Organisation - UPSC PDF Download

Introduction

Organization serves as the foundation for effectively utilizing resources, such as manpower, materials, and finances, to achieve specific goals. In our daily lives, we encounter various organizations, such as post offices, municipal offices, banks, agricultural extension offices, panchayat offices, and railway stations, which all contribute to community services. When individuals need to collaborate, distribute tasks, and work cooperatively over an extended period to accomplish certain objectives, an organization is formed. In this section, we will explore the nature and significance of organizations, as well as the distinctions between formal and informal organizations, their features, and the interplay between these two types of organizations to ensure efficient service delivery.

Organisation: Meaning and Definition

• Organisations have existed throughout history, with the family being the earliest form. The term "organisation" has been defined in various ways by different authors, depending on the emphasis they wish to place on certain aspects. Some definitions focus on structure, while others emphasize the cooperative efforts of human beings for a common purpose. In general, an organisation consists of a structure, working arrangements between people, and the relationships among them. These organisations can be found in many aspects of our lives, such as government, church, army, school, or club, and can be classified based on size, nature of relationships, and formality.
• Organisations come in various sizes, from small ones, like a single-teacher school, to large ones, like the Indian Railways with over twenty lakh employees. They can also be classified as simple or complex, depending on the nature of relationships and activities involved. A family, with direct relationships and few activities, is an example of a simple organisation, while a complex organisation, like the defence ministry, covers a wide range of services and sectors. Additionally, organisations can be categorised as formal or informal, based on the importance given to their structure or human side of the enterprise.
• Understanding the characteristics and functions of formal and informal organisations is crucial for comprehending their workings. Formal organisations are those with a clear structure and hierarchy, while informal organisations are those that arise from social interactions among individuals within a formal organisation. Both types play a significant role in achieving the goals of an organisation through the collaborative efforts of their members. In conclusion, organisations are diverse and multifaceted entities that play a vital role in our lives, and understanding their various aspects is essential for effective management and functioning.

Formal Organisation

• The field of organization theory has seen significant interest in the study of formal and informal organizations. A formal organization is one that is intentionally designed, planned, and authorized by an appropriate authority. This type of organization can be seen on an organization chart or as described in manuals and rules. It is the organization as it appears to external observers. It is common for organizations to create a chart depicting their structure, as illustrated below.
  
• Chester Bernard defines a formal organization as a system of consciously coordinated activities or forces involving two or more people. Barnard posits that individuals agree to work within an organization because they are willing to contribute their services and receive certain benefits in return. A prime example of a formal organization is the postal department, where the delivery of mail relies on interrelated activities such as sorting letters, distributing mail to respective postmen, and delivering it to the intended recipients. Louis Allen describes a formal organization as "a system of well-defined jobs, each bearing a definite measure of authority, responsibility, and accountability, the whole consciously designed to enable the people of the enterprise to work most effectively together in accomplishing their objectives."
• In summary, a formal organization facilitates the design of an organizational structure, the identification of various decision-making levels, the allocation of duties and responsibilities, and the assurance of smooth performance. 

Characteristics of Formal Organisation

Formal organisation is the frame through which organised effort is directed for achieving the goals. It has certain distinct characteristics. They are:

• Legal Status
• Division of work
• Primacy of structure
• Permanence
• Rules and Regulations

A study of these characteristics would enable you to understand the nature of formal organisations.

• Legal Status: One of the key characteristics of a formal organization is that it operates under legal sanctions. This means that the establishment of such an organization at the government level requires the enactment of laws by the parliament or legislature. For example, the Income Tax Department exists due to the Income Tax Act, and Municipal Corporations in cities like Bombay, Delhi, or Hyderabad are established based on legislation enacted by their respective state legislatures. Public sector organizations, such as the Life Insurance Corporation and the Food Corporation, are also created through enactments by the union parliament. The legal status of these organizations provides them with the authority to carry out their functions and regulate the activities of individuals or other organizations.
• Division of Work: Formal organizations facilitate the division of work, which is essential for their existence and efficient functioning. The structure of a formal organization, with its various levels of management, job titles, and areas of operation, allows for the convenient division of work. This enables organizations to specialize in specific tasks or activities and achieve their goals effectively. The division of work also promotes specialization, as each unit within the organization can focus on its particular tasks and develop expertise.
• Primacy of Structure: In formal organizations, the design and structure are of utmost importance. As Urwick noted, an absence of structure is illogical, cruel, wasteful, and inefficient. A well-defined structure specifies the roles of individuals within the organization, communication flows, and relationships between members.
• Permanence: Formal organizations tend to be more permanent than other types of organizations. Although they adapt to environmental conditions and may change their structure or objectives, they are generally created to endure for an extended period. Not only do formal organizations last a long time, but they also typically grow and expand over time.
• Rules and Regulations: Another crucial feature of formal organizations is that they operate according to a set of well-formulated rules and regulations. Officials working in formal organizations must act within the boundaries of these rules and regulations, rather than following their personal preferences. For example, when a bank sanctions a loan to an entrepreneur, the rules and regulations regarding loan approvals must be adhered to, and the entrepreneur must fulfill all the required conditions. The officer in charge of approving loans must strictly follow these rules and regulations, which ensures objectivity and limits the discretion of those with authority.

