Group is defined as two or more individuals who are interacting with each other, interdependent on each other and work together to achieve certain specific objectives (Robbins, Millett, Cacioppe & Water-Marsh, 2001). Groups are formed to address social and security needs, achieve specific goals, to pursue common interests and goals and based on various other attributes (Robbins et. al., 2001) . Within organizations, generally there are two main types of groups that are formed; formal groups and informal groups. Formal groups are formed by the systematic and deliberate grouping of people in an organization based on the organizational needs in order to achieve certain set organizational goals, whereas informal groups are formed spontaneously and naturally by employees of an organization when they work or interact with each other over a period of time (Australian National University, 2006). This essay list the functions of these groups, formal and informal, in an organization set-up along with the advantages and disadvantages of each for an organization. In the last part, it mentions how the understanding of the group behaviour can be used by the managers to perform effective management. During the course of the essay, different theories and concepts are used to justify the points and opinions made. These theories and concepts include division of labour theory, Maslow’s hierarchy of needs theory, social identity theory, balance theory and groupthink theory.

Formal groups are the groups that are formed and defined according the organization structure and have designated work duties, tasks and responsibilities (Australian National University, 2006). In these formal groups the activities performed by the individuals are limited and the communication in these groups takes place through a straight chain of command. These formal groups show behaviour that is defined as well as directed towards the broader organizational goals. The main function of the formal groups is to establish division of work based on specialization in a formal structure (Farivar & Esmaeelinezhad, 2012). This division of work in a formal group is based on the division of labour theory, which defines the roles based on the work that an individual has to perform in an organization (Farivar et. al., 2012). The other function is to create formal teams that are responsible for fulfilling a particular task that would eventually contribute to the fulfilment of the overall organizational goals. This in turn increases the efficiency of the organization and its employees. Another function of the formal groups is to create a structure that provides effective division of power, authority and accountability (Aghion & Jean, 1997). As already mentioned, formal groups have straight chain of command, this ensures that the power is effectively distributed and the individuals at the top of the organizational hierarchy have the supreme power, with the power then distributed as per the role down the hierarchy.

The formal groups in an organization have ample benefits related to them. These groups in an organization provide a basic structure for the division of the responsibilities and work (Robbins, DeCenzo, Coulter & Woods, 2011). This structure enables the management to use the organization’s human resources in the best possible way as it is easier to divide work and responsibilities among employees if their designation and the scope of the work that they can perform is known. This also makes easier for the employees as well, as they know what is required of them. In addition, formal structure enables effective management of the large sized organizations and the organizations that tend to increase with time (Robbins, et. al., 2011).

Apart from the benefits, the formal groups also tend to negatively affect an organization based on different aspects. According to Blau & Scott as cited in (Farivar et. al., 2012) generally the employees in a formal setup do not accomplish their tasks and duties by the powers that are vested into them, because most of the time the formal authority fails to completely motivate the employees. Furthermore, in the formal organizational groups the formal communication devised by the management are more likely to be underprivileged and unidirectional (Farivar et. al., 2012). Due to this nature of the communication in the formal groups the communication is not very effective and most of the times there are delays in the message passing, which can even negatively impact the employees and the organizations. In addition, the employees in a formal organization are required by policies and regulations to show certain standardized behaviours and this in turn hinders creativity and innovation (Farivar et. al., 2012). Above all, the formal groups don’t address the social or the psychological needs of the employees as they are put into formal groups as per the organizational needs thereby neglecting the basic sociological needs of the employees. In terms of Maslow’s Hierarchy of Needs theory, the sociological or sense of belonging needs of the employees are not fulfilled and hence a result of this the employees are very less likely to be motivated.

As already mentioned, the other type of groups in an organization besides the formal groups are the Informal groups. They are the groups that are formed independently in organizations by the employees to satisfy and meet their social needs (Australian National University, 2006). These groups emerge whenever the employees of an organization come together and interact with each other on a regular basis. These groups serve several major functions in an organization. One of their function is to provide a sense of social satisfaction, security and status to the members involved in the group (Farivar et. al., 2012). These things are achieved by the providing a feeling of the belongingness to some entity, in this case the entity refers to all the other team members in the group. Other function of the informal groups is to provide another communication channel i.e. GRAPEVINE, apart from the formal communication channel to the employees in an organization (Robbins, et. al., 2001). By utilizing the informal communication channel the members of an organization are able to communicate and learn about the information and matters that can be of importance and can affect them and others. One of the other important function of these groups is to strengthen and maintain the values and norms that the members in the group possess in common (Farivar et. al., 2012). This enables the team members to bind together and hence operate as a unit. Lastly, the informal groups help solve the problems in an organization, as the members of the informal group can help each in phase of any difficulties related to job, health and recreation. Hence, these groups can help the individual employees and make them to reach and perform at their full potential.

