The key advantage of informal organization is:

Organisation

In a growing technology firm, the CEO decided to reorganize operations to improve efficiency. The company adopted a formal organization structure by clearly defining roles and responsibilities for each employee, creating specialized departments such as R&D, Marketing, and Customer Support. Job descriptions, reporting relationships, and workflows were documented in an organizational chart.

However, alongside this structure, the company recognized the importance of informal organization—social networks and personal relationships among employees. For example, employees from different departments formed a cross-functional team to brainstorm innovative ideas over coffee breaks, fostering collaboration beyond formal channels.

To ensure smooth operations, the CEO implemented delegation of authority by empowering department heads to make decisions within their domains, such as approving budgets and setting project timelines. This delegation freed the CEO to focus on strategic planning. However, the CEO made it clear that accountability remained with the department heads—they were responsible for ensuring tasks were completed and goals met.

This combination of structured formal processes, informal collaboration, and clear delegation of authority improved decision-making, enhanced employee morale, and boosted the firm’s overall productivity.

The key advantage of informal organization is:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Enhanced employee morale

Option (1) Enhanced employee morale — Correct. The informal organisation fulfils the social needs of employees and gives them a sense of belonging, which raises job satisfaction. The case also says the informal collaboration helped to enhance employee morale.
Option (2) Clear job descriptions — Incorrect. Job descriptions belong to the formal organisation, which the firm wrote down and showed in its organisation chart.
Option (3) Detailed workflows — Incorrect. Workflows were also documented as part of the formal structure. The informal organisation has no written rules.
Option (4) Reduced collaboration — Incorrect. It is the other way round. In the case, informal contacts fostered collaboration beyond formal channels.

NCERT (2026-27 Edition): “Advantages: The informal organisation offers many benefits. Important among them are given below:
(a) Prescribed lines of communication are not followed. Thus, the informal organisation leads to faster spread of information as well as quick feedback.
(b) It helps to fulfill the social needs of the members and allows them to find like minded people. This enhances their job satisfaction since it gives them a sense of belongingness in the organisation.
(c) It contributes towards fulfillment of organisational objectives by compensating for inadequacies in the formal organisation. …”

Organisation

The key advantage of informal organization is:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Enhanced employee morale

Option (1) Enhanced employee morale — Correct. The informal organisation fulfils the social needs of employees and gives them a sense of belonging, which raises job satisfaction. The case also says the informal collaboration helped to enhance employee morale.
Option (2) Clear job descriptions — Incorrect. Job descriptions belong to the formal organisation, which the firm wrote down and showed in its organisation chart.
Option (3) Detailed workflows — Incorrect. Workflows were also documented as part of the formal structure. The informal organisation has no written rules.
Option (4) Reduced collaboration — Incorrect. It is the other way round. In the case, informal contacts fostered collaboration beyond formal channels.