formal & informal organisational

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  • 1.PROF.CHHAYA PATELFormal and Informal Organisation

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. 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. 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. Limitations of Formal Organisation1. 2.Loss of initiative Unsatisfied social needs 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. 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. 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. Human and Participation Theories of Formal Organisation The classical theory of organisation was opposed in 1950s 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. 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 managers 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. 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 peoples 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. Factors Affecting Contingency Theory 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. Features of Informal Organisation 1.Unplanned structure2.Fulfillment of social needs3.No formal structure4.Informal leaders5.Informal communication system6.No rules and regulations7.No fixed tenure 15. Benefits of Informal Organisation 1.Promotes social and cultural values2.Relief to top managers3.Supplement to managers capacities4.Social satisfaction and security5.Communication6.Better relationships7.Solve work-related problems8.Promotes creativity9.Self-control10. Restraint on managers discretion 11. Social satisfaction 12. Quick feedback to managers 16. Limitations of Informal Organisation 1.Conformity2.Attitude of leaders3.Role conflict4.Rumor5.Resistance to change6.Conflicting goals 17. Comparative Analysis of Formal and Informal Organisations 18. Contd 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. 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. 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. 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. 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. Types of Groups 1.Th