In formal organizational, each level has its own challenges and demands.
The Peter Principle said: an explanation for poor managerial performance which suggests that managers are promoted until they reach a level at which they can no longer perform effectively. And how about problems of responsibility?…The problems arise in defining responsibility in an organization are: constant change, new problems, and inadequate job descriptions create “gray areas” where responsibility is ill-defined.

Informal organization arises from the divergence between power sources and authority. It exists in every organization and can help or hinder organizational performance.

Purpose of organizational hierarchy is logical, vertical separation of responsibility maintains predictability in the technical core, while allowing the organization to respond to environmental pressures.

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