Informal and formal organizations: concept, goals and objectives

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:42

The economy is made up of the actions of various economic entities. Informal and formal organizations form the basis of the economic system. They may have a different structure, diverse goals and objectives, but their main purpose is the implementation of production and entrepreneurial activities.

The concept of organization

Perceptions about the organization are formed at the intersection of disciplines such as economics and management. It is also understood as a certain process during which any system is created and managed, and a set of certain interactions of various systems and groups in the course of joint work, and the unification of people for the implementation of any tasks. Traditionally, there are three historical types of organizations: community, corporation and association. Depending on the principle of internal structure, there are informal and formal organizations. But in any case, they are groups of people united by common goals andtasks. The main feature of the organization is the presence of several people who work together, pursuing the achievement of a socially significant, common goal. Organizations are characterized by complex structure and a large number of varieties.

Organization structure

The difficulty of studying organizations is that they are distinguished by their extremely diverse structure. It is a complex, interconnected system of elements with different functions and structure. The structure of the organization is subject to the internal logic of production processes, it reflects the functional specifics of the enterprise and is designed to contribute to the most effective solution of economic and business problems.

Traditionally, the structure of an organization is seen as a control element. The organizational structure in management is determined by the tasks and activities of the company, it is influenced by the economic factor - a rational organizational structure allows you to reduce costs. Also, the organizational structure is formed under the influence of such factors as the form of organization by management, the degree of centralization of individual functional units, the principles of the division of labor, the external environment, the ways in which employees interact, and the management strategy.

The structure of the organization contributes to the efficiency and speed of making the most important production and management decisions. The organizational structure must be flexible but stable in order to increase the competitiveness of the company in the market.

Types of organizational structures

KThere are several approaches to studying the structure of an organization. In a technical aspect, the structure of an organization is a system of material objects and processes that serve as the basis for the implementation of all processes. The technical structure provides the basis for functional relationships between staff, influences the content and nature of work, determines the type of personal and work relationships between employees and affects the social structure of the organization.

The social structure of an organization encompasses interpersonal and intergroup interactions and extends to goals, values, power. The social structure is formed under the influence of several factors: the leadership's potential, its ability to build a strategy and relationships, authority, professionalism, the moral and psychological climate in the team, the creative and professional potential of employees, their initiative, ability and desire to look for non-standard ways to solve production problems.

The third component of the organization's structure is socio-technical, this structure is made up of spatial ways of connecting employees within their workplaces, ensuring their interconnections.

The organizational structure of a company in management is usually divided into hierarchical and adhocracy. In turn, hierarchical structures are divided into linear, functional, linear-functional, divisional and others. And organic are divided into matrix, project and team.

Hierarchical structures are a familiar type of organization, they evolved gradually during the evolution of management. Linearthe organizational structure is simple and typical for enterprises with a simple production cycle. In such organizations, all cycles are combined under the supervision of a leader, who, in turn, reports to higher managers. The head of the department assumes full responsibility for the work of his department. The advantage of such a structure is the visible effectiveness of each unit and its manager, a well-functioning system of subordination and distribution of functions, clear areas of responsibility for the leaders of each link. The disadvantages of such organizational structures are the complexity of the overall strategic management of units, each of which solves its own tasks, but is poorly involved in the implementation of strategic plans, poor flexibility and response to external and internal changes, and a high degree of dependence of results on the professionalism of managers. Functional organizational structures differ from linear ones in the principle of subdivision selection, it is created based on the tasks to be solved. In such organizations, there is often cross-management by the same performer, which greatly complicates management. Linear and functional structures are ways of managing organizations that are outdated, as they do not meet modern management requirements.

Linear-functional structure combines the two previous types, in this case, line managers rely on the activities of functional units. Such structures are convenient for the same type of production processes with a staff notmore than 3000 people. A more modern type of such a structure is a linear-staff organization, in which a headquarters is created for each type of activity, helping the manager to solve the main tasks. Divisional structures are characteristic of large companies with a complex production cycle. A division is a separate production unit headed by a manager who is fully responsible for the work of his team. Divisions can be allocated on a regional basis (this is an understandable branch system) or on a product basis. Hierarchical organizational structures have stability, but a low degree of flexibility under the influence of a changing environment. Often in such structures there is a long decision-making time, bureaucratic barriers.

