Tuesday, July 18, 2006

Formal Vs. Informal Organization

The next few posts and publications would tend to concentrate on the importance of incorporating the two aspects into economic organizational, planning and the effects in communication. For the most part formal institutions have been analyzed and evaluate quite independently of informal institutions. Also, the study of informal institutions has largely abstracted from the importance of formal institutions, after viewing them as mere functional substitutes. There are strong interactions between formal & informal institutions I intend to highlight.

But firstly I'll like to mention a few points as it concerns informal channels and communications, because I feel this suffers more neglect (my personal view, subject to debate). An organization's informal communication system referred to as a grape vine, along which information can travel in any direction. The path that messages follow along the grape vine is based on social interaction, not organizational charts.

To show essential an informal system can be is illustrated with Xerox’s Pato Alto Research Centre (PARC), www.parc.xerox.com. The company learned just how important informal communications were when it began looking for ways to boost productivity. In an effort to boost efficiency, the company hired a social anthropologist to observe their 'tech reps' The consult saw that the tech reps often made a point of spending time with each other but not with customers. Through their stories when they hanged out, the reps shared knowledge and generated new insights about how to repair machines better. Xerox concluded that tech rep performance could be improved by increasing this type of communication, so the company issued two-way radio headsets to the reps.

The information carrying capacity of a communication channel (information richness) increases as the degree of informality increases i.e. from formal numeric documents (budget reports) to formal written documents (bulletins & reports) to written letters/memos to telephone conversation then face to face.

The next post would be on the interactions of formal/informal institutions, viewing them as mechanisms of change, compliments or substitutes.

Sunday, July 02, 2006

Formal Vs. Informal Groups/Organization

Firstly, I’ll like to point out that two or more people/individuals coming into contact on a continuing basis, personally & meaningfully could be referred to as a group.

Informal group comprises of a small number of people who frequently participate in activities and share feelings for the purpose of meeting their mutual needs. The institution is a set of rules based on implicit understanding, being in most part socially derived and therefore not accessible through written developments or necessarily sanctioned through formal position. These formal institutions include social norms, routines and political processes.

Formal group and institution on the other hand could be defined as the rules that are readily observable through written documents or rules that are determined & executed through formal position such as authority or ownership. They include explicit incentives, contractual terms, & firm boundaries as defined by equity positions, organizational charts and job descriptions generally reflect the formal structure or prescribed network in a given organization. The military can perhaps be considered to be the ultimate state of formal organization where by rank and job title are sufficient to fully described persons role in the organization. This form permits no role ambiguity. Effective performance in such an organization would need you to understand the requirements in one’s role within the cultural and procedural context of the organization.

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