A formal organizational structure seeks to separate the
individual from the role or position, as the role or position stays the same
regardless of who’s holding it.
An informal organization,
on the other hand, places more value on the individual. It allows for the
evolution of a role or position based on an individual’s preferences, skill
set, etc., and places less importance on what team or department that
individual is part of.
Objectives of Formal Organization
A formal
organization has a specific set of commands to direct employees in achieving
its goals. Some important objectives of the formal organization are as
followed:
1.
To facilitate the accomplishment of the goals of the organization:
In a
formal organization the work is delegated to each individual of the
organization. Employee works towards the attainment of definite goals, which
are in compliance with the goals of the organization.
2.
To facilitate the co-ordination of various activities:
The
authority, responsibility and accountability of individuals in the organization
are defined. Hence, it facilitates the co-ordination of activities of the
organization effectively.
3.
To aid the establishment of logical authority relationship:
The
responsibilities of the individuals in the organization are well defined. They
have a definite place in the organization due to a defined hierarchical
structure which is inherent in any formal organization.
4.
To aid the establishment of division of labor:
Permit
the application of the concept of specialization and division of labor,
division of work amongst individuals according to their capabilities helps in
greater specializations and division of work.
5.
Create group cohesiveness:
Creating a cohesive
group is one of the fundamental objectives of an organization which ultimately
results in increase in group dynamics & productivity.
Characteristics of Formal Organization:
A formal
organization has the following characteristics:
1. Well defined rules and regulation:
The first
& foremost characteristic of a formal organization is a well defined set of
rules & regulations. These will be strictly followed to carry out the
activities of the company to achieve goals.
2. Arbitrary structure:
A formal
organization always contains an arbitrary structure that allows all the
departments of the organization work in a coordinated way to achieve the
target.
3. Determined objectives and policies:
A formal
organization consists of specific objectives & policies. All the activities
in the company follow around these policies & to achieve the objectives.
4. Limitation on the activities of the individual:
Every
individual in a formal individual is assigned with specific duties &
responsibilities. This is true regulation for every personnel.
5. Strict observance of the principle of co-ordination:
The
co-ordination between different departments in an organization is strictly
maintained to achieve the most efficient result.
6. Messages are communicated through vertical chain:
Normally
in a formal organization the vertical communication chain is followed so that
the chain of command & its unity is maintained.
7. Status symbol:
A formal organization
is a separate social entity. The activities have a separate entity than the
individuals performing those activities.
Functions
of Formal Organization:
1. Set specific Goals for organization:
A formal
organization has to set specific goals for the personnel working in it. By
achieving the goals individually achieved the organization as a whole will be
benefited in achieving the eventual goals.
2. Establishing working relationship:
In a
formal organization the primary goal is to establish an efficient working
relationship & to establish a clear chain of command. The effective work
relationship is the most important thing for the goals.
3. Create group cohesiveness:
It
creates a sense off cohesiveness & belongings among the groups of the
personnel working in a formal organization. The employees inter personnel
interaction is important for the functioning of an organization.
4. Organizational Development:
A formal
organization works on the organizational development by testing all the rules,
regulations & the chain of activities as present. Organization detects any
problem & work to change them if necessary for better service.
5. Discipline:
Discipline
within an organization is important to get the best result of it. The org.
management has to find a proper way to achieve proper discipline.
6. Human Resource Development:
It helps in other human resources development
activities such as recruitment, promotions, career planning and development and
manpower planning. The important part of a organization is its employees. A
formal organization gives the opportunity to treat the human resources within
the organization. The development & improvement of human resource is easy
in a formal organization.
Benefits of Formal Organization:
A formal
organization has beneficial aspects in the way it runs & its relationship
with its employees. Mainly the employees are the main beneficiary of a formal
organization along with the environment in which they are operating. In this
topic we will discuss the benefits of the employees working in a formal
organization. The benefits can be enlisted as followed:
a) Financial Aspects of benefits:
1. Security:
A formal
organization is more established & the entity of the company is not
dependent on individual losses. So working in such a organization provides a
secured financial support to the employees & the employees working here is
more devoted to work.
2. Slow but steady promotion:
In a
formal organization the promotion may not be rapid due to a chain of command
but with certain seniority in the organization with sufficient performance a
personnel is sure of a promotion.
3. Commissioned ranks open to men and women graduates:
A formal
organization will always put preference to recruit graduate or highly educated
personnel, in this way creating job opportunities for this class of people.
