The following points highlight the difference between a functional structure and a divisional structure.

A network of social relationship that arise spontaneously due to interaction at work is called informal organisation. It emerges from social interaction and free flow of communication among the employees of an organisation. On the other hand, formal organisation refers to a formal system based on superior-subordinate relationship. Whereas, delegation and decentralisation are concerned with the transfer of authority and responsibility to the subordinates.

Rumours are a result of informal organisation. They can have adverse effect on the working environment. It may result in arguments or conflicts among the people of the organisation. For example, a rumour about the boss may pop up during a communication among a group of employees, which may affect the superior-subordinate relationship.

The following are the steps involved in a successful process of organising.

(i) Identifying and Dividing the Work: Under organising, the very first step deals with identifying the activities and dividing them according to the defined plans. The actions are divided as per the objectives. A clear division of work is done so as to avoid any duplicity.

(ii) Creating Departments: Herein, the divided actions are further grouped into units based on the similarity in nature. That is, similar activities are grouped together. Such departmentalisation promotes specialisation. Each department specialises in a particular task. Departments can be formed on the basis of several criteria such as working profiles, regions, product, etc.

(iii) Assigning Duties: The third step under organising deals with assigning the roles and responsibilities to the personnel. Under each department work is allocated to different members as per their skill and ability. While assigning the duties it must be ensured that the best suited and proficient person is selected for the work.

(iv) Establishing the Relationships: Any organisation needs a proper hierarchic structure to work efficiently. Every person should know whom he’s working under and to whom he needs to report. Clear establishment of such relationships help in smooth functioning of an organisation.

An informal organization is that organization which is not established deliberately but comes into existence because of common interests, tastes and religious and communal relations. The main purpose of this organization, structure is getting psychological satisfaction. For example, employees with similar interest in sports, films, religion etc. may form their own informal groups.

Features
1. It originates from within the formal organization as a result of personal
interaction among employees.
2. It has no written rules and procedures.
3. It does not have fixed lines of communication.
4. It is not deliberately created by the management.
5. It is personal means the feelings of individuals are kept in mind.
Advantages
1. Speed: Prescribed lines of communication are not followed which leads
to faster spread of information.
2. Fulfilment of social needs – enhances job satisfaction which gives them
a sense of belongingness in the organization

3. Quick solution of the problems – because the subordinates can speak
without hesitation before the officers, it helps the officers to understand
the problems of their subordinates.
Disadvantages
1. It creates rumours: All the persons in an informal organization talk in a
careless way and sometimes a wrong thing is conveyed to the other
persons.
2. It resists changes and lays stress on adopting the old techniques.
3. Priority to group interests: Pressurises members to conform to group
expectations.