STRUCTURE AND NATURE OF FORMAL ORGANIZATION

INTRODUCTION Formal organizations are product of deliberate actions that are goal directed. Hence, when groups (labourers, Administrators, Marketers etc.) are brought together in a production point or a complex organization, then a formal organization will naturally emerged. The erroneous conception of an institution as a group of people is corrected in this unit. But formal organizations are group of people. Central to all formal organizations are formal structure and formalization. These concepts are made clearer in this unit. Formal Organizations and Institutions When groups are deliberately brought into existence for the purpose of attaining specific goals in large or complex organizations, they are called formal organizations. A nation’s government is a network of formal organizations charged with the business of governing. A school is a formal organization designed to educate children. An army is a formal organization that takes care of the business of war and defence. A corporation is a formal organization performing some function in a nation’s economy. An institution is a procedure, an established ways of doing things, a pattern of behaviour, and a custom. Institutions are not groups of people. You cannot join an institution; you can merely do things in an institutionalized way. For example, when you marry, you carry out a human activity establishing a paired relationship, propagating the species-in an institutionalized way. Formal organizations are groups of people. You may join such organizations, or have dealing with their members. (a) Formal Structure The effort to coordinate efficiently the actions of many people toward a single objective leads to the development of formal structure. It is called “formal structure” following Max Weber’s formulation of the components of bureaucracy. (b) Formalization The concept of formalization permits that details of procedures are rendered explicit and unambiguous and thus rational. These can be put down on paper by reducing it to chart of organization that defines offices, codifies rules, specifies flow of authority and extent of responsibility, and indicates the technical competences that provide qualification for office. Analysis of Formal Structures The analysis of formal structures in large or complex organizations has often focused particularly on three issues. Authority: Formal organizations are designed so that, consistent with the hierarchy of positions, some positions have authority over others. In order that the occupant of each position will be able to carry out this task, sufficient power is provided in the form of control over resources and also control over people in subordinate positions by the capacity to reward or sanction (punish). Rewards: One consequence of ranked positions in formal organizations is an unequal distribution of rewards. Salaries range upward from that of the night watchman to the president. Other rewards-parking spaces, private offices, private secretaries, executive bonuses-may be available to some upper level ranks. Such an unequal distribution of rewards functions to attract talented people and to serve as incentive to people to be productive. An organization does not necessarily attempt to provide equity in distributing rewards. It may only pay what it needs to get trained people and keep them in the system. Communication: No complex organization can function effectively-or indeed at all-unless it has assured channels of communication. Channels of communication must be known to all participants, each member should have access to the formal channel of communication, the lines should be as short and direct as possible, and those communicating should make use of the appropriate line of communication, not by passing any link. Ideally each member will have access to what he or she needs to know but will not be over burdened with extraneous information. But effective communication in hierarchy often proves to be difficult. Information flows more easily downward than it does upward, and the middle levels often block or distort communication between top and bottom. Upper levels may even believe that the lower levels need to know only orders-what to do-and some occasional propaganda from the top, while those in lower levels may feel they need to know more. As consequence, informal and extra-legitimate channels of communication in organizations “grapeviness”, “scuttle-bult”, “rumour mills”-operate in the absence of effective formal communication. Characteristics of Formal Organizations A formal organization comes into being when a number of individuals join together for the purpose of reaching certain objectives or improving certain conditions. Formal organizations display certain definite characteristics. Firstly, they have a formal structure. Their goals and programmes for carrying them out are formally stated in policy guidelines, constitutions, and other bylaws. Formal organizations also include a body of officers whose relations with one another and with other members of the organization are specified in writing. Second, they are relatively permanent. Some formal organizations, especially those established for profit making, may prove to be temporary if no profit is made. The expectation, however, is that a large scale organization will last as long as it performs its original tasks. Third, authority is organized in a hierarchical order. The leadership of the organization is assumed by a number of individuals who are ranked from high to low. The high-ranking individuals give the orders; the low ranking individuals obey. In industry the highest level of authority is the board of directors, who select officers and elect an executive committee. The board at the recommendation of the executive committee determines policy. An administrative executive carries out this policy, helped by an assistant, who in turn has a staff to assist him. Fourth, formal organizations have a formal programme of which all members are aware, by which to attain their goals. Relationships among members are systematic and complex. People relate to others whose authority and functions differ from their own-people of higher or lower rank-according to guidelines specified in the programme. CONCLUSION While formal organizations are made up of groups that are deliberately brought in complex organizations to achieve specific goals, institutions are procedures, established ways of doing things and a pattern of behaviour among others. Formal organizations exhibit common characteristics that are discussed in this unit. SUMMARY In this unit, efforts have been made to distinguish formal organizations from institutions. Furthermore, the issues in the analysis of formal structures were presented. Lastly, the distinctive features of formal structures were discussed.