Apparel Industry Management

Apparel Industry Management 3(3+0)

Lesson 10 : Concept of Organisation

Formal and Informal Organisations Distinguished

Many people distinguish between formal and informal organization. Barnard referred to an organization as formal when the activities of two or more persons are consciously coordinated toward a given objective. He found that the essence of formal organization is conscious common purpose and that the formal organization comes into being when persons (i) are able to communicate with each other, (ii) are willing to act, and (iii) share a purpose. The informal organization refers largely to what people do because they are human personalities-to their actions in terms of needs, emotions and attitudes, not in terms of procedures and regulations. In the informal organization, people work together because of their personal likes and dislikes. We may clarify this basic distinction further along the following lines:

1. Formal organization is established with the explicit aim of achieving well-defined goals. It is meant to engage in production of goods and / or in performing of certain services required by society. The goals of formal organization generally centre around stability, survival, growth, private profit, public welfare and so on. Informal organization is not established as such. It springs on its own as a complex of small informal groups. Its goals are ill-defined and intangible like friendship, goodwill, understanding, unity and so on.
2. Formal organization is bound together by authority relationships among the members. A hierarchical structure is created, constituting top management, middle management and supervisory management. The structure can be represented by an organizational chart. Informal organization is characterized by a generalized sort of power relationships. Power in informal organization has basis other than rational-legal right. The power structure in informal organization is very complex and is uncharitable.
3. Formal organization recognizes certain tasks and activities which are to be carried out to achieve its goals. These tasks are divided and sub-divided. Work units are created for specific and well defined tasks. Segmentation of tasks is followed up by integration and co-ordination. Informal organization does not have any well-defined tasks; nor are they divided and sub-divided.
4. The roles and relationships of people in formal organization are impersonally defined. They are supposed to structure their behavior in accordance with certain prescribed and required performance of tasks, interactions and relationships. In informal organization, the relationships among people are interpersonal and not impersonal. No specific rules and relationships are prescribed but they evolve as a matter of course. Certain collectively accepted norms of behavior guide people in their relationship.
5. In formal organization, much emphasis is placed on efficiency, discipline, conformity, consistency and control. All these elements tend to introduce rigidity, bureaucracy and artificially in the process and practice of formal organization. Informal organization is characterized by relative freedom, spontaneity, homeliness and warmth.
6. The focus of the entire activity of the formal organization is on effective achievement of organizational goals and promotion of organizational interests. The social and psychological needs and interests of members of the organization get little attention. Members are supposed to partially suppress their views, feelings and needs for the sake of the formal organization. But in informal organization, the socio-psychological needs, interests and aspirations of members get priority. Infact, informal organization emerges basically to cater to the social needs and sentiments of its members. The goals of the informal organizations and those of its members are almost totally congruent.
7. The communication system in a formal organization follows certain pre-determined patterns and paths. In informal organization, the communication pattern is often compared to a ‘grapevine’ which is haphazard, intricate and natural.
8. Formal organization exhibits certain established habit patterns and ways of doing things. It is relatively slow to respond and adapt to changing situations and realities. As against this, informal organization is in a flux always. It is dynamic and ever vigilant. Even though each informal organization develops its own culture and character, such a condition does not prevent it from being sensitive to its surroundings.