| S.No. | BASIS | Formal organisation | Informal organisation |
| 1. | Meaning | Structure of authority relationships created by the management. | Network of social relationships arising out of interaction among employees. |
| 2. | Origin | Arises as a result of company rules and policies. | Arises as a result of social interaction. |
| 3. | Authority | Arises by virtue of position in management. | Arises out of personal qualities |
| 4. | Behavior | It is directed by rules. | There is no set behavior pattern. |
| 5. | Flow of communication | Communication takes place through the scalar chain | Flow of communication is not through a planned route. It can take place in any direction. |
| 6 | Nature | Rigid | Flexible |
| 7 | Leadership | Managers are leaders. | Leaders may or may not be managers. They are chosen by the group. |
