A formal organization is an organization with a fixed set of rules of intra-organization procedures and structures. As such, it is usually set out in writing, with a language of rules that ostensibly leave little discretion for interpretation.
Sociologist Max Weber devised a model of formal organization known as the bureaucratic model that's based on the rationalization of activities through standards and procedures.[1] It is one of the most applied formal organization models.
In some societies and in some organizations, such rules may be strictly followed; in others, they may be little more than an empty formalism.
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An important characteristic of a formal organization is its stability. Therefore, the formal organization grows and expands with the passage of time.
The structure of the formal organization is based on jobs to be performed by the individual, and not vice versa. Roles are hierarchical and work is assigned to individuals on the basis of expertise and capability.
A formal organization is structured and organized to accomplish the organizational mission. One exponent has remarked that the “absence of structure is illogical, cruel, wasteful, and inefficient”.
Because of this feature, the roles and responsibilities of individuals in an organization are clearly defined.
As the organization is structured, it has continuity of operations. They last for a long time and grow over a period of time.
Formal organizations follow rules and regulations. Individuals working in formal organizations do not perform activities, according to their whims. Rather, they act according to the rules and regulations framed by the organization.
For example, if a cooperative bank has to sanction a loan to a Panchayat for its development, the manager of the bank has to follow guidelines before sanctioning the loan.
Every individual in a formal individual is assigned specific duties & responsibilities. This is true regulation for every personnel.
Strict observance of the principle of coordination: The coordination between different departments in an organization is strictly maintained to achieve the most efficient result.
Messages are communicated through the vertical chain: Normally in a formal organization, the vertical communication chain is followed so that the chain of command & its unity is maintained.
A formal organization is a separate social entity. The activities have a separate entity from the individuals performing those activities.
Formal rules are often adapted to subjective interests—social structures within an enterprise and the personal goals, desires, sympathies and behaviors of the individual workers—so that the practical everyday life of an organization becomes informal. Practical experience shows no organization is ever completely rule-bound: instead, all real organizations represent some mix of formal and informal. Consequently, when attempting to legislate for an organization and to create a formal structure, it is necessary to recognize informal organization in order to create workable structures. However, informal organization can fail, or, if already set in order, can work against mismanagement.
Formal organizations are typically understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. But in modern societies, formal organizational structures arise in highly institutional contexts. Organizations are driven to incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society. Organizations that do so increase their legitimacy and their survival prospects, independent of the immediate efficacy of the acquired practices and procedures. There can develop a tension between on the one hand, the institutionalized products, services, techniques, policies, and programs that function as myths (and may be ceremonially adopted), and efficiency criteria on the other hand. To maintain ceremonial conformity, organizations that reflect institutional rules tend to buffer their formal structures from the uncertainties of the technical activities by developing a loose coupling between their formal structures and actual work activities. - (John Meyer and Brian Rowan, 1976)
In some countries, formal organizations are registered in public registers to make their identification easier even if an organization renames.
Examples of organization identifiers:
The deviation from rule-making on a higher level was documented for the first time in the Hawthorne studies (1924–1932) and called informal organization. At first this discovery was dismissed as the product of avoidable errors, until it finally had to be recognized that these unwritten laws of work of everyday life often had more influence on the fate of the enterprise than those conceived on organizational charts of the executive level. Numerous empirical studies in sociological organization research followed, ever more clearly providing evidence for this, particularly during the human relations movement. It is important to analyze informal structures within an enterprise to make use of positive innovations, but also to be able to do away with bad habits that have developed over time.
There are many different reasons for informal organization:
Managerial organization theory often still regards informal organization as rather disturbing, but sometimes helpful. In the opinion of systems theory and cybernetics, however, formal organization fades into the background and only serves, if necessary, to supplement or to correct. Changes in structure always redevelop because of the conduct and differences among coworkers, and the ability of self-organization is recognized as a natural characteristic of a social system.