A well-constituted body that is mutually established with a vow of loyalty to achieve a specific purpose or pre-determined goal is a formal organizational structure. It is characterized by a well-defined organizational structure, task specialization, division of work, and consistency of finished products, adhering to rules and regulations that are Implemented in addition to efficient communication networks. Thus, the formal organizational structure functions based on the operation of a well-structured and organized network that is both coordinated and well-managed by experts and Researchers in various areas of expertise.
In-Brief
- A network in which various cooperative ties are formed between different positions of organizations is a formal organizational structure that has been intentionally created for protecting Economic processes.
- The Decision-making task is made simple for individuals as a result of a formal organizational structure.
Formal Organizational Structures
Each individual is attached to various groups or clusters within an organization. Some of them are defined explicitly and more formally like organizational units, committees, departments, clubs, etc., whereas some groups are informal and they emerge from more vague and hidden factors like a community is connected due to their daily interactions or an alliance network. The formal organizational structure is a network that constitutes various cooperative ties between different positions in organizations that have been created intentionally for safeguarding economic processes. This study is mainly focused on the organizational structure, which is defined by the top management. The geographic structure is considered as an intentionally formed structure, and therefore, it is termed as formal.
Reasons for Formal Organizational Structure
- The structure as an Empirical Object
This structure, rather macroscopic and theoretical, it is important for organizational communication mainly for two reasons. First, most of the characters or dimensions that are analyzed by the experts describe particularly Weber’s stipulation of written messages, communication processes, and upright discussion about exceptional problems. Second, an organization, which is an information-processing entity, forms the basis of many of these discussions.
- The structure as an Information Processing Tool
The task of the decision-making process is eased for individuals by the formation of organizational structure, in addition to many other formalized organizational practices. Information about organizational structure informs the employee about what has to be done, whose orders to be followed, and whom to update about the employee’s activities and outcomes. The formal structure is designed in such a way that everyone has to do all tasks required by the organization, and that employees are enclosed by proper Information Environment to make appropriate decisions. Organizational structure varies according to the needs of an organization.
- The structure as System Form
Organizational Structure isolates and restricts the limits of subunits. It also paves the way for their integrative coordination. To be brief, the organizational structure is used to determine the arrangement or the form of the system’s subunits significantly. Systems theory serves both as an analytical instrument which helps to stimulate attention towards new features of organizations and also forms the basis for the integration of the assets of other literature.
Decision making of organizations often quits from the state of wisdom. Members of an organization often have restricted resources of attention, and, in the vague, intricate situations, attention can be paid to part of decisions and by formal criteria, other issues should concern them. When ambiguity and complexity of organizations are distinctive, participants, problems, solutions, and choice opportunities are badly built in a random way.
- The structure as Carrier of Social Psychological Processes
The organizational structure serves as a stimulus to other phenomena. Due to the formal structure of organizations, its socio-psychological processes have been transformed.
An organizational structure that supports digital transformation
Digital Technologies assist organizations to reinvent the whole process of business and also to establish new ones. Some experts realized the effectiveness of the use of an organizational structure which has been characterized by decentralized decision-making, more flattening structure, rapid transfer of knowledge among employees, greater coordination and collaboration, team working, knowledge networking, parallel communication, practical approach, agility, and flexibility. As old technical models were not flexible, with strong internal and external boundaries, the progress of the new structure of the organization is unavoidable. Old models lack the potential to respond rapidly to changes in a hyper-connected environment. 4
Features of Formal organization:
(1) The process of organizing has intentionally created a formal organizational structure.
(2) The achievement of the goal of organizations is the purpose of the formal organization structure.
(3) Each individual has got a specific task in the formal structure of organizations.
(4) Each individual has decision-making power in the formal organizational structure.
(5) The superior-subordinate relationship has been formed in the formal organizational structure.
(6) A scalar chain of communication has been formed in the formal organizational structure.
Advantages of Formal Organizational Structure
- Systematic Working: Organization has got systematic and smooth functioning due to the formal organizational structure.
- Achievement of Organizational Objectives: Organizational objectives have been established by the formal organizational structure.
- No Overlapping of Work: Every departments and employee have work divided among them in the formal organizational structure. So overlapping or duplication of work can always be avoided.
- Co-ordination: Activities of various departments have been coordinated as a result of formal organizational structure.
