Formal and Informal Communication in Organizations, Explained

UPI Study › Courses › Foundations of Leadership › Free lessons › Lesson 8.7 Free with a free account

Formal and Informal Communication in Organizations

Foundations of Leadership · Chapter 8: Communication ModuleSection 8.7 · lesson 54 of 9010 min · free with a free account

← Interpersonal Skills in Professional SettingsNext lesson: Verbal, Non-Verbal and Vocal Communication →

Earn 3 college credits for Foundations of LeadershipRecommended for credit by NCCRS · Business 205 · self-paced · one payment, lifetime access
Enroll in Foundations of Leadership · $250 →Download the syllabus (PDF)

In this lesson

The official channels and the unofficial ones - and why suppressing the second never works.

  • Define formal communication and its three features
  • Name the failure mode of each formal channel
  • Recognise what informal communication legitimately does
  • Read divergence between the two streams as a signal

Free study notes

Get this lesson's notes by email

The key points and 4 practice questions with answers, in your inbox. One email, free.

One email. Unsubscribe in one click.

Transcript

Everything said in the video, section by section (1,343 words). Read along, or search it.

Communication Module

Formal and Informal Communication

Every organisation communicates through two parallel streams. The formal channels that the organisation designs and authorises. And the informal ones that arise spontaneously among the people who work there. Both are necessary. Both convey real information. Both shape behaviour. This section examines the formal stream and its principal channels. The irreducibly important role of informal communication. The grapevine, which is the most studied form of it. And what it means when the two streams stop telling the same story.

Two Streams

Every Organisation Runs Both at Once

It is tempting to think of one stream as legitimate and the other as leakage. So the useful question is never which stream to trust. It is what each one is good for, and what each one predictably gets wrong. The argument here is not that the formal should absorb or replace the informal. It is that effective communication means deliberately managing both. As complementary parts of a single system.

The Definition

What Makes Communication Formal

Formal communication flows through channels the organisation authorises and structures. Memoranda, scheduled meetings, recorded briefings. Performance reviews, board papers, customer-facing statements. First, an explicit sender who is authorised to speak on the matter at hand. Second, a defined audience to whom the message is officially addressed. Third, a recorded or recordable form, so it can be referenced later. Together those three carry something specific. The organisation's deliberate intent. What it is officially asking, instructing, deciding, or announcing.

The Trade

Authority and Record, Bought With Bandwidth

Formal communication buys two things, and pays for them with two others. Its strength is clarity of authority and preservability. When a written policy is issued, there can be no later confusion about what was meant. When a board decision is minuted, it becomes part of the binding record. Its weakness, taken alone, is bandwidth and pace. Organisations whose communication is wholly formal are slow, and often stilted. And they are frequently surprised by developments the informal channels surfaced weeks earlier. So the two streams are complementary rather than competing. The formal one cannot do without the informal one, any more than the reverse.

Channels

Five Channels, Five Predictable Failures

Formal channels fall into a recognisable set, each failing in its own way. Downward channels carry strategy, instructions and organisational news. Their failure mode is one-way overload. Receivers feel told, rather than engaged. Upward channels carry status, results and concerns from below. Their failure mode is filtering. Bad news softened or omitted at each layer. Lateral channels coordinate between departments and peers. They run thin where authority lines do not connect people, and they attract turf disputes. External channels carry the organisation's voice outward. Their failure mode is inconsistency with the internal voice, which damages trust. And the documented record holds policies, minutes, contracts and audit trail. Its failure mode is becoming ritual rather than reference. Nobody re-reads it. Those failures are predictable enough to be designed against. Which is exactly what most organisations never get around to doing.

The Weak Link

Upward Communication Fails By Default

Downward communication is rarely the real problem. Upward communication is almost always the weak link, and it fails by default. And lateral communication is often surprisingly thin. The mechanism behind upward failure is filtering. Unwelcome content is softened or omitted as it moves up through each layer. That is structural, not personal. Nobody has to lie for the picture at the top to end up wrong. Rebuilding upward flow takes deliberate counter-mechanisms. Skip-level conversations that bypass the intermediate layers. Anonymous channels. And a culture in which bad news is rewarded rather than punished. That last one is the hardest, and it is the one that actually decides the outcome.

The Other Stream

What Informal Communication Is Actually For

Informal communication arises spontaneously, outside anything the organisation designed. The conversation in the kitchen. The message on a personal platform. The friendship that crosses departmental lines and carries information with it. Formal communicators tend to underestimate it. They treat it as either irrelevant, or vaguely threatening. The research consistently disagrees with both readings. Informal communication is among the strongest predictors of innovation. And of problem-solving speed, employee engagement, and organisational resilience. Rapid transmission of practical information that formal channels would move too slowly. Cross-functional trust that lubricates later formal cooperation. The surfacing of concerns that are not yet ready for formal articulation. And the social fabric that makes the organisation somewhere people will invest in.

