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Chapter: Principles of Management : Organizing

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.

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. 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."


(i) Are able to communicate with each other

(ii) Are willing to act and

(iii) Share a purpose.

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


ü   Division of labour

ü   Scalar and functional processes

ü   Structure and

ü   Span of control


Informal Organization

Informal organization refers to the  relationship  between people in the  organization basedon 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.

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Principles of Management : Organizing : Formal and Informal Organization |

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