Formal and Informal

Organisation
Characteristics of Formal organization:
Classical theorists- Four pillars
1. Division of Labour
2. Scalar and functional process
3. structure
4. span of control
1. Organization structure is designed by Top Management

2. It is mainly based on Division of labour & Efficiency in operation.

3. Concentrates more on Performance not on Individuals.

4. Authority and responsibility is assigned to each job where status is
determined.

5. Coordination and control through procedures & Rules.

Characteristics of Informal organization:

1. Natural outcome at workplace.

2. Created on the basis of some similarity (ex: Age, sex, place of origin
etc)

3. Membership is voluntary

4. Coordinated and controlled by group norms.

Basis of comparison Formal Informal
Origin Created by Top
Management
Based on socio-
psychological forces
Purpose Organizational objective Social and psychological
satisfaction
Size Quite large in size Small
Nature of groups Stable & Long Unstable
Number of groups Many Based on
organizing pattern
Many & overlapping of
membership
Authority Top - Low People with maximum
positive interactions
Behaviour of
members
Governed by rules &
regulations
Norms, beliefs and
values of the group
Communication Chain of command Any form

Abolition Any time by management Difficult to abolish
Span Of Management:

Span of management refers to the number of
subordinates who can be managed effectively by a
superior.

Implication:
- determining complexity of managers job
- determines the shape

Determination of span of management :

Graicunas French management consultant

1. Direct single relationship
2. Direct group relationship
3. Cross relationship

Formulae:
Direct single relationship = n
Direct group relationship = n(2
n-1
-1)
Cross relationship = n(n-1)

Total relationship = n(2
n
/2 +n-1)




Factors affecting Span of Management:

1. Capacity of supervisor

2. Capacity of subordinates

3. Nature of work

4. Degree of decentralization

5. Degree of planning

6. Communication techniques

7. Use of staff assistance

8. Supervision from others



Organisational
level
Members at each level

At span of 4 At span of 8
1
2
3
4
5
6
7
1
4
16
64
256
1024
4096
1
8
64
512
4096
32768
262144

Wide or Narrow span:
Tall or Flat structure:

Tall High cost

Excessive distance between Top and Low level

Flat widens span of control

overloaded