Functions of Formal Organisation

• Formal organizations serve several essential functions. Firstly, they help establish goals and objectives, which are crucial for directing the skills of individuals towards achieving the desired outcomes. For example, the postal department's goal is to provide fast and efficient mail delivery services, while the defense ministry's objective is to protect the country's sovereignty and integrity from external threats.
• Secondly, formal organizations define the roles and responsibilities of different units within the organization. In the defense ministry, for instance, the army, navy, and air force have specific duties to protect the land, sea, and air, respectively.
• Another important function of formal organizations is coordination. For example, a police sub-inspector oversees the activities of several head constables, while circle inspectors coordinate the activities of multiple police stations, each under the supervision of a sub-inspector. Higher-level officials coordinate the activities of their subordinates to ensure that the organization functions effectively.
• As Allen suggests, formal organizations create boundaries, signposts, and pathways that must be followed. They provide a fundamental structure that enables governments and other enterprises to operate efficiently. A key characteristic of formal organizations is the impersonal nature of relationships, which promotes objectivity and unbiased examination of issues. Decisions are made based on the merits of each case, rather than extraneous factors.

For example, in a court of law, judgments are rendered based on the evidence presented to the judge, rather than any other irrelevant considerations. Similarly, when auditing financial transactions, an auditor should adhere to financial rules, receipts, vouchers, and other documentary evidence to maintain objectivity and accuracy.

Formal & Informal Organisation

Informal Organisation

• Informal organization refers to the aspects of a company's structure that are not defined by formal authority, but rather supplement or modify the official structure. Chester Barnard emphasizes the importance of informal organization, describing it as a collection of personal interactions and connections, as well as the way people group themselves within the company. Informal organization focuses on individuals' personalities and emotions, rather than the formal hierarchy.
• Many administrators recognize the importance of informal structures and often participate in informal groups, both within and outside their organizations. High-ranking officials, such as presidents and prime ministers, may have unofficial advisory groups, sometimes referred to as "kitchen cabinets," which can be more influential than their formal counterparts.
• Informal communication channels, such as the "grapevine," are also essential for executives to understand the true feelings of their employees and vice versa. This information can help administrators better manage tasks and responsibilities.
• Informal organizations are often seen as shadow or silhouette organizations, lacking clear definitions and goals. They are characterized by spontaneous, unofficial, and unstructured relationships that can lead to positive feelings, increased interactions, and stronger bonds among members. Due to their informal nature, they do not have specific goals or structures, and formal control systems do not apply to them.

Why Informal Organisation?

• Informal organizations emerge for various reasons, one of which is to satisfy the social needs of individuals. People have a natural desire for companionship and affiliation, and if these needs are not met, they may feel isolated and dissatisfied. Informal organizations allow individuals to develop relationships and connections that may not be possible within the formal structures of an organization. Chester Barnard also noted that individuals find personal comfort and a sense of belonging in social relations, which can lead to solidarity and social integration.
• Another reason for the emergence of informal organizations is their ability to help individuals cope with tensions and frustrations experienced in the workplace. They act as 'release valves' where individuals can find sympathetic friends who share similar experiences and provide support and understanding. Informal organizations also enable members to collaborate and assist one another in achieving their organizational objectives, which may involve sharing knowledge, guidance, and resources. Additionally, informal organizations offer opportunities for individuals to express their creativity and develop their talents in a more spontaneous and flexible environment.
• Lastly, informal organizations play a crucial role in preserving and perpetuating shared values within a group. While formal systems may not always align with individual values, informal organizations provide opportunities for members to uphold and develop their beliefs. Moreover, informal organizations often develop efficient communication channels that allow members to stay informed about organizational events and adjust accordingly. This can be especially beneficial when formal communication methods are slow or hindered. Overall, informal organizations serve essential functions in supporting individuals' social needs, fostering collaboration, and maintaining shared values within an organization.