These groups prove to be beneficial to almost all the organizations around the world. Social Identity Theory as cited in Farivar et. al., 2012 states that the employees are able to get satisfied by the sense of belonging as that sense stimulates the process of motivation and hence improves an individual’s self-esteem and as a result in high level of performance. The informal groups are able to cater to these social needs stated in the theory and hence prove to be advantageous to an employee and the organization. Besides this, the communication in the informal groups is interactive, spontaneous and far more effective than the communication in the formal organizational setup (Aghion, et. al., 1997). This is due to the reason that the members in the informal groups come from various division of the organization and this makes the informal communication net very extensive. So, important information can be communicated in the organizational very spontaneously. Hence, it can be said that informal communication can add value to the organizations. In addition, the informal group members are able to reduce the levels of stress and psychological pressures, among themselves, related to their work responsibilities and duties (Farivar et. al., 2012). Due to this reduction in stress and emotional pressures there are visible improvements in the efficiency of the employees and in this in turn leads to greater to improved employee performance. Furthermore, the existence of the informal groups in an organization is very advantageous to the management of an organization as the informal groups establish the norms to institute the accurate behaviours and this in turn reduces the workload on the organization’s management to a great extent.

In few aspects the informal groups do not work ideally for an organization and hence have some drawbacks related with them. According to Groupthink Theory as cited in Robbins, et. al., 2011, informal groups are source of conflict as the members in an informal group become loyal to that group and put their informal group’s aims and objectives ahead of the formal organization’s goals and even identify themselves with that informal group and hence as a result of that conflicts can arise. Besides this, in the informal groups misleading and inaccurate information can spread every quickly as informal groups in an organization are far more extensive than the formal organizational groups (Farivar et. al., 2012). Sometimes, even rumours can also spread very rapidly which can affect the reputation of a company or the individuals who work in that company. In addition, the individuals in a formal group tend to be like-minded and have similar perspective on different things. This trait of conformity that exist in the informal groups can play a negative role when an organization is trying to any implement changes in the formal organizational structure and some formal groups can oppose those change and this in turn leads to the resistance to change in an organization.

The mangers in an organization can greatly benefit from the understanding of the group behaviour and implement this understanding for performing better management and to improve productivity. As discussed in the disadvantages of the formal groups, the formal group setup in an organization is not able to fulfil the social belongingness needs of an individual; not having the social needs fulfilled the employees can become unmotivated and hence less productive. Therefore, the managers should focus on the social needs of the groups and try to address them by making efforts to increase the interaction among the employees. According to Maslow’s Hierarchy of Needs theory, having the social needs fulfilled, there is greater probability for the individual to be motivated and confident. Motivated workforce is one of the biggest asset that can organization can possess, which will improve its efficiency, productivity and hence its revenues.

As it has been mentioned in the disadvantages of the formal groups that the employees are not able to think outside box because of the restrictions that are posed on their actions by the formal structure. The management should understand the adverse effects of this practice on the organization and must undertake some steps to rectify it. For example, Google frees its employees from the formal restrictions of the company for the 20% of time and in that time the employees are free to think creatively and produce whatever they want to (as cited in Farivar et. al., 2012). During this 20%, one of the employees’ of the company invented Gmail and today it is one of the main services offered by Google. From this it can be inferred that if the managers are able to free the employees of the restrictions of the formal structure for certain periods of time then they can allow employees to think creatively that can ultimately lead to innovation. This innovation can greatly benefit an organization and can make considerable contributions to the revenues of the company.

As it was discussed in the advantages of the informal groups, the informal groups are capable of motivating the members of an organization and hence, help them achieve high productivity; the managers thus by respecting and recognising the existence of such informal groups can use the optimism and the high levels of energy produced among the members of these groups, towards achieving the organizational goals and increasing the levels of productivity within an organization.

It was clear from the disadvantages of the informal groups that these can be source of conflict their goals are not aligned with the goals of the organization, so it is essential for the managers to treat these groups in an appropriate manner (Aghion et. al., 1997). Hence, if the manager is capable of addressing the issues of these groups that arise of the conflicting organizational goals, the manager is able to utilize the workforce in an efficient and positive manner to fulfil the organizational goals.

In conclusion, based on the above discussion it can be said that both formal and informal groups are of utmost importance and benefit to an organization. The formal groups have formal acceptance within an organization and they are used to achieve the overall organizational goals whereas the informal groups tend to have no formal acceptance and are created by the employees who are members of different formal groups and they are mainly created to address the social needs of the employees. Formal groups have proper work distribution, specified goals and know what is expected of them but are restricted by the formal structure so much that they tend to lack innovation and creativity, but on the other hand informal groups tend on voluntary basis free from all the pressures that are present in the formal groups and hence foster free thinking and motivation among members. Both, the formal and informal groups tend to complement each by covering each other’s shortcoming in an organization. Therefore, the mangers in an organization can greatly benefit if they try to understand the concept of the group behaviour of both the formal and informal group and implement this understanding for performing better management and hence improve productivity, of the employees to efficiently, speedily and effectively achieve organizational goals.

References

Aghion, P., & Jean, T. (1997). Formal and real authority in organizations. Journal of Political Economy. 105(1), 1-29.

Australian National University. (2006). Formal and informal groups. Retrieved from: http://teaching.fec.anu.edu.au/BUSN8030/L14_Understanding% 20groups%20and%20teams.pdf

Farivar, F., & Esmaeelinezhad, O. (2012). The effects of informal groups on organizational performance: a case study. Interdisciplinary journal of contemporary research in business. 12(3).

Robbins, S., DeCenzo, D., Coulter, M. & Woods, M. (2011). Management: the essentials.China:Peasrson Education.

Robbins S.P., Millett B., Cacioppe R. & Water-Marsh T. (2001). Organizational behaviour 3rd edition. Prentice Hall: Maryborough

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Organisational Behaviour
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