These groups are the groups, which appears in response to the need for social contact. These groups are formed within the structure of the organization but by the members themselves. They are formed to satisfy the social needs on the job.
Importance of informal groups to the organization
Informal groups are important not only from the point of view of their members; they have a great utility from organization's point of view also. They help the organization in better administration by performing the following functions:
1) Filling in gaps in manager's abilities: informal organization may act to fill in gaps in a manager's abilities. For example, if a manager is weak in planning, one of his subordinates may help him informally in such a situation.
2) Solving work problems: informal organization helps in solving the work problems of members it allows them sharing job knowledge and taking decisions which affect a number of jobs.
3) Better coordination: informal groups evolve short-cuts and eliminate red tapes. They facilitate smooth flow of information and quick decision-making. All these ensure better coordination among various individuals and departments.
4) Channel of communication: informal groups act t fill up the communication gaps, which arise in the organization informal communication cuts across the hierarchical and departmental boundaries and transmits information with greater speed.
5) Restraint on managers: informal groups do not allow the managers to cross their limits. They restrict them from acquiring unlimited power and from using their power injudiciously.
6) Better relations: a manager can build better relations with subordinates through informal contacts. He can consult the informal leaders and seek their cooperation in getting the things some from the workers.
7) Norms of behavior: informal groups develop certain norms of behavior, which differentiate between good and bad conduct and between legitimate and illegitimate activities. These bring discipline and order among the employees.
8) Satisfied workforce: cohesive informal groups provide satisfaction to the workers. As a result, labor turnover and absenteeism are reduced and organization's productivity is increased.
9) Developing future executives: informal groups recognize talented workers as their leaders. Such leaders can be picked by the management to fill vacancies at the junior executive level in the future.
Problems created by informal groups
Informal groups have dysfunctional aspect too. They may create the following problems for the organization:
1) Negative attitude of informal leaders: the informal leader may turn out to be a troubleshooter for the organization. In order to increase his influence, he may work against the policies of management and manipulate the behavior of his followers. Thus, he can be a source of conflict between the management an dthe workers.
2) Conformity: the informal group exerts strong pressure on its members for conformity. The members may become so loyal to their groups that following the group norms becomes a part of their life. This implies that members become subject to willful control of the group leader who may lead the group towards selfish ends. This will lead to dilution of the effect of organizational policies and practices on the group members
3) Resistance to change: informal groups generally have a tendency to resist change. Change requires group members to make new adjustments and acquire new skills. But groups want to maintain status quo.
4) Rumor: informal communication may give rise to rumors. This is not desirable from organization's point of view. Rumor originates for a number of reasons. One cause if plain maliciousness, but it is probably not the most important. A more frequent cause is employee's anxiety and insecurity because of poor communication I the organization.
5) Role conflict: every member of the informal groups is also a member of the formal organization. Sometimes, there may be role conflict because what the informal group requires of members is just the opposite of what is expected of him by the formal organization. In such a situation, group members may conform to their social normal.