Formal Organization Informal Organization

 Formal Organization Informal Organization

1. Formal Organization

• In every enterprise, there are certain rules and Organization procedures that establish work relationships among the employees.

• Notably, the management is responsible for designing the formal organization in such a way that it specifies a clear boundary of authority and responsibility.

•  Again, the management builds the formal organization.

• Lastly, it lays more emphasis on the work to be done without stressing much on interpersonal relationships.

 

Advantages

• The formal organization clearly outlines the relationships among employees.

•  An established chain of commands maintains the unity of command.

•  In a formal organization, there is a clear definition of rules and procedures.

•  Finally, it leads to the achievement of organizational goals and objectives.

Disadvantages

• Decision making is slow in a formal organization.

• It is important to realise that any organizational need has to flow through the respective chain of commands before being addressed.

•  Formal organization is very rigid in nature.

•  Lastly, the formal organization does not take into account the social nature of humans as it talks about only structure and work.

 

2. Informal Organization

• It's easy to understand that if we interact with certain people regularly we tend to get more informal with them.

•  As a matter of fact, informal organization arises out of the formal organization.

• Unlike formal organization, informal organization is fluid and there are no written or predefined rules for it.

• Lastly, as there are no defined structures or lines of communication, the interactions can be completely random and independent lines of communication tend to emerge in informal organization.

 

Advantages

• In this type of organization, communication does not need to follow the defined chain.

• This implies that communication in an informal organization is much faster relative to formal organization.

• The informal organization ensures that there is socialization within the enterprise.

• Hence, in informal organization, various limitations of formal organization is covered up.

 

Disadvantages

• The informal organization is random and can result in the spread of rumours.

• Again, we cannot manage and control informal organization.

•  It is important to realise that it is not possible to effect changes and grow without the support of the informal organization.

•  To point out again, informal organization conforms to group standards and behaviors.