Formal and Informal Organization

Formal Organization

A formal org typically consists of a Classical Hierarchical structure in which,

Positions Responsibility Authority Accountability And line of Command

Are clearly defined and established

Definition

According to ALLEN, The formal organization is

a system of well defined jobs, each bearing a definite measure of authority, responsibility and accountability

Characteristics

Flexible and properly planned Based on principle of division of labour

Concentrates on Performance of Job not on Individual Performance

Org charts are usually drawn

Members coordination ensured

Responsibility and Accountability clearly defined

Advantages

Boundary of each worker clearly defined Overlapping of responsibility easily avoided Stable org ensured Less dependant on one man Sense of security arises from work classification Motivates the employees

Informal Organization

Is an Org which establishes the relationship on the basis of

Members interaction Communication Personal likings and disliking Social contacts within as well outside org

Characteristics

Voluntarily formed Created based on some similarity among the members Has no place in org chart Has no structure and definiteness One person may become member of several inf. org. Rules and traditions not written but commonly followed

Advantages

Gives satisfaction to the workers and motivates Fills up gaps and deficiency of formal org Its one of useful channel of communication

Encourages the managers to plan correctly and act accordingly

Disadvantages

May function in ways that are counter productive Indirectly reduces the effort of management to promote greater productivity

Spreads rumor among employees regarding org which not moves in right way