Formal and Informal Groups

Collectively, groups of people accomplish far more than individuals; the standard of living that we experience is improved by tackling problems together We are heavily dependant on others, we are social animals, and there is a strong need for collective and organised activity. Organisations fulfil our social, cultural, political and physical environment (Mullins, L. 2005).

Formal groups are formed as part of the organisational structure, by managers to organise and delegate the work load. Informal groups are formed by personal preferences, and satisfy psychological and social needs (Mullins, L. 2005). The study of individuals of an organisation cannot be studied in isolation, all interactions and variables within the structure of the organisation need constantly reviewing. Buchanan D. and Huczynski, A. (1991) added that organisations are social arrangements for the controlled performance of collective goals (Buchanan, D. and Huczynski, A. 1991:7).

Wenger and Snyder (2000) followed studies into how people share information through being a member of a formal or informal group. Wenger defined these groups as communities of practice, and they will develop around issues that matter to employees. Groups of people informally bound together by shared expertise and passion for joint enterprises. Some meet regularly, others are connected primarily by e-mail networks. These groups may or may not have an explicit agenda on a given week, and even if it does, it may not follow the agenda closely (Wenger E and Snyder 2000139).

Formal groups are created to achieve organisational objectives; this is achieved through co-ordinating the work load. Individuals are brought together by defining their role within the organisations structure. The nature of the tasks is predominant to the group; this formal structure reinforces the organisation’s culture and control systems (Greenberg, J and Baron, R. 2003). When there is a business need for a specific task to be completed, groups can be formed to accomplish this. These groups can have a time limit placed on them from the start (Mullins, L. 2005).

A lack of official information will quickly reveal informal groups within an organisation. The grape vine will pass information swiftly through the organisation. This cuts through the organisation’s structure ignoring the formal channels of communication. The group members are spread across departments; they might be friends who do lunch, or smokers who meet out side the building. This net working is informal, and can benefit the individual member; each group has its own culture. These groups are cross sectional, and are formed without any involvement from the formal structure (Mullins, L. 2005).

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List the key individual differences that exist and state why it is necessary for managers to have an understanding of them.

What is effective for the individual may not be effective for the organisation and vice versa. Organisations are measured by their individual performance; this rates their success within the markets and cultures that they operate in. There is a multitude of interrelated individuals, group, organisational, and environmental influences on behaviour within the organisation (Buchanan, D and Hucczynski A, 1991).

Within each group there are a set of characteristics that bind them together. Within a formal group the structure of the organisation will have a strong influence on these characteristics. Informal groups are formed independent of work; these situations cannot be managed or controlled by the structure. Certain boundaries and limitations can be placed on the behaviours within them, although this can force further cohesion amongst members (Greenberg, J and Baron, R. 2003).

The characteristics of an effective formal work group are their shared beliefs, aims and objectives; there is commitment within the group. There is a high level of acceptance of values and norms within the group. These groups are efficient and effective; they obtain the goals that management has set them. This is the ideal scenario when planning and forming groups (Mullins, L. 2005).

Although once a group has become fully developed and cohesive, it is almost impossible for a manager to change the norms, values attitudes and behaviours. The group has formed their own culture within the organisation. The group will resist change, and even become critical and hostile to people outside the group. Inter group rivalry can appear when resources have to be competed for; each group will be defensive of their allocation (Mullins, L. 2005).

To reduce the rivalry, competitiveness and resistance employees can be rotated in different work groups, allowing them to form alliances in different teams. This can reduce the formation of individual group culture, allowing changes to practices when necessary The success and cohesion of the group can be vital factors in its downfall, resisting change that the organisation has considered necessary (Greenberg, J and Baron, R. 2003).