4. Can't be fired:
After
recruiting a person a formal organization tries its best to develop the
personnel. In many cases the personnel is not generally fired depending on few
personal mistakes.
5. Good retirement benefits:
The
organization of such value will arrange a plan for the employees so that they
can retire with benefits.
b) Social Aspects of benefits:
1. Many different branches appeal to different interests:
A formal
organization has many different departments to perform various activities. So a
person has a wide range of options from which he/she can choose depending on
individual interest & skill level. So as a person there is a option in this
type of organization on the choice of profession.
2. Social Status:
A formal
organization has specific position & position names that bears the status
of the person in the organization. These posts are familiar in the environment
the company is operating & often works as a social status symbol. By
working in a formal organization the person has to way to achieve such position
& thus achieving a high social activity
3. See interesting places and people:
By working in a formal organization a person gets
to meet many different people of different views & values. By interacting
with these variations a person will learn more in working in such environment.
Limitations of Formal Organization
A formal
organization has many benefits both for its internal & external environment
but it has some drawbacks too. The common limitations can be listed as
followed:
1. Limited Flexibility:
As this
type of organization is very specific in every activities there is very little
margin of flexibility & spontaneous decision making in the company. Such
practice in the company can de-motivate the employees.
2. Slowness of processing:
In a
formal organization for performing a task needs many formal procedures. Such
formalities often slow down the implementation of decision making.
3. Communication Barrier:
As in a
formal organization a task needs the co –ordination of different departments so
communication needs to clear in this process. Any kind of miscommunication may
lead to ultimate inefficiency.
4. Quality of decision:
Sometimes
the quality of the decision made in the top management may not be most
compatible for the company but the chance of correction is very scarce.
5. Slowness in Problem detection & processing:
As every procedure goes through lot of formalities
any problem detected in the operation level cannot be instantly corrected. The
right process will take some time to detect the problem & correction &
its implementation. In such a process the organization may suffer financial
loss.
Informal
Organization:
The
informal organization is the interlocking social structure that governs how
people work together in practice. It is the aggregate of behaviors,
interactions, norms, personal and professional connections through which work
gets done and relationships are built among people who share a common
organizational affiliation or cluster of affiliations. The informal
organization evolves organically and spontaneously in response to changes in
the work environment, the flux of people through its porous boundaries, and the
complex social dynamics of its members.
Keogh
Javis defines, "an informal organization is a
powerful influence upon productivity and job satisfaction."
Characteristics of the informal
organization:
The
nature of the informal organization becomes more distinct when its key
characteristics are juxtaposed with those of the formal organization.
1)
Evolving constantly
2) Grass
roots
3)
Dynamic and responsive
4)
Excellent at motivation
5)
Requires insider knowledge to be seen
6) Treats
people as individuals
7) Flat
and fluid
8) Trust
and reciprocity
9)
Difficult to pin down
10) Essential for situations that change quickly or
are not yet fully understood
Functions of informal organizations:
Keith
Davis suggests that informal groups serve at least four major functions within
the formal organizational structure.
1) Perpetuate the cultural and social values:
They
perpetuate the cultural and social values that the group holds dear. Certain
values are usually already held in common among informal group members.
Day-to-day interaction reinforces these values that perpetuate a particular
lifestyle and preserve group unity and integrity.
2) Provide social status and satisfaction:
They
provide social status and satisfaction that may not be obtained from the formal
organization. In a large organization (or classroom), a worker (or student) may
feel like an anonymous number rather than a unique individual. Members of
informal groups, however, share jokes and gripes, eat together, play and work
together, and are friends-which contributes to personal esteem, satisfaction,
and a feeling of worth.
3) Promote communication among members:
The
informal group develops a communication channel or system (i.e., grapevine) to
keep its members informed about what management actions will affect them in
various ways. Many astute managers use the grape- vine to
"informally" convey certain information about company actions and
rumors.
4) Provide social control:
They provide social control by influencing and
regulating behavior inside and outside the group. Internal control persuades
members of the group to conform to its lifestyle. External control is directed
to such groups as management, union leadership, and other informal groups.
Benefits of Informal Organization:
1) Better Total System:
Informal Organizations blend with formal systems to make an effective
total system. Some requirements can be met better by informal relations, which
can be flexible and spontaneous.
2) Lighter workload for management:
Informal Organizations lighten the workload on management. When managers
know that the Informal Organization is working with them, they feel less
compelled to check on the workers to be sure everything is shipshape.
