Formal and Informal Organization: Characteristic Features, Advantages and Disadvantages

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.

FORMAL ORGANIZATION

Chester I 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–

         Are able to communicate with each other

          Are willing to act and

            Share a purpose.

The formal organization is built around four key pillars. They are:

Division of labor

Scalar and functional processes

Structure and

Span of control

Thus, a 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

            Formal organization structure is laid down by the top management to achieve organizational goals.

            Formal organization prescribes the relationships amongst the people working in the organization.

            The organization structures is consciously designed to enable the people of the organization to work together for accomplishing the common objectives of the enterprise

            Organization structure concentrates on the jobs to be performed and not the individuals who are to perform jobs.

            In a 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.

            A formal organization is bound by rules, regulations and procedures.

            In a 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.

            A formal organization is deliberately impersonal. The organization does not take into consideration the sentiments of organizational members.

            The authority and responsibility relationships created by the organization structure are to be honored by everyone.

            In a formal organization, coordination proceeds according to the prescribed pattern.

Advantages of formal organization

            The formal organization structure concentrates on the jobs to be performed. It, therefore, makes everybody responsible for a given task.

            A formal organization is bound by rules, regulations and procedures. It thus ensures law and order in the organization.

            The 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

            The formal organization does not take into consideration the sentiments of organizational members.

            The formal organization does not consider the goals of the individuals. It is designed to achieve the goals of the organization only.

            The formal organization is bound by rigid rules, regulations and procedures. This makes the achievement of goals difficult.

INFORMAL ORGANIZATION

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

            Informal organization is not established by any formal authority. It is unplanned and arises spontaneously.

            Informal organizations reflect human relationships. It arises from the personal and social relations amongst the people working in the organization.

            Formation of informal organizations is a natural process. It is not based on rules, regulations and procedures.

            The inter-relations amongst the people in an informal organization cannot be shown in an organization chart.

            In the case of informal organization, the people cut across formal channels of communications and communicate amongst themselves.

            The membership of informal organizations is voluntary. It arises spontaneously and not by deliberate or conscious efforts.

            Membership of informal groups can be overlapping as a person may be member of a number of informal groups.

            Informal 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

            It blends with the formal organization to make it more effective.

            Many things which cannot be achieved through formal organization can be achieved through informal organization.

            The presence of informal organization in an enterprise makes the managers plan and act more carefully.

            Informal organization acts as a means by which the workers achieve a sense of security and belonging. It provides social satisfaction to group members.

            An informal organization has a powerful influence on productivity and job satisfaction.

            The informal leader lightens the burden of the formal manager and tries to fill in the gaps in the manager's ability.

            Informal organization helps the group members to attain specific personal objectives.

Informal organization is the best means of employee communication. It is very fast.

        Informal 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.

        It serves as an agency for social control of human behavior.

DIFFERENCES BETWEEN FORMAL AND INFORMAL ORGANIZATION

Formal Organization

1. Formal organization is established with the explicit aim of achieving well-defined goals.

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 defined

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.

Informal Organization

1. Informal organization springs on its own. Its goals are ill defined and intangible.

2. Informal organization is characterized by a generalized sort of power relationships. Power in informal organization has bases other than rational legal right.

3. Informal organization does not have any well-defined tasks.

4. In informal organization the relationships among people are interpersonal.

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.