Yes, I do agree with this statement. It can be clarified with the help of advantages of informal organisation and limitations of formal organisation.

Advantages of Informal Organisation:

(i) Effective Communication: In the absence of any definite course, it is an effective system of communication. Messages can be quickly conveyed from one place to another with the help of this system.

(ii) Fulfills Social Needs: In the informal organisation, people having similarity of thoughts and ideas form a group of their own. All the people in the group stand by one another in all the organisational or personal matters.

(iii) Fulfills Organisational Objectives: In the informal organisation, the subordinates put their ideas before the superiors without any fear or hesitation. It helps the superiors to understand their difficulties and immediate solution of the problem is sought out. Since the problems are easily solved it becomes easier to achieve the objectives of the organisation.

Limitations of Formal Organisation:

(i) Delay in Work: Every activity is bound by rules which causes unnecessary delay in the completion of work.

(ii) Lack of Initiative: In this organisation, the employees have to do what they are asked to do and they do not have a chance of some independent thinking. This, therefore, kills initiative.

(iii) Mechanisation of Relations: The relationship of all the people are defined. This leaves no chance of any mutual interplay and thus the knowledge of other people and their experience cannot be exploited.

Hence, it can be said that informal organisation is better than formal organisation.