BUS603: Managing People

There are two primary types of groups: formal and informal. Moreover, within these two types, groups can be further differentiated on the basis of their relative degree of permanence. The resulting four types are shown in Table 9.1.

Types of Groups
	Relatively Permanent	Relatively Temporary
Formal	Command group	Task group
Informal	Friendship group	Interest group

Formal Groups. Formal groups are work units that are prescribed by the organization. Examples of formal groups include sections of departments (such as the accounts receivable section of the accounting department), committees, or special project task forces. These groups are set up by management on either a temporary or permanent basis to accomplish prescribed tasks. When the group is permanent, it is usually called a command group or functional group. An example would be the sales department in a company. When the group is less permanent, it is usually referred to as a task group. An example here would be a corporate-sponsored task force on improving affirmative action efforts. In both cases, the groups are formal in that they are both officially established by the company to carry out some aspect of the business.

Informal Groups. In addition to formal groups, all organizations have a myriad of informal groups. These groups evolve naturally out of individual and collective self-interest among the members of an organization and are not the result of deliberate organizational design. People join informal groups because of common interests, social needs, or simply friendship. Informal groups typically develop their own norms and roles and establish unwritten rules for their members. Studies in social psychology have clearly documented the important role of these informal groups in facilitating (or inhibiting) performance and organizational effectiveness. Again, on the basis of their relative degree of permanence, informal groups can be divided into friendship groups (people you like to be around) and interest groups (e.g., a network of working women or minority managers). Friendship groups tend to be long-lasting, whereas interest groups often dissolve as people's interests change.

One of the more interesting aspects of group processes in organizations is the interaction between informal and formal groups. Both groups establish norms and roles and goals and objectives, and both demand loyalty from their members. When an individual is a member of many groups - both formal and informal - a wide array of potentially conflicting situations emerges that has an impact upon behavior in organizations. We will focus on this interplay throughout the next few chapters.