Management's challenge is thus to build adaptability into the controls of the organization, thus providing employees with more flexibility and freedom to innovate while concurrently directing their activities towards the common purpose of the organization. The use of informal rewards by managers can help influence desired employee behaviors in effective, yet nondirective ways. The trend toward increased uncertainty. U.S. business increasingly is experiencing constant change at a faster and faster rate. Because companies are operating in a dynamic, changing environment, management must use a more flexible, less formalized coordinating mechanism that serves to increase the use of informal controls and attempts to reduce reliance upon formal management controls.
Informal systems work better during times of uncertainty.
In such times, informal systems can better help to stabilize operations than more formal control systems. As stability and predictability increase, the use of formal systems increases. In times of major change, the informal system should be the dominate management system. Informal rewards even have increased potential for use with executive management. In today's business environment, the critical motivational needs of executives and, therefore, the effectiveness of most incentive schemes are undermined.