Formal and Informal Organisation

1. Formal and Informal Organisation
Formal Organisation: -“The formal organisation is a system of well-defined jobs, each
bearing a definite measure a authority responsibility and accountability.”
Feature of Formal Organisation: -
 It lays down the rules and procedures essentials for achieving the objectives of the
organisation.
 It facilitates coordination and integration of the efforts of various departments.
 It gives lot of emphasis on work to be performed rather than the interpersonal
relationships among the employees.
 It clarifies the authority, responsibility and superior_ subordinate relationships in an
organisation.
 Such a structure is intentionally designed by the top management to facilitate the
smooth functioning of the organisation.
Advantage of Formal Organisation: -
 Specific Duties: - In formal organisations structure, role of each and every member is
clearly defined which helps in avoiding confusion and duplication of work and
efforts.
 Unity of Command: - This organisation clearly specifically designed by the
management; hence such chain of command is established that helps in maintaining
unity of command.
 Responsibilities are fixed: - This organisation clearly specifies the authority and
responsibility of every job holder. Systematic coordination and pre-defined
relationships among employees help to fix the responsibility in case of deviations.
Specific Duities Unity of Command
Responsibilities are
fixed
Fulfills
Organisational
Objectives
Stability

2.  Fulfils Organisational Objectives: - It helps in achieving the objectives of the
organisations by providing a framework regarding operations to be performed and
ensuring that each employee known clearly about his job.
 Stability: - It also ensures stability in the organisations.
Disadvantages of Formal Organisation
 Delay in Work: - The existence of chain of command in the organisation may result
in delay decisions.
 Back of Initiative: - It may not provide adequate recognition to creative talent since
it does not allow any deviations from rigidly laid down policies.
 Emphasis on Work Only: - Since it lays more emphasis on organisational goals alone
and therefore at times it becomes very difficult to understand human aspects of
relationships in the organisations.
Informal Organisation: -“Aninformal organisationisanaggregate of interpersonal relationships
withoutany consciouspurpose butwhichmaycontribute tojointresults.”
Feature of Informal Organisation: -
 An informal organisation emerges within a formal organisation because of the social
interaction among its people.
 The group norms lay down the standards of behaviour.
 It is not intentionally created by the management but arises spontaneously.
 The members develop independent channels of communication without any fixed
direction of flow of information.
Delay in Work Back of Initiative
Emphasison Work Only

3.  It is a network of social relationships and therefore does not have any fixed
structure.
Advantage of Formal Organisation: -
 Fulfils Social Needs: - It meets social needs of the members and hence results in a
sense of belongingness among them.
 Influence on Productivity: - It has a powerful positivity influence on the productivity
and job satisfaction.
 Fast Communication: - It serves as a faster channel of Communication.
 Fulfils Organisational Objectives: - It helps in achieving organisational objectives by
compensating the limitation of the formal structure.
Disadvantages of Formal Organisation
Fullfills Social Needs Influence on Productivity
Fast Communication
Fulfills Organisational
Objectives
Resistanceto
change
Creates Rumours
Lack of
Specilisation

4.  Resistance to change: - It is very difficult for management to bring changes in the
organisation if the informal organisation opposes them. Such resistance may restrict
growth of the organisation.
 Create Rumours: - Some times informal organisation becomes a disturbing force,
which can go against organisational interests e.g., spreading rumours in the
organisation.
 Lack of Specialisation: - It is a based on the mutual relationships rather than on
division of work as anybody can talk to any person in any department with regard to
any topic. Hence, specialisation is not possible.