Informal work‐groups are described, and their characteristics and development are discussed. They are compared with formal groups which are defined by the structure of the organisation and an individual′s role within that structure. Informal groups will always occur in any organisation; so management′s task is to understand and use informal groups to achieve the organisation′s ends. This is especially true as regards productivity, and the variables affecting productivity are discussed. The article then concentrates on leadership as a factor affecting group productivity. In this context, interactions between leaders (formal and informal) and group members are considered. A model is presented of how management can use informal groups to increase productivity. The importance of good relationships between formal and informal groups is emphasised, and a list of ways in which management can foster good relationships is provided. If, for any reason, the informal group will not co‐operate with the organisation, but continues to work against it, management must ensure that the group is disbanded.
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