When Ann Watts returned to the business environment as a cost accountant after taking off five years to raise her family, she vowed that she would not listen to office gossip. Her philosophy was that what she did not know cannot hurt her. For a while she stayed true to this vow and refused to talk about the personal lives of co-workers when she had lunch with other employees.

However, she began to wonder if she was making a mistake trying to isolate herself from the office grapevine. She noticed that she seemed to have more trouble getting along with her co-workers and supervisors. Watts did not have the benefit of the behind-the-scene information about these people’s personal lives. For instance, last week when she delivered last month’s cost of goods manufactured statement to the controller, he was rude to her and began asking for explanations why direct material and direct labor costs had increased so drastically during the last quarter. When she was unable to give a concise answer, he immediately told her to have a detailed report on his desk by 8:00 the next morning.

By the time she arrived back at her office from this meeting, she was seriously considering resigning. Her secretary, noting the distraught look on her face, asked what was the matter. After Watts told her what had happened, the secretary remarked, “Oh, don’t you know?

His 16-year-old son wrecked the family car last night. While no one was badly hurt, he completely destroyed his new sports car.”

This started Watts thinking that maybe she should become more a part of the group. Yet, she dreaded the thoughts of trying to separate herself from some of the obsessive gossipers she had seen around the company. However, Watts also remembered several other events that had left her with egg on her face.

Once, for example, when the vice president asked her at an office party how she liked the change in office dress code, she had quickly remarked, “I think it is completely old-fashioned not to allow the company’s female professional staff to wear pant suits to their jobs.

Further, I believe this is discrimination.” Later, she learned that it was this vice president who had pressed so hard for the change in dress code to prohibit pant suits. His argument had been that the company paid these ladies high enough salaries to require that they dress accordingly. Most of the women employees had resented the change to a more formal dress code, but they had limited their verbal outbursts to discussions among themselves.

In view of these recent events, Watts questions her approach to the working environment and wonders if she should change her tactics regarding the informal communication system.

Required:

a. Compare the sources of power and authority for an informal organization with those of the formal organization.

b. Explain the factors that cause the development of informal organizations within the formal organization structure of companies.

c. Discuss ways an informal communication system can be beneficial to the management process in achieving the organization’s goals.

d. Describe the ways formal and informal communication systems differ as to accuracy and speed of communication. What is the impact that communication has on employees?

e. Discuss (1) what employees can learn from office talk and (2) what its dangers are.

f Explain why Ann Watts has or has not made an error in her approach to the informal work group.