Formal and Informal Organisation

Formal Organization is formed when two or more persons come together. They have a common objective or goal. They are willing to work together to achieve this similar objective. Formal Organization has its own rules and regulation. These rules must be followed by the members (employees and managers). A formal organization has a system of co-ordination. It also has a system of authority. It has a clear superior-subordinate relationship. In a formal organization, the objectives are specific and well-defined. All the members are given specific duties and responsibilities. Examples of formal organization are:- a company, a school, a college, a bank, etc. Characteristics of Formal Organization

It is flexible and properly planned It is used on principle of division of labour and efficiency in operations. It concentrates more on the performance of jobs and not on the individuals performing the jobs. Organization charts are usually drawn. Co-ordination among members and their control are well specified through processes, procedures, rules etc. The responsibility and accountability at all levels of organization should be clearly defined. Unity of command is normally maintained.

Advantages of Formal Organization 1. 2. 3. 4. 5. Easier to fix Responsibility No ambiguity in the role . This also helps in avoiding duplication of effort. Behavior of Employee fairly predicted Unity of command through an established chain of command Stability to the organization

Limitations 1. The formal communication may lead to procedural delays 2. Do not provide adequate recognition to creative talent 3. More emphasis on Structure and Work, difficult to understand all human relationships in an enterprise as it places Informal Organization exists within the formal organization. An informal organization is a network of personal and social relationships. People working in a formal organization meet and interact regularly. They work, travel, and eat together. Therefore, they become good friends and companions. There are many groups of friends in a formal organization. These groups are called informal organization. An informal organization does not have its own rules and regulation. It has no system of co-ordination and authority. It doesn't have any superior-subordinate relationship nor any specific and well-defined objectives. Here in informal organization, communication is done through the grapevine.
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Characteristics of Informal Organisation:

It arises without any external cause ie. Voluntarily .It is natural outcome at the work place. It is created on the basis of some similarities among the members. The basis of similarity may be age, sex, place of birth, caste, religion, liking, disliking, etc Informal organization has no place in the organization chart. It is one of the part of total organization.
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It has no structure and definiteness to the informal organization. A person may become member of several informal organization at the same time. The rule and traditions of informal organization are not written but are commonly followed.

Advantages of Informal Organization:

Since informal organization gives satisfaction to the workers, it motivates workers and also maintains the stability of the work. It fills up to gaps and deficiency of the formal organization. It fills up the gaps among the abilities of the managers.
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The presence of informal organization encourages the executives to plan the work correctly and act accordingly. It is one of the useful channel of communication.

Disadvantages of Informal Organization:

Informal organization may function in ways that are counterproductive .They may stand in the way of organizations achieving the objectives.
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It directly reduces the effort of management to promote greater productivity. It spreads rumor among the workers regarding the functioning of the organization unnecessarily.

Difference between formal and informal organization.

S.NO.
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Point of view
Origin

Formal organization
It is created deliberately and consciously by the frames of the organization

Informal organization
It is created spontaneously and naturally. It is created by the members of the organisation for social and psychological satisfaction Unplanned and unofficial

2.

purpose

It is created for achieving Legitimate objectives of the Organization.

3.

Nature of groups

Planned and official

4. 6.

Size Number of groups

It may quite large. It may be stable and continue More for a very long Definite structure mechanical and rational

It may be small in size. It is quite unstable in nature Less Structures impersonal and and emotional Group norms and values.

7.

Structure

8.

Control

rigid rules and regulations