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Formal & informal organisational

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Formal & informal organisational

  1. 1. PROF.CHHAYA PATEL Formal and Informal Organisation
  2. 2. Formal Organisation - - Formal organisation is a well-defined structure of authority and responsibility that defines delegation of authority and relationships amongst various organisational members. It works along pre-defined sets of policies, plans, procedures, schedules and programmes. Most of the decisions in a formal organisation are based on predetermined policies. Formal organisation is a deliberately designed structure with formal authority, responsibility, rules, regulations and channels of communication.
  3. 3. Features of Formal Organisation 1. 2. 3. 4. 5. 6. 7. 8. Deliberately created structure Job-oriented Division of work Departmentation Formal authority Delegation Coordination Based on principles of organising
  4. 4. Benefits of Formal Organisation 1. It clearly defines objectives of the organisation and authority- responsibility relationships amongst people for attainment of those objectives. 2. It results in optimum utilisation of scarce organisational resources. 3. Clear division of work and relationships amongst people develops effective system of communication in the organisation. 4. The organisational hierarchy avoids overlapping of activities between two individuals or two departments. Two individuals are not assigned the same task. 5. Career advancement and promotional avenues are clearly defined in a formal structure of organisation. 6. The rate at which people join and leave the organisation is reduced (because of clear objectives, policies, strategies etc.). The rate of labour turnover and absenteeism, thus, remains low. 7. Formal organisation attempts to integrate formal goals of the organisation with goals of individuals working in the organisation. There is, thus, synthesis of individual, group and organizational goals.
  5. 5. Limitations of Formal Organisation 1. 2. Loss of initiative Unsatisfied social needs
  6. 6. Theories of Formal Organisation Organisation theory is the study of organisations and people and groups working in them. There is no unified set of organisation theory that provides insight into organisation principles and practices. Different theories have evolved over a period of time with different sets of assumptions and features. Organisational theories are classified as follows : 1. Classical Theory of 2. Human and Participative Theories of 3. Contingency Theory o
  7. 7. Classical Theory of Formal Organisation It focuses on structure, design and features of the organisation like specialisation, scalar chain, departmentation, span of control, centralisation/decentralisation etc. The structure is created and people are appointed to run the various departments. It considers organisations as closed system with very little or no interaction with the environmental forces. It emphasises on tasks more than people. Hierarchy of authority, division of work, specialisation, impersonal relations, narrow span of control etc. are the important factors of classical theories of organisation. (a) People work only if they are directed to work. They do not assume responsibilities on their own. (b) Formal plans, motivational factors and communication channels are designed to get the work done through subordinates.
  8. 8. Contd… (c) (d) (e) It achieves efficiency at the cost of social dissatisfaction. It emphasises on division of work as a means to improve workers‟ performance. It views unity of control as the basis for achieving coordination amongst varied activities of organisational members.
  9. 9. Human and Participation Theories of Formal Organisation The classical theory of organisation was opposed in 1950‟s when the behavioural theories emerged on the management scenario. The classical theory was criticised for being highly mechanistic, formal and impersonal. Hawthorne experiments conducted by Elton Mayo supported social and informal interactions amongst work groups to increase organisational efficiency. The human theories focused on people as means to achieve the tasks. These theories characterised a shift from task - oriented approach to people - oriented approach for achieving the organisational goals.
  10. 10. Contingency Theory Classical and Participative theories are not unrealistic. However, managers may choose a theory which consists of features from both to adapt the organisation to its surrounding environment. The contingency theory identifies four factors that affect manager‟s choice of a theory. 1. Nature of people : People who are lazy, lack responsibility, do not wish to work on their own, prefer to be led and guided, prefer to be governed by the classical theory of organisations. People who enjoy their work, wish to seek greater responsibility, exercise self-direction show better results if managers adopt participative theory to organising. 2. Type of task and technology : Classical form of organisation is preferred for producing goods through mass production technology while participative theory is more suitable where job-order (small scale) or continuous technology is adopted.