Identify the tools available to managers to assist with the decision-making process.
The decision making process within an organisation will develop long term strategic plans (Johnson G, &, Scholes, K 2004). Strategy is the direction and capacity of an organisation, which achieves advantages through its configuration of resources within the changing environment. The strategy answers both the questions “where do you want to go?” and “how do you want to get there?” The first question is answered when the goals are set; the second is answered when the strategies are planned (Mullins L 2005).

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Planning is the first stage of implementing a new strategy Managers are required to step back to look at the environment, competitors, market place and review both the internal and external strengths and weaknesses. A SWOT analysis will focus the managers on both internal and external factors that can affect a new strategy (Groucutt, J. et al 2004).

A portfolio analysis will review the current position of the organisations products within their chosen markets. Ansoff (1987) developed a product growth matrix, which reviews current products and their markets; this will also highlight new markets that entry to can be considered. Ansoff considered reviewing the portfolio as only one part of the equation for a successful decision making. To formulate a successful strategy more than one review of their current position will clearly identify any problematic areas (Ansoff (1987) cited in Groucutt, J. et al 2004:212).

Porter’s five forces are widely reviewed in literature; this model looks at the competitive forces that shape strategy. By identifying the major influences and drivers, they can be built into scenarios with each considered as a positive or negative outcome. This scenario planning will prepare the organisation for possible changes, allowing them to be proactive to any threats that the external environment may hold. This will allow the organisation to be flexible and allocate the correct resources to a strategy (Johnson J & Scholes K 2004).

Most business plan for the future.

Discuss planning, the types of planning and identify why plans fail.

Once an organisation has decided on the strategic fit, the planning process begins. The planning is the archetypical administrative control, through the systems that are put in place to monitor and control resources. These strategies can build on or stretch the organisation current resources (Johnson G, &, Scholes, K 2004). Incorrect allocation or too few resources is a major factor of failure for an organisation’s strategy (Mullins L 2005).

Managerial decisions are made to identify what is required to implement the new strategy. Are new resources are required? I.e. property, finance or employees, then the risk should be assessed for its long term value to the organisation. Strategies should not only be considered on how they will affect existing resource capabilities, but also if needed new resources and how they will be controlled. The costs to the organisation should be weighed against the long term gains, and if needed it can be reviewed, accessed and amended accordingly (G, Johnson & K, Scholes, 2004).

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This planning can use several approaches, resource or budgetary based, top down, or centralised The objectives are set, monitoring is put in place and there is review of the actual and target, with corrective action if necessary. With the original plans, there should be scope for revision, to allow for any changes in the market or environment. If these reviews are either not put in place or fail to be reacted on, then the whole of the process will not succeed (Mullins, L. 2005).

Widely used is the IT approach to planning, with in house systems that control resources, these systems can be integrated into the whole business. This reduces human error when planning. Reports can be produced simply and quickly on all aspects of the business. Although these systems will reduce any risk involved, managers should be confident in reading the data produced (G, Johnson & K, Scholes, 2004).

From the different management tools plans can be drawn that utilise organisational strengths, and commence procedures to improve the weaknesses. For this process to be successful managers have to be completely honest and committed to the strategy (Groucutt, J. et al 2004). Misjudged, misguided and apathetic strategies have in the past brought down organisations both financially and in their reputation, damaging the public’s opinion of them (Drucker (1989) cited in Mullins 2005:214).


Buchanan D, and Hucczynski A, (1991) Organisational Behaviour Prentice Hall, Padstow

Greenberg, J and Baron, R. (2003) 8th edition Behaviour in organizations understanding and managing the human side of work Prentice Hall

Groucutt, J. et al (2004) Marketing Essential Principals and New realities Kogan & Page, Great Britain

Johnson, G &Scholes J (2004) (6th Edition) Exploring Corporate Strategy Prentice Hall, Hemmel Hempstead.

Mullins, L (2005) (7th Edition) Management and Organisational Behaviour Prentice Hall, Pearson Education, Edinburgh

Wenger E and Snyder WM. Communities of practice: the organisational frontier. (2000) Harvard Business Review

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