According to Chester I Barnard___“ A Formal Organization is a system of consciously coordinated activities or forces of two or more persons“.
In formal organizations, employees perform their delegated tasks and duties in cooperation with other personnel and staff members. As they communicate with one another during their tasks, they eventually develop interactive relationships among them. These relationships become the basis of various social work-groups of interactive employees. This network of social work groups is known as formal organization. Therefore, informal organization is a structure created through friendly or social relations between individuals. It automatically comes into existence within formal organizations without making any deliberate effort.
Advantages of Formal Organization
- Easy to Fix Accountability: In formal organisations, it is easy to detain unproductive individuals and fix accountabilities as authority and responsibility of every member s predetermined.
- No Overlapping of Works: Everything happens in an organised way under formal organizations. There are fewer chances of activities being ignored or overlapped, without any reason.
- Unity of Command: Under formal organizations, the principle of unity of command can be easily followed as authorities of each member are well-defined according to the management hierarchy.
- Easy to Attain Objectives: It is easy to attain organizational objectives as the human and material resources are utilised in the best possible manner.
- Stability: Each individual acts according to the prescribed rules and stays within their authoritative limits. This facilitates the formation of good relations thereby ensuring the organisational stability.
- Job Dissatisfaction: Working in a formal system may result in job dissatisfaction, as it is very inflexible. Non-creative and antisocial work conditions are significant factors that often demoralise individuals.
- Suppress Social Needs: There is less scope of social connections and emotional needs within formal organization. The rules and policies frame under such organizations are formed only for the organizational gains.
- Suppresses Creativity: Formal organizations have methodical and inflexible structures that assign fixed jobs and duties. This hampers the creativity of individuals.
- Operational Delays: An organisation and its arrangement often need to be ignored for speeding up the work. But, as formal organizations tend to perform every task under a well-defined arrangement, it can lead to operational delays. All managerial activities are performed according to hierarchy of authority and responsibility, i.e., scalar chain. Workers can easily interact and report to the senior most officials, when there are no rigid formal limitations. However, this rarely happens. Thus, formal system often slows down operational activities, particularly in contrast to informal systems.