- Creation of Chain of Command: superior-subordinate relationship has been well-established in the formal organizational structure.
- More Emphasis on Work: importance is given to work than interpersonal relations in the formal organizational structure.
Disadvantages of Formal Organization
- Delay in Action: Actions may get delayed while following the chain of order and scalar chain.
- Ignores Social Needs of Employees: Social and psychological needs of employees were not given importance in the formal organizational structure which leads to a lack of motivation among employees.
- Stresses on Work Only: Work is given more importance in the formal organizational structure. Human relations, talents, and creativity were ignored. 5
Conclusion
Formal structures mean purposely designed organizations that result from larger institutional arrangements. Research carries in various disciplines recommends that formal organizational structure can form beliefs, opinions, and behaviors of individuals. In the literature of organizational theory, formal organizations are illustrated as the opinions and characteristics of organizational members that have been restricted by shared organizational culture. 6 It is proved that the process of informal organization has not generally been damaging to the development and growth of the formal organization.
Future scope
Researchers better understand the consequences of formal organizational structures on the apparent strategic alignment. Organizations should look for the lateral mechanisms to break the impact of silos due to significance over the influence of the functional division. Future research should be carried out to identify a mechanism that reveals the insights on the alignments that progress in companies. It could be both beneficial to both experts and scholars to identify the evolution of insights in the context of the structural changes by conducting a study. 3
References
- Comfort R. Etor, 2019, Formal and informal organizations.
- Robert D. McPhee, 2018, Formal Structure and Organizational Communication.
- P. Lahdelma, The Effect of Formal and Informal IntraOrganizational Structures on the Perceived Strategic IT-Business Alignment.
- Vladimir Mirković, Jelena Lukić, Snežana Lazarević, Željko Vojinović, 2019, Key Characteristics Of Organizational Structure That Supports Digital Transformation, Strategic Management and Decision Support Systems in Strategic Management
- Therence Apostol, 2019, The formal and informal organization structure.
- Christina Prell, Mark Reed, Liat Racin, Klaus Hubacek, 2019, Competing Structure, Competing Views: The Role of Formal and Informal Social Structures in Shaping Stakeholder Perceptions
Video liên quan
When a small business enjoys a substantial growth spurt, the owner soon realizes that the only way to keep up with business is to get organized. A formal organizational structure could help the owner deploy and coordinate employees, but the disadvantages might outweigh the benefits -- at least until the company’s growth leaves the owner no choice. By understanding the downsides, an owner may be able to mitigate the disadvantages of a formal organizational structure.
Flexibility is the first casualty of formal structuring. To ensure that nothing goes undone, an owner must bundle tasks into firm job roles. Employees must stick to these jobs according to a schedule or routine so the owner can coordinate everyone’s efforts. Written rules and procedures make certain that a new employee can quickly assume a job role. Gone are the days when people could shift their efforts to meet sudden challenges. Though organizing reduces adaptability, it makes a company more focused.
Confined to tasks that must be done in a certain way at a certain time, employees don’t have much room for creativity and innovation. In fact, it’s undesirable, since standardizing work promotes efficiency and productivity. This strength becomes a weakness when a company needs to innovate to compete or respond to sudden market changes.
Before a company erects a formal structure, information flows spontaneously and freely throughout the company. After a small business adopts a structure, employees’ concerns and access to information narrows to their own departments and individual jobs. Disconnected from information, employees lose a sense how their roles affect the company as a whole. They have even less understanding of how other departments affect the company. Cooperation and coordination suffer.
Usually, small businesses choose the functional structure as their first type of formal organization. Similar jobs become collected into departments, allowing people with the same concerns to easily communicate and share resources. Though efficient, segregating employees according to functional areas, such as marketing and accounting, hinders interdepartmental communication and coordination. Additionally, this structure is the least flexible, besides discouraging innovation. These disadvantages may be acceptable for companies needing maximum efficiency, control, mass production or standardized products.
Companies needing creativity and the ability to quickly react to the competitive environment might be better served with the team structure. This framework unites employees with different skills and knowledge into temporary teams that assume responsibility for a goal or area of company concern. The structure requires that employees are well-trained, given power to make decisions, and excel at team dynamics.
The divisional structure is a less drastic shift away from the functional structure. It may work for companies with more than one product line, location or market. To build it, an owner assigns employees to a division dedicated to one product, area or customer type, then subdivides by function. Divisional employees coordinate well, since they’re all working on the same goals. These common goals also increase a division’s adaptability without giving up as much efficiency as the team structure.
