Difference between Formal & Informal Organization

Basis of difference	Formal Organization	Informal Organization
Meaning	Formal Organization may be defined as such organization in which authority, responsibility and account-ability of each member are clearly defined.	On the other hand, informal organization may be defined as such organization in which authority, responsibility and account-ability of each member are not clearly defined.
Objectives	The purpose or objective of establishing formal organization is to achieve Pre-determined goals of an enterprise.	Where as, the objective of establishing informal organization is just to fulfill the psychological and social needs of its members.
Stability	Formal organization is generally more stable in comparison to informal organization, because it is established according to proper rules and regulations for achieving certain goals.	On the other hand, informal organization is not as stable as formal organization, because it is established, in the lack of proper rules and regulations.
Need	Formal organization is gene-rally more needful to every organization, in comparison to informal organization due to stability.	On the other hand, informal organization is not as essential to every organization as formal organization due to absence of proper suitability.
Size	Formal organization is generally too large in size, in comparison to informal organization.	On the other hand, informal organization is generally too small, in comparison to formal organization.
Establishment	Formal organization is established on the basis of proper rule and regulation, where authority, responsibility and accountability of each member are clearly defined.	On the other hand, informal organization is established spontaneously. It doesn't require any rule and regulation to emerge.
Use of Organization charts	Organization charts is needed to show formal organization.	There is no use of organization charts in informal organization.
Types of Communication	In formal organization generally written or formal communication takes place to express the orders, views and feedback etc.	On the other hand, in informal organization generally oral or informal communication takes place to express the orders, views and feedback etc.
Flow of authority	n formal organization gene-rally authority flow from top to bottom vertically over the subordinates and responsibility goes from bottom to top over superiors.	On the other hand, in informal organization everyone has equal rights and duties, so there is horizontal flow of authority in this organization.
Leader	In formal organization gene-rally managers are the leader of organization and so, each and every activity is done under their guidance.	On the other hand, in informal organization generally leader is elected by the members and so, each and every activity is done by members under his guidance.
Relationship	In formal organization each and every members has impersonal or formal relationship with each-other due to bound in rules.	On the other hand, in informal organization each and every member has informal or personal relationship with each-other due to equal rights.
Scope	The scope of formal organization is broader, in comparison to informal organization.	On the other hand, the scope of informal organization is narrow in comparison to formal organization.
No. of members	There is long list of members in this organization for achieving certain goals of organization.	On the other hand, in informal organization there is short list of members due to lack of certain goals.

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What is the Importance of Organization in Management?

• Specialization: Organizing provides a great scope for bringing specialization in every department of an enterprise through putting the right person at the right jobs at the right time so that everything can occur in the right way. Infect organizing allocates the activities among the employees according to their abilities, qualifications and aptitudes. This helps to enterprise to maintain specialization among the departments. 

• Source of Co-Ordination: Organization is an important means of bringing co-Ordination among the various departments of the enterprise. It creates clear authority and responsibility relationship between superiors and subordinates. This helps to establish proper unity and co-ordination between them on behalf of conflict relationship. Thus it is clear that organization is an important source of co-Ordination.

• To attain Enterprise goals: Organization plays a significant role towards the attainment of enterprise goals. Infect, in the lack of proper organizing system any enterprise cannot able to attain its preset goals in the best and cheapest way. Because only organizing provides a way to enterprise to reach up to its goals. Hence, it is clear that organization is the means to attain enterprise goals.

• Better Utilization of Human Resource: Organization plays an important role in the better utilization of human resource. As we know that in any enterprise every activity are done by means of man and so it is too important that every employees in enterprise should get jobs according to their abilities, specialization and aptitudes as well. But this can only be possible while efficient organizing system will exist in enterprise. Thus we can say that organization helps in the better utilization of human resources.

• Optimum use of new technology: A sound organization structure is flexible and gives great scope for the introduction to new technology to the employees. So that every employee can easily take advantages to new technology and advancement for the efficient utilization of all resources.

• Provides Training and Development Programs: Organization is one of the most important means of providing training and development programs to the employees. Infect, organizing provides training and development programs to the personnel on time to time with a view to increase the abilities of personnel. So that they can take more responsibility for the development of enterprise, whenever need arises.

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what is the Steps of Organizing in Management

Organizing is such process of Management which is made for the purpose of achieving preset goals of Enterprise. The important steps which are involved in the process of Organizing can be described as follows:

• Establishing Enterprise goals or objectives: At first step which is taken in organizing process is to determine Enterprise goals or objectives. It is an essential step of organizing process. In fact, in the absence of enterprise goals or objectives there is no existence of organizing system because organizing system is adopted by any enterprise with a view to achieve its goals or objectives in an appropriate way. Thus it is clear that establishment of enterprise goals is a vital step of organizing.

• Determination of various activities: After the establishment of enterprise goals or objectives the next step which is involved in organizing process is to determine various activities. It is matter of fact that objectives of enterprise cannot be achieved by doing one activities. Hence, a group of activity is defined clearly according to its nature, size and importance so that the employees can easily understand their tasks.

• Allocation of work amongst the Employees: After the determination of group activities into sub-activities the next step of organizing process is to allocate the works amongst the employees according to their ability, qualification as well as aptitudes so that every employees can take responsibility for doing their works in the best and cheapest way. 

• Defining Authority, Responsibility and Accountability: After the allocation of work amongst the employees according to their ability, qualification and talent the next step of organizing process is to clearly define authority, responsibility as well as accountability of every employee for the purpose of successful execution of activities. It is also important to establish proper unity and co-ordination amongst the employees.