  11. 11. Contd… 3. The environment : Firms which operate in dynamic environment are more flexible in their operations and, therefore, adopt a participative theory while firms operating in a stable environment show better results when they work according to principles of classical organisation. 4. Degree of change and uncertainty : Change in people‟s attitudes, perception and knowledge from simple to complex shifts the organisation structure from classical to participative. As society moves from underdevelopment to development, managers become educated, trained and skilled labour is available in abundant supply, the general level of education and specialisation increases and, therefore, a shift from classical to participative organisation structure is observed.
  12. 12. Factors Affecting Contingency Theory
  13. 13. Informal Organisation As the formal organisation grows in size, parallel existence of informal relationships along with formal relationships becomes unavoidable. They arise because of inevitable social and personal needs of individuals which cannot be satisfied by the principles of formal organisations. They represent non-planned, unofficial, social interactions amongst people working in formal structures. They arise out of common interests of people. These organisations are not governed by formal set of principles but nevertheless, are an important and integral part of formal organisations.
  14. 14. Features of Informal Organisation 1. Unplanned structure 2. Fulfillment of social needs 3. No formal structure 4. Informal leaders 5. Informal communication system 6. No rules and regulations 7. No fixed tenure
  15. 15. Benefits of Informal Organisation 1. Promotes social and cultural values 2. Relief to top managers 3. Supplement to managers‟ capacities 4. Social satisfaction and security 5. Communication 6. Better relationships 7. Solve work-related problems 8. Promotes creativity 9. Self-control 10. Restraint on manager‟s discretion 11. Social satisfaction 12. Quick feedback to managers
  16. 16. Limitations of Informal Organisation 1. Conformity 2. Attitude of leaders 3. Role conflict 4. Rumor 5. Resistance to change 6. Conflicting goals
  17. 17. Comparative Analysis of Formal and Informal Organisations
  18. 18. Contd…
  19. 19. Integration of Formal and Informal Organisation Formal and informal structure are complementary to each other. Managers must, therefore, give due regard to the requirements and needs of both the forms of organisation structures. This can be done in the following ways : 1. Resistance to change and problem of conformity can be overcome by educating employees. 2. Role conflict can be reduced by integrating individual goals with organisational goals.
  20. 20. Contd… 3. Formal organisations must be flexible so that preferences for individual talents and creativity can be incorporated in the formal structures. 4. Managers should ensure that group norms are not against formal organisational goals. 5. Managers should understand that workers need to interact with each other during long working hours and, therefore, recognise their informal relationships. 6. Informal channels spread information at a fast speed. Managers should use this channel for spreading important, official information. This will prevent spreading of gossips and rumours. 7. Managers should allow members to discuss their problems in groups rather than discuss them with their immediate superiors. 8. Managers should take leaders of informal groups into confidence while making organisational plans and policies. This will promote easy and fast acceptance of plans and policies by organisational members.
  21. 21. Group Dynamics „Group dynamics‟ is an important aspect of organising. Managers cannot do away with groups. Groups contribute to organisational and group goals. A group refers to “two or more people who interact with one another, are psychologically aware of one another, perceive themselves to be members of the group, and work towards a common goal.”
  22. 22. Features of a Group 1. Interaction : A group is an interaction of two or more people. 2. Influence : The group members have reciprocal influence on each other. Each member influences and is influenced by others in the group. 3. Mutuality : People develop mutual perceptions and emotional ties with one another. 4. Informal leadership : Every group has a formal leader elected by the members. However, informal leaders are also elected by them. 5. Role structure : Role structure is “the set of defined roles and interrelationships among those roles that the group or team members define and accept.” Every individual performs a specific role which influences and enhances expectations of the group members from each other.
  23. 23. Contd… 6. Group norms : Every group functions on the basis of certain norms. A norm is “a standard of behaviour that the group accepts and expects of its members.” 7. Group cohesiveness : Cohesion is the power to stick together. Group cohesiveness is the power of the group to remain attached to each other.
