Formal organization

A formal organization is an organization with a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation.

Sociologist Max Weber devised a model of formal organization known as the bureaucratic model that is based on the rationalization of activities through standards and procedures. It is one of the most applied formal organization models.

In some societies and in some organizations, such rules may be strictly followed; in others, they may be little more than an empty formalism.

• To facilitate the accomplishment of the goals of the organization: In a formal organization, the work is delegated to each individual of the organization. He/She works towards the attainment of definite goals, which are in compliance with the goals of the organization.
• To facilitate the co-ordination of various activities: The authority, responsibility, and accountability of individuals in the organization are very well defined. Hence, facilitating the co-ordination of various activities of the organization very effectively.
• To aid the establishment of logical authority relationship: The responsibilities of the individuals in the organization are well defined. They have a definite place in the organization due to a well-defined hierarchical structure that is inherent in any formal organization.
• Permit the application of the concept of specialization and division of Labor. Division of work amongst individuals according to their capabilities helps in greater specializations and division of work.
• Incite a sense of group cohesiveness.

Characteristics of formal organization

Source:

1. Stability
2. Division of Labor
3. Structured
4. Permanence
5. Rules and Regulations
6. Limitation on Activities of Individual
7. Principle of Coordination
8. Communication Throw Vertical Chain
9. Status Symbol

Stability

An important characteristic of a formal organization is its stability. Therefore, the formal organization grows and expands with the passage of time.

Division of Labor

The structure of the formal organization is based on jobs to be performed by the individual, and not vice versa. Roles are hierarchical and work is assigned to individuals on the basis of expertise and capability.

Structured

A formal organization is structured and organized to accomplish the organizational mission. One exponent has remarked that the “absence of structure is illogical, cruel, wasteful, and inefficient”.

Because of this feature, the roles and responsibilities of individuals in an organization are clearly defined.

Permanence

As the organization is structured, it has continuity of operations. They last for a long time and grow over a period of time.

Rules and Regulations

Formal organizations follow rules and regulations. Individuals working in formal organizations do not perform activities, according to their whims. Rather, they act according to the rules and regulations framed by the organization.

For example, if a cooperative bank has to sanction a loan to a Panchayat for its development, the manager of the bank has to follow guidelines before sanctioning the loan.

Limitation on Activities of Individual

Every individual in a formal individual is assigned specific duties and responsibilities. This is true regulation for every personnel.

Principle of Coordination

Strict observance of the principle of coordination: The coordination between different departments in an organization is strictly maintained to achieve the most efficient result. Coordination will also facilitate easier communication hence making everyone to be on the same page.

Communication Throw Vertical Chain

Messages are communicated through the vertical chain: Normally in a formal organization, the vertical communication chain is followed so that the chain of command and its unity is maintained.

Status Symbol

A formal organization is a separate social entity. The activities have a separate entity from the individuals performing those activities.

Distinction from informal organization

Formal rules are often adapted to subjective interests—social structures within an enterprise and the personal goals, desires, sympathies and behaviors of the individual workers—so that the practical everyday life of an organization becomes informal. Practical experience shows no organization is ever completely rule-bound: instead, all real organizations represent some mix of formal and informal. Consequently, when attempting to legislate for an organization and to create a formal structure, it is necessary to recognize informal organization in order to create workable structures. However, informal organization can fail, or, if already set in order, can work against mismanagement.

Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies, formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their formal structures and actual work activities. - (John Meyer and Brian Rowan, 1976)

Identification numbers and public registers

In some countries, formal organizations are registered in public registers to make their identification easier even if an organization renames.

Examples of organization identifiers:

• VAT identification number - usually only organizations that are tax-payers (companies)
• Czech Republic: Identifikační číslo organizace
• Germany: Wirtschafts-Identifikationsnummer
• Poland: REGON (Rejestr Gospodarki Narodowej)
• Brazil: CNPJ

The Hawthorne experiments

The deviation from rule-making on a higher level was documented for the first time in the Hawthorne studies (1924–1932) and called informal organization. At first this discovery was dismissed as the product of avoidable errors, until it finally had to be recognized that these unwritten laws of work of everyday life often had more influence on the fate of the enterprise than those conceived on organizational charts of the executive level. Numerous empirical studies in sociological organization research followed, ever more clearly providing evidence for this, particularly during the human relations movement. It is important to analyze informal structures within an enterprise to make use of positive innovations, but also to be able to do away with bad habits that have developed over time.

Reasons for informal organization

There are many different reasons for informal organization:

• Informal standards: personal goals and interests of workers differ from official organizational goals.
• Informal communication: changes of communication routes within an enterprise due to personal relations between coworkers.
• Informal group: certain groups of coworkers have the same interests, or (for example) the same origin.
• Informal leaders: due to charisma and general popularity, certain members of the organization win more influence than originally intended.
• Different interests and preferences of coworkers.
• Different status of coworkers.
• Difficult work requirements.
• Non-satisfactory conditions of work.

Managerial organization theory often still regards informal organization as rather disturbing, but sometimes helpful. In the opinion of systems theory and cybernetics, however, formal organization fades into the background and only serves, if necessary, to supplement or to correct. Changes in structure always redevelop because of the conduct and differences among coworkers, and the ability of self-organization is recognized as a natural characteristic of a social system.

References

This article originated as a translation of the corresponding article in the German-language Wikipedia. Retrieved November 21, 2004. That article gave the following references:

• Organization, Manfred Schulte-Zurhausen, 3. Auflage 2002 München, ISBN 3-8006-2825-2.
• Organizations theorien, Kieser A., Kubicek H., 2 Bände 1978 Berlin.
• Betriebsführung und Arbeitsmoral, Roethlisberger F. J., 1954 Köln.

Further reading

• Di Meglio, Francesca. 2007. "Learning on the McJob." Bloomberg Businessweek, March 22. Retrieved February 10, 2012 ([1]).
• Etzioni, Amitai. 1975. A Comparative Analysis of Complex Organizations: On Power, Involvement, and Their Correlates. New York: Free Press.
• Goffman, Erving. 1961. Asylums: Essays on the Social Situation of Mental Patients and Other Inmates. Chicago, IL: Aldine.
• Michels, Robert. 1949 [1911]. Political Parties. Glencoe, IL: Free Press.
• Newman, Jerry. 2007. My Secret Life on the McJob. New York: McGraw-Hill.
• Ritzer, George. 1993. The McDonaldization of Society. Thousand Oaks, CA: Pine Forge.
• Schlosser, Eric. 2001. Fast Food Nation: The Dark Side of the All-American Meal. Boston: Houghton Mifflin Company.
• United States Department of Labor. Bureau of Labor Statistics Occupational Outlook Handbook, 2010–2011 Edition. Retrieved February 10, 2012 (https://web.archive.org/web/20100416105901/http://www.bls.gov/oco/ocos162.htm).
• Barnard, Chester. 1938. The Functions of the Executive. Boston: Harvard University Press.
• Weber, Max. 1968 [1922]. Economy and Society: An Outline of Interpretative Sociology. New York: Bedminster.

External links

• Institutionalized Organizations: Formal Structure as Myth and Ceremony