In Depth

What the Grapevine Knows

Keith Davis began the work in the nineteen fifties, and the findings have held up. The grapevine is faster than formal channels. And it is surprisingly accurate when measured against eventual outcomes. Davis estimated it was roughly seventy-five to ninety per cent accurate on factual matters. Though it tended to be incomplete, with crucial nuance often missing. The uncomfortable half is that you cannot rely on the grapevine being wrong. Information you would prefer to manage carefully is travelling through it anyway. The useful half is that it works as a diagnostic instrument. When something is being widely discussed informally, the underlying matter is usually real. Even when the details have been distorted in the retelling.

Divergence

The Most Diagnostic Moment in an Organisation's Life

The most diagnostic moment in an organisation's communication life is easy to miss. It arrives when the two streams stop matching. When what the official communication says and what the grapevine carries no longer agree. That divergence is information, not noise. Something is going on that the formal communication is not addressing. Or is addressing in a way the informal channel finds simply incredible. The responses split into healthy and unhealthy versions. The unhealthy response is to suppress the informal communication. Restrictions on internal social tools. Sanctions against rumour-spreading. It rarely succeeds, and it almost always damages trust further. Because it tells employees that leadership cares more about controlling the message. Than about addressing whatever is underneath it. The healthy response is to investigate what the informal channel is responding to. Then correct the formal communication, address the underlying issue, or both. Organisations that build that discipline find divergence becomes rarer over time.

Case

The Memo Nobody Believed

A logistics firm announced a programme of cost savings. The memo described the changes as efficiency improvements. Explicitly unrelated to any reduction in headcount. Within twenty-four hours the grapevine carried a completely different account. A major round of layoffs was imminent, beginning with the regional offices. Two weeks later, layoffs in the regional offices were announced. The memo had been technically defensible. The immediate decisions genuinely did not include layoffs. But it was received as misleading. The grapevine version was wrong on the technicalities, and correct on the direction. The episode damaged leadership credibility for the following two years. Subsequent communications about cost savings were assumed to mean layoffs. Regardless of what they actually said. That is the long memory of an organisation whose grapevine outperformed its leadership voice.

Practice

Listening to the Grapevine

Leaders who treat the grapevine as a diagnostic rather than a threat build simple habits. They notice what is being talked about informally. They ask trusted colleagues at lower levels what is currently circulating. And they watch for divergence between informal and formal coverage of major topics. They do not chase rumours, but they treat persistent currents as worth investigating. The practice is cheap and informative. And it usually surfaces issues weeks earlier than formal channels would have. Over time, leaders with this habit become known as unusually well-informed. About what is actually happening in their own organisations. It is a reputation the discipline genuinely earns.

Consolidate

One System, Not Two Rivals

The competent organisation manages both streams as one system. Keeping the formal channels credible is the first half. That means being honest, timely and substantive. Saying what is happening. Acknowledging what is not yet decided. And addressing the issues employees are actually concerned about. Respecting the informal channels is the second half. Neither suppressed nor co-opted, and listened to for the signals they carry. Leaders then move between the two as the situation requires. Formal announcement for matters that need authority and record. Informal conversation for matters that need exploration, judgement, or speed. One shift in mental model sits underneath all of this. Information is not something an organisation possesses and dispenses. It is something that flows continuously through its people. Organisations that grasp that shape their architecture to support the flow. Rather than to control it. And they get better-informed employees and more responsive leadership.

About Foundations of Leadership at UPI Study

Foundations of Leadership (Business 205) is a self-paced online course of 90 video lessons in 12 chapters, from the roots of leadership theory and the trait, situational and transformational approaches to power, decision-making, communication, teams, conflict, diversity and global leadership. It carries a NCCRS credit recommendation for 3 semester credits.

Every lesson transcript is free on pages like this one, and the videos are free with a free UPI Study account. Enrolling adds a practice quiz after each lesson, the graded work and final exam that earn the credit, lifetime access, and an official transcript on completion. UPI Study has helped over 130,000 students with college credits. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.

