Formal and Informal Structures of Organizations | Bradford (Lynch) Levy’s Blog

Formal and Informal Structures of Organizations

Originally Posted: December 08, 2015

This post examines how the formal structure set by managers can differ drastically from its informal structure which dictates how information flows within the company.

Formal Structure

Formal structure of an organization refers to the classic image of a hierarchical flow chart depicting the various people in a company and their titles. This is the structure that managers can impose upon a firm but often it does a poor job representing the true flow of information and location of influence. Below is an example of the formal structure of an organization, depicting as a network graph.

The dark blue node in the center of the graph above is the CEO of the company. The two lighter blue nodes are her assistants then the other nodes are directors and top managers, in that order of decreasing hierarchy. In reality, the people within this organization are part of cross-functional teams, they have preferences for sharing coffee with one another, and some even attend the same health club together.

Informal Structure

All of these additional relationships create links between the nodes that wouldn’t otherwise exist, thus creating what is known as the informal structure of the organization. This aspect of the company’s network has profound impact on how, when, and where information flows. Depicted below is the informal structure of the same organization examined above. Click once on an individual to see their first-degree connections. Double-click to reset the chart.