Formal Organisation Characteristics, Advantages and Disadvantages

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A formal organization is purposefully designed to achieve some particular objectives. It refers to the structure of well defined-jobs, each bearing a definite measure of responsibility, authority and accountability.

According to Chester I Barnard, “A Formal Organisation is a system of consciously coordinated activities or forces of two or more persons.”

Within the formal organisation, members undertake the assigned duties in cooperation with each other. They communicate or interact among themselves in the course of their work. Slowly, they develop friendly relations and form small social groups. The network of these social groups based on friendship is called an informal organisation. The informal organisation is hence a system of social relationships among the members. It naturally emerges on its own within the formal organisation.

Characteristics of Formal Organisation 

Characteristics of the formal organisation are as follows:

1) Defined Interrelationship: Formal organisation is a sort of arrangement which clearly defines the mutual relationship. Everybody knows their authority and responsibilities. This clearly shows who will be reporting to whom.

2) Based on Rules and Procedures: It is important to observe all the predetermined rules and procedures in the formal organisation. The purposes laid down under planning are thus achieved.

3) Based on Division of Work: The chief basis of formal organisation is the division of work. It is this that connects the efforts of different branches with each other.

4) Has its Specific Function or Functions: A university for example has the main function of promoting education. But it also promotes the artistic, literary, athletic and other interests of the members. Hence, the formal organisation may have its latent as well as manifest functions. 

5) Has its Norms or Rules of Social Behaviour: Certain conduct is appropriate in certain organisations. A formal organisation lays down procedures to be followed by the members.

6) Members of an Organisation have Different Statuses: Statuses imply the division of labour. Organised actions in a formal organisation are possible because of the division of labour. It contributes to the efficiency of the institution. Division of labour leads to specialisation. 

7) Creates Authority: Where there is no organisation there is no authority where there is no authority there is no organisation. Authority is one of the most significant criteria of an organisation.

8) Bureaucracy refers to the Administrative Aspect of the Formal Organisation: It refers to the arrangement of the organisation designed to carry out its day-to-day business. It is represented by a hierarchy of officials who are assigned different responsibilities and provided with different roles and statuses. 

9) Based on Rationality: The rationality of formal organisations has two sources – the predominance of rules that have been devised to help achieve definite results and the systematic reliance on knowledge in the operation of the organisation. The formal organisations are relatively permanent. Some organisations last for a longer time while others perish within a short period.

Advantages of Formal Organisation 

1) Easy to Fix Accountability: Since the authority and responsibility of all the employees have been already fixed, inefficient employees can easily be apprehended and in this way, accountability can be fixed.

2) No Overlapping of Works: In the formal organisation, everything moves in an orderly manner. Therefore, there is no possibility of any work being left out or unnecessarily repeated.

3) Unity of Command:  It is possible to observe the principles of unity of command given the scalar chain of authority.

4) Easy to Get Goals: Under a formal organisation, it is easy to achieve the goals of the organisation because there is optimum use of all the material and human resources.

5) Stability in the Organisation: All the people work by following rules and remain confined within the domain of their authority. This leads to the establishment of good relationships which in turn leads to stability in the organisation.

Disadvantages of Formal Organisation

1) Job Dissatisfaction: Because of their rigid nature, working in a very formal structure can often lead to job dissatisfaction. Although various factors contribute to that, a tedious, non-social and non-creative working environment is a big factor.

2) Suppress Social Needs: In formal structures, there is no room for social affiliation and psychological needs. They are built solely for the benefit of the organisation. Eventually, they may end up suppressing the social needs of the employees. The great downside of this is that people often get demotivated – especially the ones who have high social affiliation needs. Moreover, the process of communication is also affected by a lack of socialising.

3) Stampedes Creativity: We just learned that formal structures are very rigid and systematic in terms of job assignments and responsibilities. This, as a result, stampedes the creativity of employees in the organisation. Though not every organisation will suffer from it, the ones that do require their workers to exhibit creativity and out-of-the-box approaches are affected severely by formal structures. In short, the formal organisation – with its rigid approach – does not offer enough room to stimulate creativity.

4) Operational Delays: Sometimes, to speed up things, the structure and system should be avoided. However, as formal organisations require you to submit everything through a well-organised system it may result in operational delays. Everything goes through a scalar chain, which is hierarchical. If there are no formal boundaries, labour can directly communicate and report to the top-level executive. But that’s hardly the case in formal structures. As a result, formal structures do slow things quite a bit especially, when compared with informal structures. 

Formal Organisation