• Providing Physical Resources and Suitable Environment: After the determination of authority, responsibility and accountability of every employee the next step of organizing process is to provide adequate physical resources suitable environment to the employees so that they can easily utilize all available resources towards the attainment of enterprise goals.

• Establishing Unity and Co-ordination: It is the last but one of the most important step of organizing process. Infect, in the lack of proper unity and co-ordination among the departments, sub-departments, groups and individuals we cannot assume about efficient organizing process within enterprise.

Classification of Organizing:- 

1. Formal Organization
2. Informal Organization

• Formal Organization: Formal organization may be defined as such organization in which authority; responsibility and accountability of each individual are clearly defined. In this organization Structure authority flows from top to bottom vertically over the employees and this type of organization is established with a view to attain certain goals.

• Informal Organization: Informal organization may be defined as such organization which is established without any rules and regulations. Infect, it emerges spontaneously. The foundation of this organization depends on personal likes, dislikes, ideas, emotions etc. The purpose of establishing this organization is just to fulfill psychological as well as personal needs of the members. In an informal organization every member has equal rights and there is horizontal flow of authority. no one can dominate other members by means of his own power or authority in this organization structure.

Characteristics or Features of Formal Organization: 

• Formal Organization is established on the basis of proper rules and regulations for the achievement of certain goals.
• In formal organization authority, responsibility and accountability of each individual are clearly defined so there is no confutation about their jobs among-st the employees.
• In formal Organization, authority flows from top to bottom vertically over the employees. 
• Formal Organization is properly based on principle of unity of command. Everybody knows to whom they will take orders and instructions and to whom they will accountable so there is less chance of conflict arising in this organization. 
• In formal organization every members has impersonal relationships with each-other due to principle of unity of command. 
• Formal Organization has gained wide area of application due to universal in nature. 
• In formal organization generally written or formal communication takes place. 

Characteristics or Features of Informal Organization:

• Informal organization is established without any rules and regulations. The purpose of this organization is to fulfill the social and psychological needs of members. 
• In informal organization authority, responsibility and accountability of each individual are not clearly defined so there is a confutation about their jobs among-st the employees or members in this organization. 
• In informal organization, authority flows from bottom to top or horizontally from hind to hand.
• Informal organization is not based on principle of unity of command. nobody knows to whom they will take orders and instructions and to whom they will accountable so there is a huge possibility of conflict arising in this organization.
• In informal organization every members has personal relationships with each-other due to lack of principle of unity of command.
• Informal Organization has gained very small area of application due to not universal in nature.
• Informal Organization generally oral or informal communication takes place.

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What is the Meaning and Nature of Organizing

In general way we can define term organization as a group of individuals who are interacting with each other and contributing their efforts towards the attainment of certain goals or objectives. In other words organization may be defined as a co-operative & healthy relationship among-st the groups which is built up by them through proper network of communication system with a view to achieve their specific or common goals.
           "Organizing" may be defined as such process which is made by any business firm for the purpose of achieving its own goals or objectives in smooth way. It is the process of ensuring healthy relationship among the departments by the proper channel of communication so that the personnel (employees) of every department can give their hundred percent contributions in the accomplishment of desired goals. 

        

Concept or Nature of Organizing or Organization:

There are two essential Concepts regarding with Organizing:

• Organization as a Process: The concept of organizing can be considered as a process, because a large number of events or activities are done under the process of organizing with-a-view to accomplish the preset goals in an appropriate way. In fact, organizing involves division of works, determination of activities, grouping of activities, delegation of authority and the establishment of proper co-ordination and balance among various departments of individuals towards the attainment of predetermined goals. On the whole it is clear that the objectives of business firm cannot be obtained by doing single activity, so organizing is set to be a process.

• Organization as a Structure of Relationship: Organization refers to a structure of relationship due to involvement of a large number of groups. In fact, under the process of organizing the relationship of departments to departments, groups to groups and individuals to individuals are analyzed carefully through the process of communication system with a view to establish proper unity and co-ordination among them. So that everyone can take initiative for the welfare of enterprise. Thus it is clear that Organization can be considered as a structure of relationship.

Characteristics or Features of Organizing or Organization:

• Organization is a group of Individuals: Organization can consider as a group of individuals who comes together and make co-operative relationship with each-other and contributing their efforts with a view to attain preset goals. Infect, in the absence of group of individuals there is no existence of organization. Thus it is clear that organization is a group of individuals.

• Organization is a process: The feature of organization can put to be as a process, because a large number of events are done under organizing process towards the attainment of predetermined goals, such as determination of various activities, grouping of activities, allocation of work among-st the employees and delegation of authority as well. Hence, organization is a process.

• Organization is a ‘Means’ not an ‘End’: Organization is a means to reach out the goals of an enterprise. In fact organization provides such platforms to enterprise where all the activities are clearly predefined, as a result of this enterprise easily obtain its goals. Thus it is proved that organization is a ‘Means’ not an ‘End’.

• Organization is an important Function of Management: It is an essential feature of organisation. Organization refers to an important function of management because all other functions of management like staffing, directing, controlling etc will become ineffective in the absence of this function.

• Organization is related to its Objectives: Organization is directly concerned with the objectives of enterprise. In the absence of objectives there is no life of organization. If there is an organization then the objectives must be attached with it. Hence, Organization is related with its goals.

• Communication is the life of organization: It is also an important feature of organization. Communication can be treated as a life of organization, because in the lack of proper network of communication there is no existence of organization. Infect the foundation of an organization properly depends on communication. On the whole it is clear that organization is the system of communication. 

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