formal organisations, authority is equated with influence. The person at the top becomes the most influential person. People enjoying authority become powerful in the minds of subordinates. In a sharp contrast, influence in informal organisation is attached to the individual person. Informal group attaches more value to that man who is able to satisfy the needs of the group members.

(vi) Communication:


There is a formal, official channel of communication in formal organisation. Communication is largely a one-way traffic here. The informal organisation designs its own channel of communication (known as grapevine”) for both organisational and social communication process. The grapevine tends to outstrips formal channels on speed.

(vii) Size:

Formal organisations can balloon to gigantic, unmanageable proportions depending on their success in capturing the market. In a sharp contrast, informal organisations tend to be small and manageable, and beyond a particular point members do not join groups. That is say, if the group membership is large; members join some other group (or form some other group).