3) Work group satisfaction:
Informal Organizations give satisfaction and stability to work groups.
Workers feel a sense of belonging and security, so satisfaction is increased
and turnover reduced.
4) A safety valve for emotions:
Informal Organization is a safety valve for employee frustrations and
other emotional problem. Employees may relieve emotional pressures by
discussing them with someone else with in Informal group.
5) Cohesiveness:
Cohesiveness is indicated by how strongly the employees stick together,
rely on each other, and desire to remain members of the group.
6) Fill up gaps:
If a manager is weak in planning, an employee may informally help with
planning. In this way planning is accomplished in spite of the manager’s
weakness. Thus Informal Organizations act to fill in gaps in a manager’s
abilities.
7) Channel of employee communication:
Informal Organization provides the means for people to keep in touch, to
learn more about their work, and to understand what is happening in their
environment. Thus Informal Organization can be a useful channel of employee
communication.
8) To plan and act more carefully:
The presence of Informal Organizations encourages managers to plan and
act more carefully than they would otherwise. Because they know Informal groups
can undermine even a worthwhile project
9) Encourage Cooperation:
Informal Group support of a manager leads to better cooperation and
productivity. It helps get the work done.
10) Understanding and Dealing with the Environmental Crisis:
The IRG Solution - hierarchical incompetence and how to overcome it1984,
argued, that Central media and government type hierarchical organizations could
not adequately understand the environmental crisis we were manufacturing, or
how to initiate adequate solutions. It argued that what was required was the
widespread introduction of informal networks or Information Routing Groups
which were essentially a description of social networking services prior to the
internet.
11) Encourage improved management practice:
Perhaps a subtle benefit of informal
groups is that they encourage managers to prepare, plan, organize, and control
in a more professional fashion. Managers who comprehend the power of the
informal organization recognize that it is a "check and balance" on
their use of authority.
Problems associated with Informal Organizations:
1) Resistance to change:
Perpetuation
of values and lifestyle causes informal groups to become overly protective of
their "culture" and therefore resist change. For example, if
restriction of output was the norm in an autocratic management group, it must
continue to be so, even though management changes have brought about a more
participative administration.
2) Role conflict:
The quest
for informal group satisfaction may lead members away from formal
organizational objectives. What is good for and desired by informal group
members is not always good for the organization. Doubling the number of coffee
breaks and the length of the lunch period may be desirable for group members
but costly and unprofitable for the firm. Employees' desire to fulfill the
requirements and services of both the informal group and management results in
role conflict. Role conflict can be reduced by carefully attempting to
integrate interests, goals, methods, and evaluation systems of both the
informal and formal organizations, resulting in greater productivity and
satisfaction on everyone's behalf.
3) Rumor:
The
grapevine dispenses truth and rumor with equal vengeance. Ill-informed
employees communicate unverified and untrue information that can create a
devastating effect on employees. This can undermine morale, establish bad
attitudes, and often result in deviant or, even violent behavior. For example,
a student who flunks an exam can start a rumor that a professor is making
sexually harassing advances toward one of the students in class. This can
create all sorts of ill feelings toward the professor and even result in
vengeful acts like "egging" the residence or knocking over the mail
box.
4) Conformity:
Social
control promotes and encourages conformity among informal group members,
thereby making them reluctant to act too aggressively or perform at too high a
level. This can harm the formal organization by stifling initiative,
creativity, and diversity of performance. In some British factories, if a group
member gets "out of line”, tools may be hidden, air may be let out of
tires, and other group members may refuse to talk to the deviant for days or
weeks. Obviously, these types of actions can force a good worker to leave the
organization.
5) Undermine discipline:
Informal
groups oppose management policies rules, procedures that are meant to structure
and discipline work behavior and performance of employees. Managers are forced
to become lenient in enforcing rules and regulations in tolerating deviations
from required behavior. The character and competence of management tend to
suffer. Informal organization may ridicule and even sabotages the process,
practices and culture of formal organizations.
6) Power politics:
Informal
organizations are often riddled with fictionalization and power politics.
Members divert their energy and time from jobs to jungle in faction lighting
and petty politics. The informal leader may manipulate the group towards
selfish or undesirable ends.
7) Interpersonal and intergroup conflicts:
Informal organization also develops interpersonal
and internal group conflict that can be damage to their organization. When
employees give more of their thoughts and energies to opposing one another,
they can likely to give less to their employer. Conflicts and self- interests
can become so strong in informal organization that they reduced employee’s
motivation and satisfaction.
