Formal communication occurs through official channels like reports and meetings, uses proper grammar and pronunciation, and flows from higher levels of management to lower levels. Informal communication happens between friends and coworkers and includes slang, rumors, and gossip. Formal communication in an organization is divided into downward from managers to employees, upward from employees to managers, and horizontal between peers. Informal communication mainly consists of the grapevine, where unofficial news is spread through casual interactions.