| Basis of difference | Formal organisation | Informal organisation |
| Meaning | 'Formal organisation' refers to the relationship between authorities as defined by the management. | Refers to the relationship based on personal and informal relationship among the employees. |
| Origin | The structure originates from the rules and policies of the management. | The structure originates from the social interactions among the employees. |
| Authority | Authority is defined by the profile and managerial positions. | Authority is defined by the personal qualities of the employees. |
| Flow of communication | Communication flows through the scalar chain. | No planned route of communication is followed. |
| Nature | Formal organisations are rigid | Informal organisations are flexible |
