1.5 The impact of the informal organisation on the business

　　The informal organisation can either enhance or hold back the business. Managers need to be aware of the informal structure and ensure that they

　　§ adapt the formal structure to complement the informal one

　　§ maintain a looser formal structure so that the informal structure can thrive. For example, hold monthly meetings to inform employees of the company’s goals but allow the informal structure to flourish e.g. ad hoc teams to form so that innovation and communication is not stifled

　　§ at the very least take account of the informal structure in decision making. For example, if a manufacturing department has split itself into two informal ‘cliques’ and output is in decline, the declining output could have nothing to do with the formal structure, but be due to lack of integration of the whole division due to the cliques. Rather than changing the formal structure, management could for example mix members of the two ‘cliques’ on training courses, and so try and reduce the impact of the informal organisation.

　　Expandable text

　　In his studies at the Hawthome works of the Western Electric Company in Chicago between 1924 and 1927, Elton Mayo concluded that informal groups exercised strong social controls over workers’ habits and attitudes, e.g. an individual productivity bonus scheme failed as workers were unwilling to show up their less capable colleagues.

　　Test your understanding 14

　　What other methods could be employed to integrate a department and reduce the impact of the informal organisation as in the last example above?

　　Chapter summary

#FormatImgID_0#Test your understanding answers

　　Test your understanding 1

　　§ Most common structure found in organisations

　　§ Jobs are grouped on the grounds of common specialisation

　　§ They sell few products (that are closely related)

　　§ Operate in a stable environment

　　§ Found in smaller companies

　　Test your understanding 2

　　Food plc

#FormatImgID_1##FormatImgID_2#Board #FormatImgID_3# Tinned veg Tinned and Packed Specialist Soups #FormatImgID_4##FormatImgID_5# Soups #FormatImgID_6# Functional Matrix Entrepreneurial

　　(stable market) (manage the only two (specialist skills)

　　Customers carefully)

　　Test your understanding 3

　　False – They tend to be owner managed.

　　Test your understanding 4

　　False

　　Test your understanding 5

　　Narrow

　　Test your understanding 6

　　Other factors could include:

　　Management style

　　Level of organisational support for routine tasks

　　The dangerous nature of the work

　　Test your understanding 7

　　The work is of the drivers is not particularly complex and drivers will not need much guidance.

　　Modern technology means that meetings between managers and drivers will not often be necessary.

　　Each manager will have a wide span of control.

　　Test your understanding 8

　　decentralised

　　Test your understanding 9

　　The more able the employees, the more decisions they can be entrusted with, and the greater the levels of decentralisation.

　　Test your understanding 10

　　decreasing

　　Test your understanding 11

　　Poor decision/lack of goal congruence, leading to increased costs.

　　Training costs

　　Duplication of roles leading to increased personnel costs

　　Extra costs of gathering information from various sources/locations

　　Test your understanding 12

　　False

　　Test your understanding 13

　　True

　　Test your understanding 14

　　Methods could include:

　　Away days, ensuring that teams for the activities are picked with members from both cliques.

　　Change shift patterns so that the cliques are broken up on the production line.

　　Change break times, so that one ‘cliques’ does not take its break together.

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