Formal Organization

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What is a Formal Organization? Meaning.

A Formal Organization is a relatively stable description of the organization structure (typically in an Organization Chart) and the rules (policies, procedures and regulations) that make up an organization.

The formal organisation is a well-defined structure of authority and responsibility that defines delegation of authority and relationships amongst the organisational members. It works along pre-defined set of policies, plans, procedures, schedules and programmes. Most of the decisions in formal organisation are based on pre-determined policies.

A formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability, the whole consciously designed to enable the people of the enterprise to work most effectively together in accomplishing their objectives.

It is usually set out in some printed form. In some societies and in some organizations, the structure and rules may be strictly followed; in others, they may be little more than an empty formalism. The so called informal organization is more important in such environments.

The term may also be used to refer to such a (traditional) organization.

Benefits of the formal organisation. Advantages

• It clearly defines objectives of the organisation and authority-responsibility relationships amongst people to attain those objectives.
• It helps to achive an optimum utilisation of scarce organisational resources.
• Division of work and relationships amongst people develops an effective system of communication in the organisation.
• The organisational hierarchy avoids overlapping of activities (tasks) between individuals and departments.
• Career advancement tracks are clearly defined in the formal structure of organisation.
• The rate of absenteeism and labour turnover is decreased due to the clear objectives, policies, strategies etc.
• The formal organisation integrates the formal goals of the organisation with the goals of employees. There is an alignment of individual, group and organisational goals.

Drawbacks of the formal organisation. Disadvantages

• If too much emphasis is placed upon formal rules and regulations, workers do not use their creative and innovative skills to perform organisational tasks. There could be loss of initiative and innovative abilities.
• People like to interact with other people and share his feelings at-work and off-work. In a very formal organisation structure, little attention is given to these social needs and employees could discuss only official matters with each other. Social interactions are ignored.

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Compare also: Theory of Mechanistic and Organic Systems  |  Organizational Configurations  |  Enterprise Architecture

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