  24. 24. Types of Groups 1. The various types of groups can be categorised as follows: Formal groups (a) Permanent formal groups [Command groups and permanent committees] (b) Temporary formal groups [Task forces and project groups] 2. Informal groups
  25. 25. Formal Groups 1. Formal Groups : Groups which are deliberately created by managers for carrying out specific tasks for attainment of organisational goals are called formal groups. Committees, task forces and work teams are different forms of formal groups. (a) Permanent formal groups are formally represented on the organisation chart. They are also known as command groups and consist of managers and their subordinates. (b) Temporary formal groups are formed to deal with a specific problem. They dissolve once the problem is solved. Task groups, project groups or ad hoc committees are the forms of temporary formal groups.
  26. 26. Informal Groups These groups are not created by managers but spontaneously grow out of interaction amongst members of the formal groups. They are created by choice for promoting the goals defined by the group, that is, group goals. These groups may oppose or support the formal organisational objectives.
  27. 27. Functions of Informal Groups (i) (ii) (iii) (iv) Maintain group values and life-style Provide social satisfaction Operate communication systems Maintain social control
  28. 28. Reasons for Joining Informal Groups People join informal groups for two reasons : 1. Internal Reasons 2. External Reasons
  29. 29. Internal Reasons for Joining Informal Groups (a) Interpersonal attraction (b) Group activities (c) Group goals (d) Higher pay-off (e) Need satisfaction
  30. 30. External Reasons for Joining Informal Groups (a) Interaction (b) Personal goals (c) Superordinate goals (d) Perceived power (e) Mutual trust (f) Communication (g) Fait accompli
  31. 31. Group Cohesiveness - Group cohesiveness is the attraction of group members towards each other in terms of their loyalty and commitment to group goals. - It is “the degree to which members are attracted to a group, are motivated to remain in the group, and are mutually influenced by one another.”
  32. 32. Factors Affecting Group Cohesiveness There are two sets of factors that affect group cohesiveness: 1. Factors that increase cohesiveness 2. Factors that decrease cohesiveness
  33. 33. Factors that Increase Cohesiveness The following factors increase group cohesiveness : (a) Similarity in attitudes, values, beliefs and interests of members increases group cohesiveness, facilitates communication and develops understanding amongst group members. (b) Inter-group competition, where two groups compete with each other to reach a common goal increases cohesiveness of each group. (c) Personal liking and attraction for each other contributes to increased group cohesiveness. (d) Success in achieving group goals leads to group cohesiveness. (e) Size of the group also determines cohesiveness of a group. Smaller groups are generally more cohesive than bigger groups.
  34. 34. Contd… (f) Increase in interpersonal interaction increases attraction of group members to one another and increases cohesiveness of the group. (g) Consensus amongst group members on group goals also leads to increase in group cohesiveness.
  35. 35. Factors that Decrease Cohesiveness The following factors are detrimental to group cohesiveness : (a) Increase in size of the group decreases group cohesiveness. (b) When members have conflicting opinion about group goals, group cohesiveness will decline. (c) While inter-group competition increases cohesiveness, intra-group competition decreases cohesiveness. Intra-group competition promotes individual goals at the cost of group goals. (d) Dominance, rather than agreement leads to less dominant members of the group surrender to the desires of the dominant members. (e) Unpleasant group interactions, lack of similarity amongst members‟ attitudes, beliefs and values and lack of enjoyable group activities decreases group cohesiveness.
  36. 36. Contd… (f) Involvement of group members in activities outside the group and threatening internal environment where members compete for resources within the group reduces group cohesiveness.
  37. 37. Consequences of Group Cohesiveness Highly cohesive groups lead to following consequences : 1. Group goals and group norms can be achieved effectively. 2. If there is high compatibility between group goals and organisational goals, people perceive management as supportive of group goals and, therefore, perform better than less cohesive groups. 3. Members communicate with each other frequently and better understand the feelings of others. 4. Members achieve higher job satisfaction than members of less cohesive groups.
  38. 38. Contd… 5. It leads to friendly competition amongst work groups that perform similar activities and do not depend upon each other to get the work done. 6. It affects group‟s willingness to innovate and change. Changes can be introduced if they are accepted by members of the group.