What is Formal and Informal Organization? What is the relationship between formal and informal organization?

Organization is a plan of action to ensure fulfillment of purpose which a group of individuals has set for realization and towards the attainment of which they are collectively bending their energies. In the words of Gaus, Organization is the relation of efforts and capacities of individual and groups engaged upon a common task in such a way as to secured and the desired objectives with the least friction and the most satisfaction for whom the task is done and those engaged in the enterprise.

Gladden defines it as “the patterns of relationship between persons in an enterprise, so continued as to fulfill the enterprise’s functions.” From these definitions, it is clear that organization is a collection of individual with defined duties and responsibilities form a unified whole through which authority, coordination and control may be exercised to achieve a given purpose.

Organizations are of two types:

  1. Formal Organization.
  2. Informal Organization.

Formal Organization:

Formal organizations are planned, decided and approved by the competent authority. It consists of a classical mechanistic hierarchical structure in which position, responsibility, authority, accountability and the lines of command are clearly defined and established.

It is consciously brought into existence for predetermined objectives and is designed to enable the people in the organization to coordinate their efforts effectively in order to achieve those objectives. It is a system of well defined jobs with a prescribed pattern of communication, coordination and delegation of authority.

It is the organization as shown on the organization chart or as described by manuals and rules. It is an organization. as it appears to the observe the outside. It is also called “mechanical organization” or “engineering organization.”

According to M.P Sharma, formal organization means the organization as deliberately planned, designed and. duly sanctioned by competent authority. According to H.A. Simon, VA. Thompson and D.W. Smith burg, Formal organization relief the pattern of behavior and relationship which is deliberately and legitimately planned for the members of an organization by competent authority.” In the words of Barnard, “Formal organization is a system of consciously coordinated activities or forces of two or more persons.

The essence of formal organization is conscious purpose and it come into existence with persons:

  • Are able to communicate with each other,
  • Are willing to act,
  • Share a. purposes.

In the words of Allen, The formal organization is a system of well defined jobs, each bearing a definite measure of authority, responsibility and accountability. It consists of those relationships that are relatively stable and change slowly.

Thus, formal organization enables designing of an organization, identification of various levels for decision-making, allocation of duties and responsibilities and ensuring smooth performance. Its structure is based on division of labor and specialization. It is a stable or permanent organization. It function in accordance with well formulated rules and regulations. It define, each bearing a definite measure of authority, responsibility and accountability. It is based by legal sanctions. Here, decision-making authority is centralized at the top, communication is mostly downward in the form of command.

Informal Organization:

Informal organization refers to the type and pattern of behavior shown by the personnel working as different units in the organization. It come into existence due to the social interactions and interpersonal relationships. It exist outside the formal authority system, without any set rigid rules. It was first systematically explored in the pioneering studies carried on by Elton Mayo and others at the Hawthrone Plant of the Western Electric Company. It exists in government offices as well as in business.

According to Chester Barnard, “Informal organization as the aggregate of personal contracts and interactions and the associated grouping of people. Such organizations are indefinite, structure less and are shapeless mass of varied densities.”

Informal organizations are based upon socio-psychological support and depend upon members interaction, communication, personal liking and disliking. Here social contract within or outside the organization had its own unwritten rules and a code of conduct which every member implicitly aspects. Informal groups have their own stricture, sometimes parallel to the formal structure with its own leaders and followers, group goals, social roles and working patterns.

In the informal organization, people think and act like in group. For example, if one member is fixed, all workers go on strike in support of that member. The bonds, are much stronger and it brings in a sense of belonging and togetherness. This togetherness can have a powerful influence on productivity and job satisfaction.

Relation between Formal and Informal Organization

Both formal and informal organizations are interdependent with each other. If one organization fails, the other will necessarily disintegrated. One cannot exist without other. About formal and informal organization Barnard observe that they are interdependent aspects of the same phenomenon.

A society is structured by formal organization, but it regulated by informal organization. The bottom line is that there cannot be one without the other. According to Barnard formal organization create informal organization as a means of communication and protect the individual from the domination of formal organization. On the other hand informal organization tend to formalize several elements, thereby establishing a formal organization within an informal organization.

These classifications of organization indicates that organization can not be made merely on these two principles. No doubt they are valuable since they provide guidelines, even then they must be overruled according the personnel’s in order to an old deviation gap between formal and informal. organization.

Dr. Sharma say that “no organization can be fully understood by the study of its formal structure only. An insight into the personalities of its key men, and their reaction, is essential to give a realistic idea if the way in which it actually works. Thus, an adjustment is necessary to make the organization workable.

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