Informal groups are formed because they satisfy human needs — needs for companionship, for identification, for a sense of belonging. Informal work-groups arise when relationships develop between employees — relationships above and beyond those required by the company to get the job done.

Why informal groups are formed in an organization?

The primary function of informal organizations is basically to maintain cultural values of people. When people can associate themselves with each other socially, they always feel a sense of togetherness. Consequently, another function of informal organizations is to provide social satisfaction to members.

How are formal groups formed?

A formal group is formed when people come together to accomplish specific goals and objectives. An official group has particular structures and roles where responsibilities of members of the group are defined.