Informal vs. Formal Power Structures - Essay Example

RUNNING HEAD: INFORMAL VS. FORMAL POWER STRUCTURES IN THE ORGANIZATION Informal vs. Formal Power Structures in the Organization SchoolDate Informal and Formal Power Structures in the Organization Introduction New developments in organizational studies are the recognition that an organization has both a hard component and a soft component (Wang, & Ahmed, 2002). Organizations comprise both a formal structure as well as informal structure that influence the relationship among personnel. While the formal structure indicates the apparent flow of power in the hierarchy, the informal structure likewise exerts an influence that may run horizontally or vertically, upwards and downwards. This informal structure may affect decision-making process and modify final decisions. Informal groups form from within formal groups that develop their own social structure, culture or history and which group processes and structure control group members or protect them from the management (Informal Organizational Structure, n.d.). Most organizations have an informal structure that gets the work done but not shown in the organizational chart (Concept, 1999). Managers, especially the senior managers, have to understand the informal structure to effectively manage the organization (Ackland, n.d.). Understanding the informal structure would help the manager attain organizational goals (Wang, & Ahmed, 2002). The informal structure emphasizes elements and relationships while the formal organization focuses on recognized organizational positions (The informal organization, 2009). Burnside (1990, as cited in Wang, & Ahmed, 2002) determined two types of organizations as the mechanistic and organic structures. Formal structures may be mechanistic (i.e. characterized by hierarchy, functional specialization, management control) or organic (i.e. focused on team-work. empowerment, flexibility), the former framework stressing on the hard component (Wang, & Ahmed, 2002) while the latter, on the soft component (e.g. relationship among personnel, ranks, hierarchy) (Bunge, 1985a,b, as cited in Wang, & Ahmed, 2002). The organizational structure provides the skeletal framework in decision-making and processes (Wang, & Ahmed, 2002). The informal structure is the “hidden energy” behind the formal structure and success of organization (Wang, & Ahmed, 2002). The informal relationship may not concur with that of formal relations (Lincoln, 1982; Tichy, Tushman & Fombrun, 1979, as cited in Wang, & Ahmed, 2002) as well as the influence that flows from it (Stevenson & Bartunek, 1996, as cited in Wang, & Ahmed, 2002). Formal Structure The formal structure is illustrated by the company’s organizational chart that depicts the job titles and description of tasks and functions (Concept, 1999) and is followed in accomplishing a task within a limited time (Ackland, n.d.). It illustrates the flow of communication and reporting, reflects who possesses information and knowledge, who issues orders and instructions, and who possesses power and influence (Ackland, n.d.). It is the accepted process in getting work done (Ackland, n.d.). Power and authority is exercised as long as a person occupies the position (Ackland, n.d.). The authority then proceeds from the position and the person occupying it (The informal organization, 2009). Formal communication follows chain of command enunciated by the organizational chart (The informal organization, 2009). Decision likewise flows from the top with each department being specialized and function-based (Ahmed, 1998a, as cited in Wang, & Ahmed, 2002). There is a well-built management control and centralized power (Wang, & Ahmed, 2002). The formal structure does not reflect the actual activities and processes in an organization since they are not shown in the chart (Wang, & Ahmed, 2002). Informal Structure Many activities performed within an organization are conducted by the informal structure (Wang, & Ahmed, 2002). This structure refers to “interpersonal, cross-functional and inter-organizational interaction” (Wang, & Ahmed, 2002, p. 6). It is a hidden organization that is described through the “patterns, behaviors, and interactions that stem from personal rather than official relationships” (The informal organization, 2009). The informal social structure affects how an organization is run (Informal Organizational Structure, n.d.). It is better for the management to understand this informal set-up to better manage the organization and predict the personnel’s reaction (Informal Organizational Structure, n.d.). It illustrates how the work is actually accomplished and is said to be a better mode in making things work out (Ackland, n.d.). The power or influence in informal structure is personal (The informal organization, 2009). Information flows beyond the bounds of the hierarchy and divisions (Wang, & Ahmed, 2002). Informal relationship enhances flexibility and responsiveness within the organizaton (Wang, & Ahmed, 2002). This relationship “promotes interpersonal, crossfunctional and interorganisational interaction” (Wang, & Ahmed, 2002, p. 9). Influence in informal organizations comes from the informal power “attached to a specific individual” (The informal organization, 2009, para. 2). Informal groups may be created through interpersonal interactions such as having lunch together or attending bowling games (The informal organization, 2009). Information