Enroll now → Course details Download the syllabus All Business courses Every course with PRO →

Compare: Management and leadership courses · Foundations of Leadership vs Leadership and OB

Why take it here

Why students take Foundations of Leadership with UPI Study

What makes people follow a leaderFoundations of Leadership covers the main theories of leadership and how leaders use power, make decisions, communicate, build teams and handle conflict. It is a common course in business, management and organizational leadership degrees.
Credit at a fraction of the priceThe same 3 credits can cost $750 or more at a US college. Here it is one payment, self-paced, with lifetime access.
Finish your degree soonerTransfer credits reduce the courses you still owe, so you can graduate earlier or lighten a heavy semester.
Strengthen an applicationA completed college-level course on an official transcript shows admissions and scholarship committees you can do the work.
Study on your own scheduleNo start dates, no deadlines. Watch the lessons, practice, and take the final when you are ready.
130,000+students helped with college creditsACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.

Where the credit goes

Universities that work with NCCRS

Foundations of Leadership carries a NCCRS credit recommendation. These universities work with NCCRS; some are UPI Study's signed partners. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.

Thomas Edison State UniversityThomas Edison State UniversitySigned partnerUniversity of the PeopleUniversity of the PeopleSigned partnerCharter Oak State CollegeCharter Oak State CollegeSigned partnerStrayer UniversityStrayer UniversitySigned partnerColumbia Southern UniversityColumbia Southern UniversitySigned partnerIndiana TechIndiana TechSigned partnerPenn StatePenn StateWorks with NCCRSSouthern New Hampshire UniversitySouthern New Hampshire UniversityWorks with NCCRSSUNYSUNYWorks with NCCRS +many more cooperating universitiesFind my college →

Find my college → Not listed? Ask Athena in the corner of this page, or book a 15-minute call.

FAQ

Questions students ask us

About Formal and Informal Communication in Organizations

What is the difference between formal and informal communication in organizations?
Formal communication travels through channels the organization designs and authorizes, while informal communication arises spontaneously among employees. Formal messages, such as memos, policies, minutes and performance reviews, have an authorized sender, a defined audience and a recordable form. Informal communication happens in kitchen chats, personal messages and friendships across departments. Research links informal communication to innovation, faster problem-solving and engagement, so effective organizations manage both streams as one system.
What is the grapevine in an organization, and how accurate is it?
The grapevine is the informal network through which news and rumor spread in an organization. Keith Davis began studying it in the 1950s and found it faster than formal channels and, by his estimate, at least 75 percent accurate on factual matters, though often incomplete and missing nuance. Because it is often right, managers can treat it as a diagnostic tool: when something is widely discussed informally, the underlying issue is usually real.
What should managers do when the grapevine contradicts official communication?
Managers should investigate what the grapevine is reacting to rather than trying to suppress it. A gap between official messages and informal talk signals that formal communication is missing or mishandling something employees care about. Restricting internal tools or punishing rumors tends to damage trust further. The healthy response is to find the underlying concern, then correct the formal message, address the issue, or both, while keeping official communication honest, timely and substantive.
What are the strengths and weaknesses of formal communication?
Formal communication offers clear authority and a reliable record, but it is slow and limited in bandwidth. A written policy reduces confusion about what was meant, and minuted decisions become part of the binding record. However, organizations that rely solely on formal channels tend to be stilted and are often surprised by developments the informal network noticed weeks earlier. Typical failures include one-way overload in downward messages and filtering of bad news on the way up.

About the Foundations of Leadership course

How many college credits is Foundations of Leadership?
Foundations of Leadership (Business 205) carries a NCCRS credit recommendation for 3 semester credits. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.
How much does Foundations of Leadership cost and what is included?
$250, paid once, with lifetime access: all 90 video lessons, a practice quiz after each, the graded work and final exam, and an official transcript when you finish. Students who want several courses choose UPI Study PRO instead.
Which universities accept UPI Study credits?
UPI Study has signed partner agreements with universities such as Thomas Edison State University, University of the People and Charter Oak State College, and works with universities such as Penn State, SNHU and SUNY. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities. Use "Find my college" on this page to check yours.
How long does Foundations of Leadership take?
It is self-paced with no deadlines. The 90 lessons total about 16 hours of video; most students add reading and practice time and finish in a few weeks to a few months, on their own schedule.
How are the exams done?
Quizzes and assignments are online in the course. The final exam is taken online with proctoring; a person on the UPI Study team checks assignments, usually within two days.
How do my credits reach my college?
When the course shows 100% complete, request the official transcript from your dashboard. It is sent to the college you name, and you can send it to more than one. Check your college first with "Find my college" on this page, or ask Athena.

Ready for the full course? Earn 3 credits in Foundations of Leadership.

90 video lessons, a quiz after each one, and the graded work that earns the credit. Recommended for credit by NCCRS.

Enroll in Foundations of Leadership →Download the syllabusEvery course with PRO →
Foundations of Leadership
3 credits · NCCRSEnroll →