A group is two or more people who interact so as to influence one another. It is important to study groups because groups are everywhere in our society, because they can profoundly affect individual behavior, and because the behavior of individuals in a group is key to the group's success or failure. The work group is the primary means by which managers coordinate individual behavior to achieve organizational goals. Individuals form or join groups because they expect to satisfy personal needs.

Groups may be differentiated on the bases of relative permanency and degree of formality. The three types of formal groups are command, task, and affinity groups. Friendship and interest groups are the two types of informal groups. Command groups are relatively permanent work groups established by the organization and usually are specified on an organization chart. Task groups, although also established by the organization, are relatively temporary and exist only until the specific task is accomplished. Affinity groups are formed by the organization, are composed of employees at the same level and doing similar jobs, and come together regularly to share information and discuss organizational issues. In friendship groups, the affiliation among members arises from close social relationships and the enjoyment that comes from being together. The common bond in interest groups is the activity in which the members engage.

Groups develop in four stages: mutual acceptance, communication and decision making, motivation and productivity, and control and organization. Although the stages are sequential, they may overlap. A group that does not fully develop within each stage will not fully mature as a group, resulting in lower group performance.

Four additional factors affect group performance: composition, size, norms, and cohesiveness. The homogeneity of the people in the group affects the interactions that occur and the productivity of the group. The effect of increasing the size of the group depends on the nature of the group's tasks and the people in the group. Norms help people function and relate to one another in predictable and efficient ways. Norms serve four purposes: they facilitate group survival, simplify and make more predictable the behaviors of group members, help the group avoid embarrassing situations, and express the central values of the group and identify the group to others.

To comprehend intergroup dynamics we must understand the key characteristics of groups: that each group is unique, that the specific organizational setting influences the group, and that the group's task and setting have an effect on group behavior. The five bases of intergroup interactions determine the characteristics of the interactions between groups, including their frequency, how much information is exchanged, and what type of interaction occurs.

Interactions among work groups involve some of the most complex relationships in organizations. They are based on five factors: location, resources, time and goal interdependence, task uncertainty, and task interdependence. Being physically near one another naturally increases groups' opportunities for interactions. If groups use the same or similar resources, or if one group can affect the availability of the resources needed by another group, the potential for frequent interactions increases. The nature of the tasks groups perform, including time and goal orientation, the uncertainties of group tasks, and group interdependencies, influences how groups interact.

Conflict is disagreement between parties; it is a common cause of stress in organizations. Five types of reactions to conflict are avoidance, accommodation, competition, collaboration, and compromise. The types of interactions are determined by the compatibility of goals and the importance of the interaction to group goal attainment. Managers should recognize that conflict can be beneficial as well as harmful.

Managers must be aware of the many factors that affect group performance and understand the individual as well as the group issues.