Kinds of

Organization:
Formal & Informal
 WHAT IS AN ORGANIZATION?
It is a group of people who work together in an organized way for a shared purpose of objectives.

DIFFERENCES FORMAL ORGANIZATION INFORMAL ORGANIZATION

ORIGIN Deliberately created Spontaneously form
STRUCTURE Definite and special design Structure-less groups
PURPOSE Created to achieved goals Satisfy individual groups of members
(social satisfaction)
CONTROL Rigid system of rules and regulations No rigid system of rules and
regulations
INFLUENCE PROCESS Authority is equated with influence Influence is attached to the individual
person
COMMUNICATION There is a formal, official channel of a Design own channel of communication
communication (scalar chain) (grapevine) Fast and quick
transmission of information

SIZE Large and manageable depending on Small and manageable

their success
 ADVANTAGE OF FORMAL
ORGANIZATION
1. Systematic working its structure results in systematic and smooth functioning
of an organization
2. Achievement of Organizational Objectives established to achieve
organizational goals
3. No overlapping of work work is systematically divided among various
departments and employees
4. Coordination formal organization structure results in coordinating activities
of various departments
5. Creation of chain of command who reports to whom (superior subordinate
relationship)
6. More emphasis on work more emphasis on work than interpersonal relations
DISADVANTAGE OF FORMAL ORGANIZATION

1. Delay in action while following scalar chain and chain of

command actions get delayed
2. Ignores social needs and employees does not give
importance to psychological and social need of employees
which may lead to demotivation
3. Emphasis on work only give importance to work only
 ADVANTAGE OF INFORMAL
ORGANIZATION
1. Fast Communication does not follow
scalar chain; faster spread of communication
2. Fulfills Social Needs
 DISADVANTAGE OF INFORMAL
ORGANIZATION
1. SPREAD RUMORS
- according to survey, 70% of information spread through informal
organization are RUMORS.
2. NO SYSTEMATIC WORKING
- does not form a structure for smooth working of an organization.
3. MAY BRING NEGATIVE RESULTS
- oppose policies and changes of management.
4. MORE EMPHASIS TO INDVIDUAL INTEREST
- gives more importance to satisfaction of individual interest than
organizational interest.
USE OF INFORMAL ORGANIZATION
TO FORMAL ORGANIZATION
1. The knowledge of informal group can be used to gather
support of employees and improve their performance.
2. Through grapevine (informal way of spreading
information) important information can be transmitted
quickly.
3. By cooperating with the informal groups, the managers
can skillfully take advantage of both formal and informal
groups.
SCIENTIFIC MANAGEMENT
THEORY
 What is a management theory?
Is a collection of ideas which set forth general rules on
how to manage business or organization
Addresses how managers and supervisors relate to their
organization in the knowledge of its goal, the
implementation of effective means to get the goals
accomplished and how to motivate employees to perform
the highest standards.
FREDERICK WINSLOW TAYLOR
Developed Scientific Management Theory of Taylorism to
address the growing need to industrial production
An American who started scientific management movement by
studying work process scientifically
He also studied how work was performed and on how will affect
productivity
His philosophy focused on the belief that making people work
as hard as they could was not efficient as optimizing the way
the work was done.
 1909
He published the Principle of Scientific Management
He proposed that by optimizing and simplifying jobs, productivity would
increase
He advanced the idea that workers and managers needed to cooperate
with one another
He also believed that all workers are motivated by money therefore he
promoted a fair days pay for a fair days work
He studied time and motion in relation to work and find out that there are
could work more efficiently than others and that there is the best way
to complete the task
FOUR PRINCIPLES OF SCIENTIFIC
MANAGEMENT
1. Use scientific method to study work to determine the
most efficient way to perform specific tasks.
2. Match workers to their jobs at train them at maximum
efficiency.
3. Monitor performance and provide instructions.
4. Allocate work between managers and workers.