PRINCIPLES OF ORGANIZATION

The organizing process can be done effectively if the managers have certain guidelines so that
they can take decisions and can act. To organize in an effective manner, the following principles
can be used by a manager.

First of all, principles of specialization. This is where the whole work of a concern should be
divided amongst the subordinates on the basis of qualifications, abilities and skills. It is through
division of work specialization can effective results be achieved in an organization.

Second, principles of functional definition. According to this principle, all the functions in a
concern should be completely and clearly defined to the managers and subordinates. This can
be done by clearly defining the duties, responsibilities, authority and relationships of people
towards each other. These help in achieving co-ordination and thereby organization can take
place effectively.

In addition, principles of span of control/supervision. Span of control is a span of supervision

which depicts the number of employees that can be handled and controlled effectively by a
single manager. According to this principle, a manager should be able to handle what number
of employees under him. This can be achieved by choosing either a wide or narrow span. With
the wide span of control, it is one in which the manager can supervise and control effectively a
large group of persons at a time and the narrow span, the work and authority is divided
amongst many subordinates and a manager does not supervise and control a very big group of
people under him. That is, he supervises a selected number of employees at one time.

Moreover, principle of scalar chain. Scalar chain is a chain of command and authority which
flows from the top to the bottom. With a chain of authority available, wastages if resources are
minimized, communication is affected, overlapping of work is avoided and easy organization
takes place. A scalar chain of command facilitates work flow in an organization which helps in
achievement of effective results. As the authority flows from top to bottom, it also clarifies the
authority positions to managers at all level and ensures good organization.

The last principle is the principle of unity of command. This implies one subordinate one
superior relationship. Every subordinate is answerable and accountable to one boss at one
time. This helps in avoiding communication gabs and feedback and response is prompt. Unity of
command also helps in effective combination of resources, that is, physical, financial resources
which helps in easy co-ordination and therefore effective organization.

FORMAL AND INFORMAL ORGANIZATION

Formal organization is a well-defined structure of authority and responsibility that defines

delegation of authority and relationships amongst the organizational members. It works along
pre-defined set of policies, plans, procedures and programmes. Formal organization has some
of the following features,
Deliberately created structure. It is a deliberately created structure that defines official
relationships amongst people working at different job positions.

Job-Oriented. It focuses more on jobs than people. That is, it allocates jobs to people and
defines the structure of relationships to achieve the formal organization objectives.

Division of work. Work is always divided into smaller units and assigned to individuals on the
basis of their skills and abilities. It results in increasing organizational output.

Departmentation. It is the division of work into smaller units and their re-grouping in bigger
units on the basis of similarity of activities.

ADVANTAGES OF FORMAL ORGANIZATION

Formal organization clearly defines objectives of the organization and authority-reponsibility
relationships amongst people to attain those objectives, It results in optimum utilization of
scarce organizational resources, Division of work and relationships amongst people develops
effective system of communication in the organization, The rate of absenteeism and labour
turnover remains low, Formal organization integrates formal goals of the organization with
goals of individuals working the organization, Career advancement and promotional avenues
are clearly defined in the formal structure of organization and organizational hierarchy avoids
overlapping of activities between two individuals or departments.

LIMITATIONS OF FORMAL ORGANIZATION

Though formal structure of relationships helps to achieve organizational goals, it suffers from
the following limitations.
The first demerit is loss of initiatives. As too much emphasis is placed upon formal rules and
regulations, workers do not use their creative and innovative skills to perform organizational
tasks. There is loss of initiative and innovative abilities due to strict adherence to rules.

The second disadvantage is the unsatisfied social needs. In a formally structure, social needs
remain unsatisfied as people are related to each other through a formal chain of command to
discuss only official matters with each other. Social interactions are altogether ignored and etc.

Informal organization refers to a network of personal and social relationships which

spontaneously originates within the formal set up. Informal organizations develop relationships
which are built on likes, dislikes, feelings and emotions. It emerges from the formal organization
and it is not based on any rules and regulations as in case of formal organization.
Formal organization has the following features,

To begin with, Formal organization has an unplanned structure.it arises spontaneously out of
formal interaction amongst people. When people formally interact with each other, they tend
to discuss their interests, attitudes, hobbies, beliefs and in so doing, form groups whose goals
are different from formal organizational goals. Their informal relationships gradually develop
informal organization that co-exists with the formal organization.
Moreover, informal organization is based on social needs. The basic purpose of informal
organization is fulfilment of social needs of people. People share common thoughts, feelings,
and interests different from formal organization goals. Their social needs of friendship, love,
and support are strengthened by informal organizations.

In addition, Informal organization does not have any structure. It cannot be precisely shown on
the organization chart. Relationships amongst people change according to changes in their
interest and liking for each other. People communicate with each other in all forms, vertical,
horizontal and diagonal.

In furtherance, It is based on informal leaders. Leaders are informally elected by group

members. They strongly influence group activities and contribute to formal goals positively or
negatively.

The system of communication is informal. It does not follow the chain of command. It operates
along with formal channel of communication and works faster than the formal channel.
Communication flows in every direction and connects people throughout the organization.
Another feature is that, No rules and regulations. Informal organization has no fixed rules and
regulations that govern functions of the organization. Rules are framed and changed by people
according to their convenience.

Last feature is that, there is no fixed tenure. It is formed at the will of people and dissolves at
their will. It does not operate for a fixed time period. Dissolution of informal organization also
does not follow any legal procedure.

MERITS OF INFORMAL ORGANIZATION

Informal organization has the following merits,
Informal organization promotes social and cultural values. Members of informal organization
share common share thoughts, social, and cultural beliefs. Their interests are promoted which
strengthens the organization and promotes commitment to accomplish its formal goals.
Informal organization ensures social satisfaction and security. Members satisfy their social
needs of interaction, recognition and acceptance. Their need for friendship, love and support
are satisfied in these organizations.
Communication travels faster in informal organizations. People discuss their work and non-
work related problems and find solutions without the support of superiors.
Also, It promotes creativity. People exploit their creativity and work according to their
judgement and skills without awaiting for superiors’ instructions. They think of new ideas and
practice them without the fear of rejection by their employers.

DISADVANTAGES OF INFORMAL ORGANIZATION

Though informal organization helps to achieve formal goals of the organization, it also suffers
from the following,
 Attitude of leaders. If leaders have negative attitude, that is, want their personal interests to be
satisfied at the cost of group interests, informal organization will work against the formal
organizational goals. This is harmful for the organization and also
Resistance to change. Informal groups become over-protected about the group goals and
values. They oppose change in their way of working. Lack of desire to deviate from existing
norms or acquire new knowledge works against implementation of new and sound policies in
the organization. An organization where workers work five days a week will not easily accept a
six-day week even if working hours each day are reduced.