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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.

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