Question

“Shan Spices Ltd.” are the manufacturer of different food specific spices like Rajmaa Masala, Choley Masala, AalooParantha Masala, etc. Mr. Raghav, the owner of the company has created different departments for purchase, production, marketing, finance and human resource. There are thirty employees working in the organisation. Planning is of paramount importance to the company as Mr. Raghav believes that effective planning leads to achievement of organisational objectives. So in order to make employees focus on objectives, he issued instructions that during working hours only official matters will be discussed. He made certain rules and code of conduct for the employees to follow, according to which employees are not allowed to visit and talk to the employees of other departments except for official work. He emphasised on work performance which resulted in smooth functioning of the organisation.

1. Identify and define the type of organisation structure mentioned in the above para.
2. Identify and define the type of organisation mentioned in the above para.
3. State the type of organisation which seems to be restricted due to the rules and code of conduct for employees.
4. Discuss any three advantages of the type of organisation identified in part (c).

Answer 1

a. Functional organisation structure: A Functional Organisation Structure is a type of organizational setup where the activities of the business are grouped into departments based on specific functions such as production, marketing, finance, human resources, etc.

b. Formal organisation: A formal organisation is one whose structure was created by management in order to accomplish its objectives. It is a formal framework of precisely defined relationships and actions meant to separate and combine the organization's operations.

c. In the course of their work, employees in a formal organisation engage in interactions or communication with one another. They gradually build cordial relationships and create tiny social groups. Informal organisations are networks of these friendship-based social groups.

d. Benefits of Informal organisation. 

1. Sense of Belonging: An employee is one person among many in a formal company. He lacks a strong sense of self-worth and belonging. Self-worth and a sense of belonging are offered by informal organisations. It enhances a person's self-image and acknowledges his personality.
2. Relief from Monotony: Employees in formal organisations are required to complete routine tasks, which leads to boredom and monotony. They get the chance to mingle with one another through an unofficial organisation. Their social satisfaction increases as a result of this socialisation.
3. Solution of Work Problems: Members of informal organisations share job knowledge and assist each other in performing jobs.
4. Protection from Outside Pressure: Informal organisations provide protection to its members from pressure of top management. Informal organisations serve as a check on arbitrary actions of managers.
5. Social Control: Informal organisations defend and advance their members shared beliefs and interests. Members who don't follow the rules are reprimanded.