flows (called the grapevine information) flows in any direction, “up, down, diagonally, or horizontally across the organizational structure” (The informal organization, 2009, para. 5). This organization is more important than the formal structure that the manager should consider (The informal organization, 2009). It does not only function to spread rumor but a relevant process in information dissemination throughout the company (The informal organization, 2009). The structure is stable (Informal Structure, n.d.) and where personnel create their own “informal norms and behavior patterns: status and power systems, communication networks, sociometric structures, and working arrangements” (Scott p. 54, as cited in Informal Structure, n.d.). Its value becomes manifest with its adaptability and capability to meet contingencies which the formal structure may be unable to do (Informal Structure, n.d.). According to natural theorists, the informal structure allows enhanced ability of organization to address complexity and uncertainty (Informal Structure, n.d.). Power and Influence Analysis The power chart (see Chart 1) exemplifies a typical formal and informal power structure. In the formal flow of information and instructions, it should proceed from the president (Eric) to the line managers. But since Eric and Andy are fraternity brothers, Eric may discuss with Eric important policy issues and decisions. Andy may also provide bits of necessary information that may influence the decision of Eric. Eric’s secretary (Carmela) has access to all vital information in the office of Eric. Carmela is a neighbor of Sheila (HR employee) for 10 years and they go home together after work. They usually talk about the activities and problems they encounter at work. Once in a while, Carmela informs Sheila of the new policies and updates that will be implemented in the company. Carmela, as Eric’s secretary, also provides inputs to him on how the rank and file personnel think about new policies and programs. Cris (Sales and Marketing manager) and Bill (Operations and Logistics personnel) who are best friends go to after work relaxation and discuss the trends in the market, positive sales and losses. Tess (Finance manager) and Tony (Operations and Logistics manager), college school mates, exchange data on the finance status of the company and operational outlook. Beth, the HR manager, and Evelyn (Finance personnel) are bible study group members. They meet for the bible study every weekend. During such occasion, it cannot be avoided that Beth tells Evelyn of the need to hire new field employees or termination of an employment contract. Chart 1 Power Map of Formal and Informal Power Structure The information transmitted informally as described above can be retransmitted from personnel to personnel that can affect the functioning and activities of the entire organization. Conclusion Natural theorists espouse that informal structures should be given equal importance as the formal structure (Informal Structure, n.d.). The relationship created by this structure should not be ignored (Wang, & Ahmed, 2002). Since grapevine information is 75 to 90 percent correct, it is a good venue for the manager and staff to exchange information (The informal organization, 2009). The formal structure indicates the flow of power and influence from top to bottom. However, the informal structure also emanates power and influence informally. This influence may affect other people in the hierarchy and may rally a group within an organization to promote or counter any measure imposed by the management. Since the informal structure is an invisible potent force and can perform tasks outside of the functional division, managers should understand and consider its mechanism in that particular setting. References Ackland, C.E. (n.d.). McDonald Consulting Group, Inc. Are You Effectively Managing your Informal Organization Structure? Google docs. Retrieved November 23, 2009, from http://docs.google.com/viewer?a=v&q=cache:NrwjyGAuN7sJ:www.mcdonaldconsultinggroup.com/pdf/E-0402-InformalStructure.pdf+informal+structure+of+an+organization&hl=tl&gl=ph&sig=AHIEtbRD_xsfoYZ2v_kQvMq_edjO4eEdXg Concept: Formal/Informal Structure. (1999, December 29). California State University, Dominguez Hills. University of Wisconsin, Parkside. Retrieved November 23, 2009, from http://www.csudh.edu/dearhabermas/cnforminf.htm Informal Organizational Structure: The Hawthorne Studies. (n.d.). Retrieved November 22, 2009, from http://www.analytictech.com/mb021/Hawthorne.html Informal Structure. (n.d.). Retrieved November 19, 2009, from http://faculty.babson.edu/krollag/org_site/encyclop/inform_struct.html The informal organization. (2009). CliffNotes. Retrieved November 19, 2009, from http://www.cliffsnotes.com/WileyCDA/CliffsReviewTopic/The-Informal-Organization.topicArticleId-8944,articleId-8877.html Wang, C.L. & Ahmed, P.K. (2002). The Informal Structure: hidden energies within the organization. Working Paper Series 2002. University of Wolverhampton. Number WP008/02. ISSN 1363-6839. Retrieved November 19, 2009, from http://docs.google.com/viewer?a=v&q=cache:8xV_LnXB-9cJ:www.wlv.ac.uk/PDF/uwbs_WP008_02_Wang_Ahmed.pdf+informal+structure+of+an+organization&hl=tl&gl=ph&pid=bl&srcid=ADGEESgnZnJWEvBTFhftpvpgqlcpAHxBdSJu5K5OZYqJLLid6t0F363Kb0dFqKbzwx-dgxZP-7o3r7fCLbnsDoHjj88XmeDko5hmGZjID1MC8O-tW6CzEkoDkJ-fBw8e7p3N5Wd7Wa6b&sig=AHIEtbStal6IfxQjQ1IbUNAKJa1qzW2EKA Read More