Formal organization

Barnard defined formal organization as a system of consciously coordinated

activities or forces of two or more person. A formal organization is deliberately designed to achieve some particular objectives. It refers to the structure of welldefined jobs, each bearing a definite measure of authority, responsibility and accountability.

Characteristics of formal organization

Organization structure is laid down by the top management to achieve organizational

goals.
Organization structure is based on division of labour & specialization to achieve

efficiency in the operations.

Organization structure concentrates on the job to be performed and not the individual

who are to perform jobs.

The organization does not take into consideration the sentiments of organizational

members.
The Authority and responsibility relationship created by organization structure are to be

honoured by everyone. The position in the organization hierarchy determines the relative status of the incumbent.

Advantages of formal organization

They provide the basic structure of division of work and responsibilities. Without

such a structure it will be very difficult for employees to agree between themselves on duties and responsibilities of each, and such difficulties multiply in geometric proportions with increasing size of the organization.
It generates clarity on what support and input each employee can expect from

others, and in turn what is expected of him by others.

It promotes discipline in the organization.

It makes it easier to review and revise organization with changing requirements.

 It provides a structure for laying down pay scales and taking other decisions linked

to organizational levels.
It helps in other human resources development activities such as recruitment,

promotions, career planning and development and manpower planning.

Disadvantages of formal organization

doesn't allow flexibility.
doesn't allow long term planning. lesson the scope of creativity.

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

organization based on personal attitudes, likes, dislikes, etc. these relations are not developed according to procedures and regulations laid down in the formal organization structure. These groups may be based on common taste, language, culture or some other factor. They are not preplanned, but automatically through continuous interaction between people.

Characteristics of informal organization

Informal relations are unplanned.
Formation of informal organization is a natural process. Informal organization reflects human relationships. Informal organizations are based on common tastes, problems, language, religions,

culture, etc.
the membership of informal organization is voluntary. At the same time a person

may be a number of informal groups. Thus, there can be overlapping in these groups.

Advantages of informal organization

1. To employees
(i) Sense of belonging: In a formal organization, there is lack of sense of belongingness and personal satisfaction. (ii) Value for emotional problems: In the daily work routine there are many opportunities for tension and frustration. (iii) Aid on the job: In case of accidents or illness, members of an informal group help one another.

(iv) Innovation and originality: By enabling members to modify the job situation more
to their liking, the informal organization creates the necessary environment for individual innovation and originality. The individual can experiment with his ideas.

(v) Important channel of communication: News travels quickly via informal groups. They are the clandestine transmitters and receivers of information before it is

officially released.
(vi) Social control: Informal groups provide all its members a set of norms or guides to correct behaviour. Members are expected to conform to those norms. (vii) Check on authority: Informal group forces the manager to plan and act more carefully than he would otherwise. Informal organization is a check and balance on unlimited use of authority by a manager.

2. To management
(i) Less supervision: Informal group is self-policing. This relieves the management of much of the burden of supervision. (ii) An aid to management: The information gives the manager much feedback about employees and their work experiences thereby increasing his understanding of what he needs to do.

Disadvantages of informal organization

o Resistance to change: An informal organization is bound by customs, conventions

and culture.
o Role conflict and sub-optimization: in an informal organization, everyone works

towards the same objectives. Members put their own group objectives ahead of organization's objectives. Hence, the organization suffers.
o Rumour: An informal organization sometimes functions as a carrier of rumour. o Group think philosophy: Workers become loyal to their groups.

Difference between formal and informal organization

1. Meaning
Formal Organisation 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. Informal Organisation exists within the formal organisation. An informal organisation is a network of personal and social relationships. People working in a formal organisation meet and interact regularly.

2. Formed by Whom?
A formal organisation is formed by the top level management.
An informal organisation is formed by social forces within the formal organisation.

 3. Rules and Regulations

The members of a formal organisation have to follow certain rules and regulations. These rules are available in writing (documented). They are made by a formal authority (superiors). If the members follow these rules properly, then they will be

rewarded. However, if they do not follow these rules, they will be punished.
The members of an informal organisation do not have to follow any rules and regulations.

4. Duties and Responsibilities

In a formal organisation, the duties, responsibilities, authority and accountability of each member is well-defined. In an informal organisation, there are no fixed duties, responsibilities, authority, accountability, etc. for the members.

 5. Objectives or Goals

In a formal organisation, the objectives or goals are specific and well-defined. The

main objectives of a formal organisation are productivity, growth, and expansion.

In an informal organisation, the objectives are not specific and well-defined. The main objectives of an informal organisation are friendship, security, common interest, individual and group satisfaction, etc.
6. Stability

A formal organisation is stable. An informal organisation is not stable

7. Channels of Communication

A formal organisation uses formal channels of communication. An informal organisation uses informal channels of communication (i.e. grapevine)

 8. Organisation Chart

A formal organisation is shown on the organisation chart. An informal organisation is not shown on the organisation chart.
9. Superior-Subordinate Relationship

In a formal organisation, there exist a superior-subordinate relationship.

In an informal organisation, there is no such superior-subordinate relationship.

10. Benefits for Members

The members of the formal organisation get financial benefits and perks like wages

or salaries, bonus, travelling allowances, health insurance, etc.

The members of informal organisation get social and personal benefits like friend circle, community, groups, etc.