Formal and Informal organization

Formal and Informal organization

Formal Organisation

When the managers are carrying on the organizing process then as a result, an organizational structure is created to achieve systematic working and efficient utilization of resources. This type of structure is known as formal organizational structure.
This structure clearly spells out the job, authority, and responsibility assigned to each individual, the superior subordinate relationship and their designations.
The features of such a structure are:
1. This structure is created deliberately created by the process of organizing.
2. The purpose of the structure is to achieve organizational goals.
3. It gives more emphasis to work than to interpersonal relationships among employees.
4. Each individual is assigned a specific job and a fixed authority. Various job positions and their interrelationships are clearly defined. This clarifies who is to report to whom.
5. It results into the creation of a scalar chain. Efforts if different departments are coordinated, interlinked and integrated.

Advantages
1. It helps in effective accomplishment of goals by clearly defining the job role of each employee.
2. It is easy to fix responsibility as mutual relationships are clearly defined.
3. There is no overlapping or duplication of work as work is systematically divided among various departments and individuals.
4. Unity of command is maintained through an established scalar chain.
5. It provides stability to the organization since the behavior of members can be fairly predicted.

Limitations
1. Because of scalar chain, communication is generally slow, leading to delay in action.
2. It does not give importance to the social and psychological needs of the employees. This may lead to demotivation.
3. It places more emphasis on structure and work, and so it ignores human relations, creativity and talent.

Informal structure
In the formal structure, individuals are assigned certain job positions. While working on these job positions, the individuals interact with each other and develop some social and friendly relations in the organization. This network of social and friendly groups forms another structure in the organization which is called the informal structure.
Informal structure gets created automatically and spontaneously for getting psychological satisfaction. However, the existence of such organization depends upon the existence of formal structure. So, if there is no formal structure, there will be no job positions, there will be no people working on these job positions, and there will be no informal structure.
Features of informal structure are:
1. It gets created automatically without any deliberate efforts by the management.
2. The existence depends upon formal organization. It originates from within formal organization as a result of personal interactions among employees.
3. It does not follow any fixed path of authority or communication. So there is no specific direction of flow of information.
4. There are no officially laid down norms of behavior. There is no definite structure. The source of information cannot be known

Advantages
1. Informal communication does not follow scalar chain and so there can be faster spread of communication.
2. It helps to fulfill the social needs of members and gives them a sense of belongingness and motivation.
3. It helps the top level manager to know the real feedback of employees. This information can be made use of to fulfill organizational objectives.

Disadvantages
1. It may sometimes work against the interests of formal organization and spread rumors.
2. Sometimes the informal structure may oppose the policies and changes of management, and then it becomes very difficult to implement them in organization.
3. It may force the members to follow group norms. This may be harmful to the interest of the organization.