Informal Organizations Essay Example

There are two types of organizational structures in any company or business organization: a formal structure and an informal structure. The formal structure is defined by subordination, organizational hierarchy, seniority, and authority. The informal structure is based on personal relationships between employees. Unlike the formal structure, the rules and social culture in the informal structure are not established through documentation or company boundaries, but through cultural principles, behavioral norms, routines, and other types of implicit understandings that are socially derived (Zenger, Lazzarini & Poppo, 2002). The importance of informal structures in business organizations cannot be underestimated. Informal relationships and interconnections have a positive influence on organizational performance by improving communication, stimulating collaboration and cooperation, lowering employee turnover, challenging and motivating employees for better output, and helping them to set and achieve higher professional goals.The presence of strong informal relationships among employees is crucial for establishin