FORMAL AND INFORMAL ORGANIZATION
The formal organization refers to the structure of jobs and positions
with clearly defined functions and relationships as prescribed by the top
management. This type of organization is built by the management to realize
objectives of an enterprise and is bound by rules, systems and procedures.
Everybody is assigned a certain responsibility for the performance of the given
task and given the required amount of authority for carrying it out. Informal
organization, which does not appear on the organization chart, supplements the
formal organization in achieving organizational goals effectively and
efficiently. The working of informal groups and leaders is not as simple as it
may appear to be. Therefore, it is obligatory for every manager to study
thoroughly the working pattern of informal relationships in the organization
and to use them for achieving organizational objectives.
Bernard defines formal organization as -"a system of consciously
coordinated activities or forces of two or more persons. It refers to the
structure of well-defined jobs, each bearing a definite measure of authority,
responsibility and accountability." The essence of formal organization is
conscious common purpose and comes into being when persons–
to communicate with each other
willing to act and
organization is built around four key pillars. They are:
Division of labor
Scalar and functional processes
Span of control
formal organization is one resulting from planning where the pattern of structure
has already been determined by the top management.
Characteristic Features of formal organization
organization structure is laid down by the top management to achieve
organization prescribes the relationships amongst the people working in the
organization structures is consciously designed to enable the people of the
organization to work together for accomplishing the common objectives of the
structure concentrates on the jobs to be performed and not the individuals who
are to perform jobs.
formal organization, individuals are fitted into jobs and positions and work as
per the managerial decisions. Thus, the formal relations in the organization
arise from the pattern of responsibilities that are created by the management.
organization is bound by rules, regulations and procedures.
formal organization, the position, authority, responsibility and accountability
of each level are clearly defined.
Organization structure is based on division of labor and specialization
to achieve efficiency in operations.
organization is deliberately impersonal. The organization does not take into
consideration the sentiments of organizational members.
and responsibility relationships created by the organization structure are to
be honored by everyone.
formal organization, coordination proceeds according to the prescribed pattern.
Advantages of formal organization
organization structure concentrates on the jobs to be performed. It, therefore,
makes everybody responsible for a given task.
organization is bound by rules, regulations and procedures. It thus ensures law
and order in the organization.
organization structure enables the people of the organization to work together
for accomplishing the common objectives of the enterprise
Disadvantages or criticisms of formal
organization does not take into consideration the sentiments of organizational
organization does not consider the goals of the individuals. It is designed to
achieve the goals of the organization only.
organization is bound by rigid rules, regulations and procedures. This makes
the achievement of goals difficult.
Informal organization refers to the relationship between people in the
organization based on personal attitudes, emotions, prejudices, likes, dislikes
etc. an informal organization is an organization which is not established by
any formal authority, but arises from the personal and social relations of the
people. These relations are not developed according to procedures and
regulations laid down in the formal organization structure; generally large
formal groups give rise to small informal or social groups. These groups may be
based on same taste, language, culture or some other factor. These groups are
not pre-planned, but they develop automatically within the organization
according to its environment.
Characteristics features of informal
organization is not established by any formal authority. It is unplanned and
organizations reflect human relationships. It arises from the personal and
social relations amongst the people working in the organization.
of informal organizations is a natural process. It is not based on rules,
regulations and procedures.
inter-relations amongst the people in an informal organization cannot be shown
in an organization chart.
case of informal organization, the people cut across formal channels of
communications and communicate amongst themselves.
membership of informal organizations is voluntary. It arises spontaneously and
not by deliberate or conscious efforts.
of informal groups can be overlapping as a person may be member of a number of
organizations are based on common taste, problem, language, religion, culture,
etc. it is influenced by the personal attitudes, emotions, whims, likes and
dislikes etc. of the people in the organization.
Benefits of Informal organization
with the formal organization to make it more effective.
things which cannot be achieved through formal organization can be achieved
through informal organization.
presence of informal organization in an enterprise makes the managers plan and
act more carefully.
organization acts as a means by which the workers achieve a sense of security
and belonging. It provides social satisfaction to group members.
informal organization has a powerful influence on productivity and job
informal leader lightens the burden of the formal manager and tries to fill in
the gaps in the manager's ability.
organization helps the group members to attain specific personal objectives.
Informal organization is the best means of employee communication. It is
organization gives psychological satisfaction to the members. It acts as a safety
valve for the emotional problems and frustrations of the workers of the
organization because they get a platform to express their feelings.
as an agency for social control of human behavior.
DIFFERENCES BETWEEN FORMAL AND INFORMAL ORGANIZATION
1. Formal organization is established with the explicit aim of achieving
2. Formal organization is bound together by authority relationships
among members. A hierarchical structure is created, constituting top
management, middle management and supervisory management.
3. Formal organization recognizes certain tasks which are to be carried
out to achieve its goals.
4. The roles and relationships of people in formal organization are impersonally
5. In formal organization, much emphasis is placed on efficiency,
discipline, conformity, consistency and control.
6. In formal organization, the social and psychological needs and
interests of members of the organization get little attention.
7. The communication system in formal organization follows certain
pre-determined patterns and paths.
8. Formal organization is relatively slow to respond and adapt to
changing situations and realities.
1. Informal organization springs on its own. Its goals are ill defined
2. Informal organization is characterized by a generalized sort of power
relationships. Power in informal organization has bases other than rational
3. Informal organization does not have any well-defined tasks.
4. In informal organization the relationships among people are
5. Informal organization is characterized by relative freedom,
spontaneity, by relative freedom, spontaneity, homeliness and warmth.
6. In informal organization the sociopsychological needs, interests and
aspirations of members get priority.
7. In informal organization, the communication pattern is haphazard,
intricate and natural.
8. Informal organization is dynamic and very vigilant. It is sensitive
to its surroundings.