Formal organisation

Formal Organisation Advantages and Disadvantages

Table of Contents:-

    • Formal Organisation Meaning

    • Characteristics of Formal Organisation 

    • Advantages of Formal Organisation 

    • Disadvantages of Formal Organisation

    • Features of Formal Organisation

    • Types of Formal Organization at the Grassroots

Formal Organisation Meaning

A formal organisation 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

A formal organisation is a sort of arrangement that clearly defines a 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 this type of 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 Statutes

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, stamps 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. 

Features of Formal Organisation

Some distinct features of formal bodies are outlined below:

i) Stability: An essential characteristic of a formal organization is its stability, allowing it to grow and expand over time.

ii) Division of Labor: The structure of a formal organization is based on the tasks to be performed by individuals, not vice versa. Roles are hierarchical, and work is assigned to individuals based on their expertise and capabilities.

iii) Structured: A formal organization is structured and organized to achieve the organizational mission. An exponent has noted that the “absence of structure is illogical, cruel, wasteful, and inefficient.” This feature ensures that the roles and responsibilities of individuals in an organization are clearly defined.

iv) Permanence: Due to its structured nature, a formal organization exhibits continuity of operations. Such organizations endure for extended periods and grow over time.

v) Rules and Regulations: Formal organizations adhere to rules and regulations. Individuals working in formal organizations act according to their whims rather than following the laws and regulations established by the organization. For example, if a cooperative bank is to sanction a loan to a Panchayat for its development, the bank manager must adhere to guidelines before approving the loan.

Types of Formal Organization at the Grassroots

Some of the essential formal organizations at the grassroots are described below:

i) Cooperatives

a) Farmer’s Cooperatives: Farmers form groups or cooperatives to connect with consumers and interface with the marketplace. Through cooperatives, they share knowledge and experiences, enhancing their bargaining power in purchasing inputs.

b) Dairy Cooperatives: Dairy cooperatives play a crucial role in developing many Indian states. Milk producers market their products and engage in value addition. Additionally, they receive technical inputs for improving milk production.

c) Tribal Cooperatives: Formed to receive assistance from the government and other agencies for development, Tribal Cooperatives receive financial support from the National Cooperative Development Corporation.

d) Fishermen’s Cooperatives: Established for the well-being of fishermen, these cooperatives provide support for skill improvement and knowledge acquisition in technology, market dynamics, and management. They enhance production, processing, storage, transport capacity, and financial support for fishermen.

ii) Nehru Yuva Kendras

The Government of India promotes youth organizations at the village Panchayat level, supporting youth clubs, sports clubs, and cultural clubs. The Nehru Yuva Kendra (NYKS) or Nehru Youth Centres, initiated in 1969, are India’s largest group of youth organizations. Presently, 80 lakh non-student rural youths aged 15 to 35 are associated with Nehru Youth Centres, with 2.20 lakh youth volunteers trained. The NYKS operates at the village, district, state, and national levels, promoting voluntary youth associations, building leadership capacity, and offering small building and training programs. They also encourage cultural, sports, and service activities among rural youth.

Formal Organisation



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