The Informal Organization

Jon Katzenbach is a co-author of one of my favorite books, The Wisdom of Teams. He was a consultant at McKinsey and then created his own firm, Katzenbach Partners. They have recently released a report, titled The Informal Organization, that addresses some critical issues in a way I find refreshing and important.

The basic thesis is simple: how things get done in organizations is a coin with two sides. On the formal side you have org charts, rules, policies, and procedures. On the informal side you have people, relationships, work-arounds, and how things really happen. All organizations have both sides of this coin, but the informal side too often gets ignored. Here’s an extensive quote:

Here is what the formal is good at: creating efficiency, clarifying authority, communicating priorities, and aligning the rational behaviors of an organization’s employees with its common objectives. The formal organization is the lines and boxes that illustrate the official structures of power and paths of decision-making. It is the master of alignment because it can be written down, electronically shared, and described. The formal organization is best leveraged in situations where tolerance for inconsistency is low and control is essential. …

Here is what the informal is good at: motivating people to go above and beyond their job duties, communicating information quickly, engaging employees in collaborative work, and making changes stick. The informal structure is the complex web of relationships, influences, interactions, and judgment calls that make a company what it is—the real, productive tensions that constitute the difference between getting things done and getting things done a lot better than anyone else.

I think this ties back in to my post a few days ago about love (you should really read the comments there, by the way, they are excellent). Taking the informal organization seriously is frequently (though not always) the key to making huge leaps in effectiveness. There is more leverage there since it has not been the focus traditionally. But that means looking at and talking about things that have not traditionally been considered part of the working world.

I love this report (I know I’ll blog more about it) and you can request a copy from Katzenbach Partners here.


  1. 22.10.2007 at 6:50 pm

    I agree that the Katzenbach report makes a useful contribution to the gathering debate about the relevance of the informal dynamics of organizations to performance outcomes. It is eye-catching and creatively put together – offering a mix of articles, thought pieces and provocations around the general theme of the “informal organization”. At the same time, I have some concerns.
    For example, by expressing the “informal organization in action” solely in terms of “do[ing] what great organizations do … in allow[ing] room for humanity”, the report risks missing the central point. It might be read as simply a re-write of the “excellence” prescriptions of the ’80s and ’90s, rather than as a fundamental challenge to current management orthodoxy. If people were to coalesce instead around themes aimed at subverting management’s formally stated intentions, this would be just as much an example of “the informal organization in action” as those stories recounted in the report.
    The central proposition of the report is that managers need to pay attention to both the formal and informal organization, where the authors define the latter as:
    “… the interlocking set of relationships that connect people who share a common organizational affiliation. It is the aggregate of behaviors, interactions, norms, personal and professional connections through which work gets (or doesn’t get) done.”
    The various stories and anecdotes in the report contain some useful, ‘first base’ challenges to the rational assumptions that continue to govern the thinking and practice of most managers and organizational consultants. However, an important question remains: Do the authors view their work as a fundamental challenge to this prevailing management discourse or simply as another ‘tool’ for managers to use in an essentially unchanged view of managerial prerogative and control? My sense is that they would argue in favour of the former; whereas, in my view, the stories and commentaries continue to reflect conventional assumptions about the way in which organizations work and outcomes are achieved.
    It is vitally important to open up a dialogue about the significance of the hidden, messy and informal dynamics of organizations. The report seeks to do this in an attractive and accessible way. To add real value, though, it needs to provoke a radical shift in managers’ understanding and practice. It will not be enough for it simply to evoke concessionary nods from managers towards greater people involvement or other ‘safe’ conceptions of the informal organization, which leave their fundamental assumptions intact.