Assignment Question : Describe the formal and informal organisations and explain how they complement each other in achieving organisational objectives.
Formal Organisation
A Formal organisation is a well-defined structure of authority and responsibility that explains delegation of authority and relationship amongst organisational members. It works along pre-defined sets of policies, plans, procedures, schedules and programmes. Most of the decisions in a formal organisation are based on predetermined policies. Formal organisation is a deliberately designed structure with formal authority, responsibility, rules, regulations and channels of communication.
Features of Formal Organisation are as follows:
• Deliberately created structure
• Job-oriented
• Division of work
• Departmentation
• Formal authority
• Delegation
• Coordination
• Based on principles of organising
Benefits of Formal Organisation are as follows:
1. It clearly defines objectives of the organisation and authority- responsibility relationships amongst people for attainment of those objectives.
2. It results in optimum utilisation of scarce organisational resources.
3. Clear division of work and relationships amongst people develops effective system of communication in the organisation.
4. The organisational hierarchy avoids overlapping of activities between two individuals or two departments. Two individuals are not assigned the same task.
5. Career advancement and promotional avenues are clearly defined in a formal structure of organisation.
6. The rate at which people join and leave the organisation is reduced (because of clear objectives, policies, strategies etc.). The rate of labour turnover and absenteeism, thus, remains low.
7. Formal organisation attempts to integrate formal goals of the organisation with goals of individuals working in the organisation. There is, thus, synthesis of individual, group and organizational goals.
Limitations of Formal Organisation are as follows:
1.Loss of initiative
2.Unsatisfied social needs
Informal Organisation
As the formal organisation grows in size, parallel existence of informal relationships along with formal relationships becomes unavoidable. They arise because of inevitable social and personal needs of individuals which cannot be satisfied by the principles of formal organisations. They represent non-planned, unofficial, social interactions amongst people working in formal structures. They arise out of common interests of people. These organisations are not governed by formal set of principles but nevertheless, are an important and integral part of formal organisations
Features of Informal Organisation
1. Unplanned structure
2. Fulfillment of social needs
3. No formal structure
4. Informal leaders
5. Informal communication system 6
6. No rules and regulations
7. No fixed tenure
Benefits of Informal Organisation
1. Promotes social and cultural values
2. Relief to top managers
3. Supplement to managers? capacities
4. Social satisfaction and security
5. Communication
6. Better relationships
7. Solve work-related problems
8. Promotes creativity
9. Self-control
10. Restraint on manager?s discretion
11. Social satisfaction
12. Quick feedback to managers
Limitations of Informal Organisation
1. Conformity
2. Attitude of leaders
3. Role conflict
4. Rumour
5. Resistance to change
6. Conflicting goals
Comparative Analysis of Formal and Informal Organisations
Integration of Formal and Informal Organisation Formal and informal structure are complementary to each other. Managers must, therefore, give due regard to the requirements and needs of both the forms of organisation structures. This can be done in the following ways :
1. Resistance to change and problem of conformity can be overcome by educating employees.
2. Role conflict can be reduced by integrating individual goals with organisational goals
3. Formal organisations must be flexible so that preferences for individual talents and creativity can be incorporated in the formal structures.
4. Managers should ensure that group norms are not against formal organisational goals.
5. Managers should understand that workers need to interact with each other during long working hours and, therefore, recognise their informal relationships.
6. Informal channels spread information at a fast speed. Managers should use this channel for spreading important, official information. This will prevent spreading of gossips and rumours.
7. Managers should allow members to discuss their problems in groups rather than discuss them with their immediate superiors.
8. Managers should take leaders of informal groups into confidence while making organisational plans and policies. This will promote easy and fast acceptance of plans and policies by organisational members.
