What is Organisation?
An organisation is the basic building block for management. Organisations help us in delegating the roles and implementing the plans that were made in the first step of management. Organisational structures are also a way to buildup superior-subordinate relationships in the management. For the smooth functioning of the organisation, the organisational structure plays a major role in determining the communication of the organisation. It critically determines rules and regulations and forms of communication methods to be used in the organisation.
How Many Types of Organisations are There?
Depending on the information transmission in the organisation, there are two types of organisation:
Formal organisation and
Informal organisation
They both have their separate advantages and disadvantages, but they are the medium of communication of information within the organisation.
1. Formal Organisation
Formal organisation is designed and managed by the management of the organisation to achieve the goals laid down by the organisation. The authority, responsibility, and accountability are well defined in each of the cases in the formal organisation. The standard of communication is laid by the management of the organisation.
It concentrates more on the duties and work of the organisation; the personal relationships are usually neglected among the employees of the organisation. The scalar chain is followed by communicating the information within the organisation.
2. Informal Organisation
It emerges as a result of inter-personal interaction among the employees of the organisation. It is created spontaneously; there is no official formation made by the management. There is no set of rules and regulations to be followed in the organisational structure.
It does not have any fixed flow of communication. Standards of behaviour are laid down by the group members. In informal organisations, friendly relationships exist among the members.
Advantages and Disadvantages of the Formal Organisation
There are various advantages and disadvantages of a formal organisation and these are discussed below.
Advantages of Formal Organisation
Fixation of responsibility is easier in the case of a formal organisation as the responsibility is clearly defined.
Due to clarity in the allocation of the work, there is no duplication of the work.
The chain of command is maintained in the case of formal organisation.
The goals of the organisation are clearly attainable, and in case of any deviation, accountability can be held easily.
Disadvantages of the Formal Organisations
While following the scalar chain, it takes time for transmission of information from one person to another and hence creating procedural delays.
The unique creativity of the persons in the organisation may be neglected due to rigid policies followed in the organisation.
It leads to difficulty in the prediction of human relationships in the workplace.
Advantages and Disadvantages of the Informal Organisation
There are various advantages and disadvantages of the informal organisation and these are listed below.
Advantages of Informal Organisation
The information transmission is very quick in this case as there is no fixed line of communication.
It enhances job satisfaction as it fulfils social needs.
All the limitations present in the case of the formal organisation are rectified here in the informal organisation.
Disadvantages of the Informal Organisations
Inconsistent ways of sharing information in the organisation may lead to rumours in the organisation.
Sometimes, any changes made by management may not be effected in the informal organisation.
Members of the informal organisations have their own set of rules and regulations and hence sometimes management norms fail to be implemented in the real scenario.
Differentiation between the Formal and Informal Organisation
Case Study
Megha corporation is engaged in the production of clothes. The members of the organisation have friendly relationships among them. What type of organisation is the Megha corporation? List any two features of it.
Ans: Informal organisation is the type of organisation followed by Megha Corporations.
Its features are listed below:
There are independent channels of communication in the case of informal organisation.
There are no written rules and regulations in informal organisations.
Summary
Communication of information is the essence of the organisation. Hence, it must be regulated properly in order to achieve the goals of the organisation. The coordination among the human resources is the strength of the organisation. Both forms of organisation are necessary for an organisation to grow, but they must be well maintained.
FAQs on Types of Organisation
1. Explain the divisional structure.
Divisional structure means the organisational structure is designed in such a manner that it differentiates the company’s product category wise. For example, footwear garments, etc. The divisional managers have the authority of managing their own division and are accountable for the activities taking place in their division. A divisional structure is suitable for large firms dealing with multiple product lines. The disadvantage of divisional structure is that it mainly increases the cost in the organisation as it leads to duplication of efforts in various units.
2. Give benefits of the adequate organisation structure.
Benefits of the organisational structure are as follows:
The profitability of the organisation will be high as there is proper allocation of the resources.
It has better control over operations as it has a smooth flow of communication processes taking place in the organisation.
It specifies the relationship between people's work and resources.
It enables the perfect coordination among all types of resources in the organisation which results in better management.
3. Explain the organising process.
There are four steps in the organising process, and they are listed below:
Step 1: In the first step, the manager needs to identify the tasks and must divide them into manageable activities.
Step 2: Then the task must be divided into small units called departments. It may be in respect of functions, product territory wise.
Step 3: Then the duties must be assigned to all employees considering their skills and competencies.
Step 4: In the last step, the responsibility and accountability are decided by the departments.
