Informal Networks : The Company behind the Charts by David Krackhardt and Jeffrey R.

Hanson

Summary
Managers like to please themselves by thinking that only Formal Networks in their organisation yield
results. But they do not see the other side of the coin - Informal Networks. Informal networks refer
to the relationships among employees across functions and divisions, that cut through the
established hierarchical structures to accomplish tasks faster. They can revive stalled initiatives and
meet exceptional deadlines. However, they can also sabotage the companys plans, block
communication and create other hindrances. Understanding these informal networks will help
managers utilise the full potential of the company. If Formal Networks are the Skeleton of the
company then Informal Networks are the Central Nervous System that are intertwined with the
formal structure and drive the collective thought processes, actions and reactions of all the business
units. Formal Networks handle standard and easily anticipated problems whereas Informal networks
handle unanticipated complex problems. If formal structure is like a grid, informal networks are like
creepers that move elliptically and diagonally skipping standardised processes and avoiding
bottlenecks to get the job done.

Managers often overestimate their knowledge of these networks. They hope that their authoritative
powers will outweigh the power of informal networks. Sometimes they recruit moles to provide
them intelligence or run focus groups to get closer to their employees. But more often than not
these methods hardly portray the complete picture.

Network analysis

It helps to translate a myriad of relationship ties into maps to show organisational networks can get
work done.

Types of relationship networks :-

Advice network: Prominent players on whom others are dependent to solve problems and
get technical support. By mapping advice networks, one can find out the most influential
person and help while making routine changes.
Trust network: Depicts employees sharing delicate political information and backing one
another in crisis. A Company must review its trust network while making a major change or
while it is experiencing crisis.
Communication network: Employees talking regularly about work related matters. It helps in
identifying gaps in information flow, inefficient use of resources and failure in generating
new ideas. It must be examined when the productivity is low.

These structures can be used to restructure networks in order to accomplish organizational goals.

Steps to analyse informal network

1) Carry out a survey to get responses for certain pertinent questions regarding employee
trust, go to factor etc. It is done keeping in mind that employees arent made aware of the
person accessing it and at the same time ensuring privacy.
2) Cross-check answers. Answers are cross checked from both the parties to filter out
ambiguities & ill feeling among colleagues.
3) Processing the result and mapping them using computer software.
David Leers, the CEO discovers that the change in the companys strategic focus can lead to
dissatisfaction amongst the field design employees. Therefore, he decides to create a strategic task
force led by Tom Harris, a member of the field design. Contrary to his expectations, the group did
not make any progress. The reason for this was Toms ignorance towards the ideas and opinions of
his team members. Unwilling to accept failure, he decided to redesign the team and chose Bill
Benson as the co leader citing the reasons of time pressures and scope of the problem. Another
roadblock came up when the field design department head Jim Calder failed to prove his mettle as a
leader in spite of being a very reputed technically sound member. His autocratic outlook outweighed
his technical abilities and made him unpopular amongst the employees. Managers are often
misguided by their presumptions that formal networks enhance interpersonal relationships in the
long run and the trust is reciprocal. Similarly, Jim was unable to identify trust relationships within his
team. So, David had to cross-promote Jim in an elite parallel team and thus was able to promote
John Fleming to the head of field design. Ultimately, the performance of the group showed rising
trend.

Further, it is pointed that managements illusion that more communication between the employees
isnt the right approach. It is not the quantity but the quality of communication matters. A
hierarchical structure of reporting has its drawbacks as equal focus is not being made on every
subordinate. Being well informed about the job gives an advantage to the network structure. All this
led to the management abandoning more is better strategy and aiming at improving relationships
within the established framework. This was done by conducting seminars wherein managers became
conscious of communicating more information to subordinate. Soon after, regular surveys were
conducted and the results were communicated.

However, another problem rose. Due to difference in working days and hours, customer complaints
rose against sub-branch, which worked during the non-peak hours and Saturday hours. People
complained about the non-responsiveness of the sub-branch. The underlying reason was non-
participation of subordinates in the meetings and little contact with the management. The manager
applied the idea of communication between swapping employees to give both the factions a taste of
the other network structure.