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An organizational structure groups people together in some fashion that an owner hopes will best promote productivity. In an ideal world, employees will be able to communicate, share resources, coordinate activities and still be efficient. Perfection doesn’t exist, though, so a prudent owner must consider trade-offs. For instance, workers in highly specialized jobs may be productive, but innovation disappears. When considering which organizational structure to adopt, an owner should examine how each framework will impact productivity and why.
The functional structure is the most efficient and productive organizational structure. Grouping employees by work specialty, this structure features departments such as marketing, then classifies them still further, if necessary, into subgroups such as sales. Because specialists work together, communication and coordination increases. A strong management hierarchy ensures adherence to policies and procedures. This oversight and job specialization encourages standardization and mechanization. Together, these characteristics promote efficiency and, therefore, productivity. The functional structure isn’t for every small business. A couple downsides: The structure discourages creativity and market adaptability, while too much job specialization reduces morale and actually lowers productivity.
If a business has more than one product or service, work might be easier if each product got its own set of dedicated employees. This describes the divisional structure. Divisions operate like independent businesses, division heads reporting to the owner. Each division then organizes as if it were a functional organization, but with improved adaptability because the division dedicates itself to one product and its buyers alone. Unfortunately, divisions aren’t as productive as in the straight functional structure because some economies of scale are lost. The divisional structure can also be used for different market locations or clientele.
The team structure can’t compete with the functional structure in terms of productivity. In market responsiveness, flexibility, innovation and employee satisfaction, though, it beats the functional design hands down. The team structure achieves its advantages by pulling functional expert specialists together into teams that tackle projects, company goals or work processes. The owner forms teams according to need, and empowers these teams with decision-making authority. Some productivity is sacrificed to meetings -- teams must spend time communicating. For companies in unstable markets, though, the ability of the teams to react swiftly and creatively to market forces more than offsets disadvantages.
On an organizational chart, the virtual structure might not look like a structure at all. The small business owner using this framework only employs a small group, outsourcing work as the business needs it. An outside company might handle its books while another handles production and another sees to shipping. The virtue of this setup is that a small business can quickly expand through outsourcing or contract during slumps without worrying about taking on permanent employees, equipment or facilities. Productivity rests with the companies the small business owner hires. The virtual structure also goes by the terms network or modular structure.
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The organizational structure of your company influences its operations. Depending on how you organize your business, you can have centralized control or delegated authority. Some structures promote team cohesiveness, while others depend on individual initiatives. You have to make sure your organizational structure suits the type of business you are in and matches the requirements of your market environment.
A simple organizational structure has a hierarchy that consists of a top executive who delegates authority down the organizational ladder. It is appropriate for smaller companies in which a founder directs operations and for regulated businesses in which tight compliance with policies and procedures is essential. The structure is efficient because all activity is coordinated through the direct lines of authority. This organizational structure is slow to react to external changes, because information has to travel up the organization's chain of command and instructions have to travel back down.
When a company grows, it becomes too large to operate under a simple organizational structure and often splits into divisions. Each division acts as a smaller company with a simple structure, but the divisions are tied together at the top under a corporate framework. Divisions can be responsible for operations on a geographical base or on the basis of product lines. The structure is as efficient as a simple company, but coordination can be a problem, because each division acts independently and efforts can be duplicated.
The functional organization structure solves the duplication of effort in divisions by splitting the company into departments based on functionality. For example, one department is responsible for companywide marketing and another one is responsible for all human resources. The structure is hierarchical, but the chief executive delegates authority to the professionals in each specialized department. While duplication is reduced, coordination suffers as each department focuses on its area of activity.
In rapidly changing markets, companies must adapt quickly and need a flexible organizational structure, because the hierarchical models are too slow to react to external changes. The matrix structure combines the hierarchy for organizational matters with a responsiveness gained through placing responsibility for executing work at lower organizational levels. Teams operating at the working level have responsibility for carrying out work and interacting with the market. The team members report to a team manager for their work and also report to managers in the company hierarchy for disciplinary and job-related matters. The structure can be inefficient: Work can be duplicated, coordination between teams can be lacking and there might not be a clear path of authority. Its advantage is the ability to quickly respond to customer concerns and market changes.