Humans are interesting animals in that one of our instincts is to self organize as we form groups and work together. As social animals we just do this, and it's been quite well studied over the last few decades -- it's instinctual to us the same way birds might flock. References to this are found in economics, sociology, finance, and a dozen other fields.
It begins forming in surprisingly small groups, some research says as small as 2 people, other says around 5, but nevertheless, humans tend to self-sort into various levels of "leader" and "subordinate". When this structure accidentally emerges its considered "informal".
A "formal" hierarchy simply means a hierarchical organizational structure that's been imposed on a group from up on high. Leaders are selected from the herd and put into a rigid position, and attempts to usurp that structure can be enforced with various measures (in modern society banishment from the group is the typical response).
In an informal hierarchy, because there is no imposed structure, the leaders tend to fluid and there's no built in corrective function to reimpose an order to the herd. As a result, the "leaders" in an informal hierarchy tend to be those who have cultivated the most social power, usually through personality, but also through favor trading and promise making and other mechanisms.
Ideally formal hierarchies are supposed to be structured by the formal leaders (who also, as a formal corrective function, have a mechanism for removal and smooth transition of power) and those structures are supposed to be optimized for the good of the organization (not the group, the organization...e.g. an Army organizes to win wars not to provide safety for the members of the Army). Informal power structures always optimizes to try to secure power in the leaders e.g. a mob boss kills off his rivals
In terms of opportunity, informal hierarchies need to spend a huge amount of their time determining structure, this often means that nothing much else gets done except for activities that will help secure and define that structure and maintain it. Formal system spend far less of their time with this kind of introspection and thus frees the members up to pursue work meaningful to the organization.
It's not perfect, even in the presence of a formal power structure, humans will still form informal structures within it. However, the formal power structure can be used to break it up if it's becoming problematic (a CEO can fire a problem employee, while no single employee can remove a CEO). Good managers understand how to use the informal structure to help the goals of the formal structure.
It begins forming in surprisingly small groups, some research says as small as 2 people, other says around 5, but nevertheless, humans tend to self-sort into various levels of "leader" and "subordinate". When this structure accidentally emerges its considered "informal".
A "formal" hierarchy simply means a hierarchical organizational structure that's been imposed on a group from up on high. Leaders are selected from the herd and put into a rigid position, and attempts to usurp that structure can be enforced with various measures (in modern society banishment from the group is the typical response).
In an informal hierarchy, because there is no imposed structure, the leaders tend to fluid and there's no built in corrective function to reimpose an order to the herd. As a result, the "leaders" in an informal hierarchy tend to be those who have cultivated the most social power, usually through personality, but also through favor trading and promise making and other mechanisms.
Ideally formal hierarchies are supposed to be structured by the formal leaders (who also, as a formal corrective function, have a mechanism for removal and smooth transition of power) and those structures are supposed to be optimized for the good of the organization (not the group, the organization...e.g. an Army organizes to win wars not to provide safety for the members of the Army). Informal power structures always optimizes to try to secure power in the leaders e.g. a mob boss kills off his rivals
In terms of opportunity, informal hierarchies need to spend a huge amount of their time determining structure, this often means that nothing much else gets done except for activities that will help secure and define that structure and maintain it. Formal system spend far less of their time with this kind of introspection and thus frees the members up to pursue work meaningful to the organization.
It's not perfect, even in the presence of a formal power structure, humans will still form informal structures within it. However, the formal power structure can be used to break it up if it's becoming problematic (a CEO can fire a problem employee, while no single employee can remove a CEO). Good managers understand how to use the informal structure to help the goals of the formal structure.