Formal Organisation

Estimated time: 12 minutes

CBSE: Class 12

Introduction

Employees are guided by rules and procedures to ensure smooth functioning of the enterprise.
Job descriptions, rules and procedures related to work are laid down through the formal organisation.
Formal organisation is the organisation structure designed by management to accomplish a particular task.
It clearly specifies the boundaries of authority and responsibility.
There is systematic coordination of activities to achieve organisational goals.
The structure can be functional or divisional.

CBSE: Class 12

The formal organisation is a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability. - Louis Allen
Formal organisation is a system of consciously coordinated activities of two or more persons toward a common objective. - Chester Barnand

CBSE: Class 12

Clear Reporting: Shows who reports to whom and relationships between job positions.
Goal-Oriented Structure: Provides rules and procedures to achieve objectives given in plans.
Departmental Coordination: Coordinates and links efforts of different departments.
Designed by Management: Deliberately created by top management for smooth functioning.
Work-Focused: Gives more importance to work and tasks than personal relationships.

CBSE: Class 12

Clear Responsibility: Easy to fix responsibility because relationships are clearly defined.
No Role Confusion: Duties are clearly specified, so there is no ambiguity or duplication of work.
Unity of Command: One clear chain of command helps maintain discipline and order.
Better Goal Achievement: Provides a clear framework so each employee knows their role in achieving goals.
Organisational Stability: Specific rules guide behaviour, making employee actions predictable.

CBSE: Class 12

Slow Communication: Following the full chain of command can cause procedural delays and slow decisions.
Less Scope for Creativity: Rigid policies may not give proper recognition to creative ideas.
Incomplete Human Picture: Focus on structure and work means informal human relationships are not fully understood.

CBSE: Class 12

Formal organisation is a planned structure created by management to accomplish specific tasks.
It is based on clear rules, procedures and defined jobs with authority and responsibility.
Features include clear reporting, coordination, design by top management and focus on work.
It provides clarity, unity of command, better goal achievement and stability.
It may cause delays, restrict creativity and not show the full human side of the organisation.