Should You Go Formal or Informal?

If you’ve been keeping score at home, you’ve noticed that I’ve used the word ‘formal’ quite a bit. In fact, in one poorly worded post I suggested that “the (risk management) process doesn’t have to be formal” and got called to the carpet in a comment by Kristen. She was absolutely correct in stating that the process really does have to be formalized – meaning performed consistently and methodically – but doesn’t have to be complicated, expensive or burdensome (a point I attempted, and failed, to make).

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That exchange was a good example of how the word ‘formal’ can be misused or at least have different meanings to different people. In my last post about cost benefit analysis, I was again throwing around the f-word (no, not that one…) somewhat carelessly. Let’s take a step back and explore what really characterizes a “formal” process.

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What’s the Difference Between Formal and Informal?

If you look up the definition of ‘formal’, you will find phrases like “being in accord with established forms and conventions and requirements” and “characterized by strict or meticulous observation of forms; methodical“. These definitions touch on the concept I’m trying to describe, but they’re still too vague for my purposes. So let’s talk about the “tom” definition of formal and informal.

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When we’re talking about processes, the differences between formal and informal generally can be found in two areas: the extent of the documentation and the consistency of the method. In other words, formal processes or analyses should be performed in a consistent manner (i.e. a standard method on a regular schedule) and captured in writing. A formal process will have a structure and form. It will have a schedule or at least a trigger event. Formal process will happen on a consistent basis.

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As you would imagine, informal would be the opposite of formal. Informal processes tend to be more ad hoc – maybe an impromptu train of thought in your head or a spur-of-the-moment verbal conversation. Informal process or analysis will lack a pre-defined structure and schedule. It might happen when it’s needed or when somebody happens to think about it. It might not happen.

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How Do You Know When To Use Formal Process?

There are occasions when the situation simply doesn’t warrant the overhead of a formal process or analysis, but sometimes a formal approach is definitely recommended. A formal approach is particularly helpful when you may need to revisit the rationale behind a particular decision or if you want to communicate the reasoning for a decision to others (think decision justification or training purposes). A formal process is also necessary when you have a task that needs to be performed consistently in method and schedule.

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Many times you may have both a “formal” and “informal” version of the same process. Cost benefit analysis (CBA) is a perfect example. A formal cost benefit analysis will be triggered by a specific event or criteria. It will involve documentation of the facts (costs, benefits, assumptions) and the conclusion. An informal cost benefit analysis will probably be done in your head. Both are valid approaches as long as they are applied in the appropriate circumstances. You probably won’t want to use a formal CBA for deciding between a Big Mac and a McChicken sandwich at the local McDonalds. However, a formal CBA will be very justified if you are thinking about buying a $250,000 piece of equipment.

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Risk management is one of those processes that always warrants the use of formal process. Financial record-keeping is another one. While it’s important to know the distiction between formal and informal process, it’s much more important to know when to select the right type of approach.

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One closing thought… Don’t get caught in the trap of thinking that ‘formal’ equals ‘expensive’ or ‘complicated’. That is a complete myth. Formal processes can be very simple and cost effective. If you don’t believe me, watch what’s going on behind the counter at your local McDonalds. Their process is extraordinarily formal, but you can bet it’s optimized for cost and simplicity.

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For some reason I have a craving for fast food so let’s wrap this up. What are your thoughts on formal vs. informal? What are your concerns? Leave me a comment and let’s talk about it.

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19 thoughts on “Should You Go Formal or Informal?

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  6. Good article and it sounds the antidote is a combination of formal and informal.

    In reputation management/crisis communications, we also run up against this balance. You want your crisis response plans and systems to be formal enough to be taken seriously with a dedication to the goal. Yet, if the plan and approach becomes too formal (dense and tough-to-read plan, rigid protocols), you could be promoting a paint-by-numbers approach that limits effectivity.

    I’m currently writing a blog post on “12 crisis plan impediments” that I hope to upload later this week. If you don’t mind, I may link some relevant points back to this article.

    – J.D.

  7. Thanks for the comment, J.D. I agree with you – there is a real danger of “too formal”. I think my post may be over simplified by implying that choosing the type of process is binary – i.e. either formal or informal. In reality there are many shades of gray, many levels of ‘formal’. Although the many levels may cause some initial confusion, I think the net result is a positive. The ability to customize the level of formality to the situation is important to achieving a process that is effective without becoming a ‘going-through-the-motions’ exercise.

    I would be honored to be linked in your next post, J.D. I’m intriqued by the topic (I’d bet that the 12 impediments apply to the implementation of a small biz risk management process, too). Can’t wait to read it. Thanks for taking the time to leave the note!

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  12. I try to keep my posts brief, too, but as my daughter would say the attempt is usually an “epic fail”. 🙂 Excellent post, J.D. Thanks!

  13. “Doesn’t have to be complicated”

    Totally agree. If we remove these barriers and the mentality that it must be costly, hard, a burden, etc. etc. we will see great improvement in our risk management and compliance initiatives.

  14. You’re absolutely correct, Natasha. It all starts with attitude. If at the beginning we believe the risk management/compliance program we are setting up will be complicated, it will probably be complicated. What people don’t realize is that the inverse is true – if we believe that it can be simple, it will be simple. The biggest barrier is our own beliefs. Once we overcome that obstacle, the rest is pretty easy.

    Thanks for the comment!

  15. Thanks for the heads-up, J.D. Excellent pair of posts! There are more than a few of your 12 impediments that apply to many business processes. Looks like a potential white paper or free offer for your clients… 🙂

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