Characteristics of Informal Organisation

Informal organisatiOnhas several unique characteristics. Firstly, in these organisations, members think and act alike. Their continuous association leads to shared values. Any violation of these shared values results in group pressure and even ostracism. Thus, informal organisations, standards of behaviour are enforced.Secondly, informal organisation brings pressure on the members to conform to the standards of behaviour accepted by the group. Since members of the group desire satisfaction from their association, they tend to conform to the group pressures. As we have noted earlier any deviation from the accepted standards of behaviour results in punishment and even ostracism.Finally, in informal organisations, one finds a different style of leadership. In formal systems, members follow the leader because of their formal position or exercise of authority. But in informal organisations members follow the leader because of his influence. As Mary Parker Follett has noted, leaders emerge out of situations and they lead as long as the situation warrants. But in informal organisation, leaders must live up to the expectations of the group. If he fails he is thrown out which is nor possible in formal systems.

Dysfunctions of Informal Organisation

• Informal organizations, while offering many benefits to formal organizations, also present several challenges and dysfunctions. One such issue is the presence of grapevine communication channels, which, although faster, can lead to the spread of inaccurate, incomplete, or distorted information. This spread of rumors can result in confusion and create problems within the organization.
• Another challenge associated with informal organizations is their tendency to perpetuate certain values or maintain the status quo. This resistance to change can hinder the implementation of measures that may be beneficial to the organization. As a result, progress and innovation might be stifled due to the influence of informal organizations.
• Lastly, informal organizations often impose group standards that can have negative consequences for individual members. For example, these groups can pressure individuals to limit their productivity in order to conform to the group's norms. This phenomenon, referred to as "systematic soldiering" by Taylor, can adversely impact the overall performance and effectiveness of the organization.

In summary, while informal organizations do provide some advantages to formal organizations, they can also lead to the dissemination of misleading information, resistance to change, and negative pressure on individual productivity. These dysfunctions, if not properly addressed, can undermine the success and growth of the organization.

Interdependence of Formal and Informal Organisation

• The interdependence between formal and informal organizations is crucial for a comprehensive understanding of how organizations function. Both formal and informal organizations are two sides of the same coin, and one cannot exist without the other. To fully grasp the workings of an organization, it is necessary to study not only its formal structure but also the personalities of its key members and the roles they play.
• Formal organizations provide the structure for societies, while informal organizations energize and shape these structures. Management in the future must be able to comprehend the goals and aspirations of individuals, group dynamics, and informal roles within the organization. Informal communication, also known as the grapevine, offers valuable insights to the chief executive, enabling them to make well-informed decisions as needed.
• An effective and result-oriented administrative system should strike the right balance between formal and informal aspects of the organization to ensure optimal performance. By acknowledging and appreciating the interplay between these two types of organizations, stakeholders can better understand and navigate the complexities of their organization.

Conclusion

In conclusion, both formal and informal organisations play a crucial role in the functioning and success of an enterprise. While formal organisations provide structure, division of work, and a clear hierarchy, informal organisations focus on human emotions, relationships, and personal growth. A proper understanding of the interdependence and balance between these two types of organisations is essential for effective management and goal achievement. By appreciating the strengths and weaknesses of each, administrators can harness the benefits of both formal and informal systems to create an efficient, cohesive, and productive work environment.

Frequently Asked Questions (FAQs) of Organisation

What is the difference between formal and informal organisations?

Formal organisations are deliberately planned and designed entities with a clear structure, legal status, and well-defined roles and responsibilities. They function according to established rules and regulations. Informal organisations, on the other hand, emerge spontaneously from personal interactions and group dynamics. They are not backed by legal sanctions and do not have a fixed structure or rules. Informal organisations focus on human emotions, personal relationships, and shared values.

Why are informal organisations important?

Informal organisations are important because they provide a platform for individuals to satisfy their social needs, overcome work-related tensions, seek assistance in achieving organisational objectives, and express their creative talents. They also help to develop and perpetuate shared values among members and facilitate faster communication channels.

Can formal and informal organisations coexist and complement each other?

Yes, formal and informal organisations can coexist and complement each other. While formal organisations provide the structure and authority for tasks to be completed, informal organisations help to vitalise and condition the work environment by addressing the social and emotional aspects of the members. A proper blend of both formal and informal aspects of organisation can lead to effective performance.

What are some dysfunctions of informal organisations?

Some dysfunctions of informal organisations include spreading inaccurate, incomplete, or distorted information through informal communication channels, perpetuating status quo and resisting change, and exerting group pressure on individuals to restrict their productivity or conform to group standards.

How can management achieve a proper blend of formal and informal organisations?

Management can achieve a proper blend of formal and informal organisations by understanding the goals and aspirations of individuals, being aware of group dynamics and informal roles, and utilising informal communication channels to gather important insights. This can help in making well-informed decisions and fostering a supportive work environment that promotes both the structured functioning of the organisation and the well-being of its members.