Leading Outside the Lines
Integrating formal metrics and informal communication can lead to new levels of performance.
by Jon Katzenbach and Zia Khan
http://www.strategy-business.com/article/10204?gko=788c9

This is an extremely important topic and one worth the added effort to read the full article. They offer case studies of how to address the issue.

"Balancing Hard and Soft
In every company, there are really two organizations at work: the formal and the informal. The formal organization is the default governing structure of most large companies founded in the past century. Businesspeople recognize the formal organization as that rational construct that runs on rules, operates through hierarchies and programs, and evaluates performance by the numbers. If you have been trained in the “hard” disciplines like finance, technology, or operations — as so many senior managers have — you have probably learned to operate naturally in the formal domain, deploying tangible factors like job descriptions, organization charts, process flows, and scorecards.
The informal organization, by contrast, is an agglomeration of all the human aspects of the company: the values, emotions, behaviors, myths, cultural norms, and uncharted networks. The power of the informal is visible in every organization every day — it is an undeniable, emotionally resonant force. Even the most rational managers recognize that the informal organization within a company can create effects that seem like magic, especially in situations of change or transformation. Unexpected leaders emerge from the ranks. Passion swells up and pushes work forward. Units and operations swiftly transform themselves. And there are also less positive effects: Unexpected opposition lurks in the shadows, anxiety and fear hold work back, and critical operational improvements are derailed…..
Organizations that sustain high performance over time have learned how to mobilize their informal organizations while maintaining and adding formal structures, each in sync with the other. And in general, people appreciate the value of “leading outside the lines”: of balancing formal and informal measures in the pursuit of higher performance…..
But it’s difficult for any manager, even one who has a predilection for the informal, to understand exactly how to lead outside the lines. There is, after all, no universal recipe book: The right balance of formal and informal measures will look very different depending on the company, the business, and the circumstances.'