Formal organization is a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation. In some societies and in some organizations, such rules may be strictly followed; in others, they may be little more than an empty formalism.
On the other hand
The informal organization is the interlocking social
structure that governs how people work together in practice. It is the
aggregate of, norms, personal and professional connections through which work
gets done and relationships are built among people who share a common organizational
affiliation or cluster of affiliations. It consists of a dynamic set of
personal relationships, social networks, communities of common interest, and
emotional sources of motivation. The informal organization evolves, and the
complex social dynamics of its members also.
Again Formal rules are often adapted
to subjective interests — social structures within an enterprise
and the personal goals, desires, sympathies and behaviors of the individual
workers — so that the practical everyday life of an organization becomes informal.
Practical experience shows no organization is ever completely rule-bound:
instead, all real organizations represent some mix of formal and informal.
Consequently, when attempting to legislate for an organization and to create a
formal structure, it is necessary to recognize informal organization in order
to create workable structures. However, informal organization can fail, or, if
already set in order, can work against mismanagement.