Organic structures are designed to remove the shortcomings of the hierarchy, they are created for specific situations and quickly respond to all changes, adaptability is their main difference and advantage. The brigade structure is distinguished by the horizontal involvement of employees in working groups. The advantage of such structures is the effective use of the potential of employees, the speed of decision-making, but there are also difficulties, which lie in the difficulty of coordinating all teams and achieving strategic goals. Similarly, there is a project structure in which a working group is selected to perform a specific task. The matrix or program-target structure consists of two types of elements: functional services and projects or programs. They have double subordination, and this is a drawback.such organizations. But the advantage is management efficiency, economy, high productivity, the interaction of current tasks with the development strategy.

Also, the structure of the organization is divided into formal and informal. The formal one is the structure that is fixed in any documents, the informal structure is the spontaneously developed relationships of employees and their division into groups within the team. The main informal structure is public relations. Informal groups arise spontaneously, when necessary, therefore they have a mobile and adaptive structure. Depending on the situation, the distribution of powers and functions in such groups can easily change.

Goals and objectives of the organization

Informal and formal organizations are created for the sake of certain goals, and they determine the type and structure of the company. It is well known that the organization is distinguished by the presence of complex and diverse goals, these include:

• Strategic goals. Setting global, long-term goals for the company is an important part of top management's activities. These goals include the company's position in the market, its image, important production and commercial indicators in the future growth.
• Tactical targets. The path to achieving global goals always lies through the achievement of short-term goals. This type of goals includes current and operational tasks that necessarily fit into the overall strategic direction of development.
• Economic goals. Anythe organization sets itself commercial goals for making a profit, they must be expressed in digital terms: in amounts and time to achieve.
• Production goals. The development of the company is impossible without the modernization and improvement of production. The purchase of equipment, the development of technologies, the search for new areas of implementation - all this fits into the production strategy.
• Social goals. Creation of favorable conditions for work, formation of corporate culture, influence on society and culture - all this is also an important part of the organization's activities.

The purpose of a formal organization is usually fixed in the charter and is ideological and motivational in nature, it must be related to the mission of the company. The goals of informal groups are usually not fixed in writing and appear in the form of shared values and interests. The organization builds all the goals in order of importance and, based on them, formulates the strategy and tactics of work.

Characteristics and attributes of the organization

Despite the significant differences between organizations, they are united by characteristics inherent in any of them. The most important characteristic of an organization is the presence of a goal that is close to all its participants.

An important characteristic of a formal organization is its legal status and isolation. The organization must have an officially fixed form of management, which ensures its special status. Isolation is also manifested in the isolation of production and managementinternal processes that create a boundary between the organization and the outside world. The next sign of an organization is the indispensable presence of resources: human, financial, material, state organizations can have power as a resource. The organization has such a characteristic as self-regulation, it has its own area of responsibility and makes major decisions independently. But at the same time, it remains dependent on the external environment, which affects its activities. An important feature is the presence of an organizational culture that exists in the form of corporate norms, traditions, rituals, myths.

Signs of formal organizations

Besides common features, the characteristics of a formal organization has its own distinctive features. The first of these signs is the presence of a set of documents regulating its activities: instructions, charter, laws, regulations, prescribe a certain procedure for it in different situations. Thus, its activity was initially formalized. The formal structure of the organization also includes informal groups, but its formal components always remain dominant. Thus, the formal organization is always wider and larger than the informal one.

Signs of informal organizations

The unique characteristics of informal organizations distinguish it from its antipode. These signs include:

• The presence of public control. Informal organizations are under the vigilant control of their members and the external environment, in order to identify approved and disapproved behavior. Members of informal groups are prescribed certain behavioral models, for deviation from the norms and rules of a group member, a censure or even expulsion from the group awaits.
• Obstructing change. Another sign of informal groups is internal resistance to change, the group strives for self-preservation and sees change as a threat to its existence.
• Presence of informal leaders. The most important characteristic of such groups is the presence of informal leaders. The group leader is a structural element of such organizations, they are delegated certain rights and duties, and he has the trust and recognition of the members of the group.

Types of organizations

In addition to the fact that there are formal and informal organizations, it is also possible to single out other types. They can be classified by industry: trading, manufacturing, intermediary, service, etc. According to the legal status, organizations can be divided into commercial and non-commercial. According to the volume of production, small, medium and large organizations can be distinguished. The main classifications are predominantly for formal organizations, but some types may exist in an informal group.

Internal environment of the organization

An important feature of an organization is its internal environment. It traditionally includes goals, objectives, organizational structure, human resources and technology. The internal environment is a mobile structure, as it strongly depends on the situation. The system of formal organization takes shapeof the groups created by the management, in their activities they are guided by the norms and rules set out in the documents. In this aspect, the internal environment is usually referred to as an element of the corporate culture of the organization. In this case, the formal group may be subject to changes, but their initiator is the manager. Informal groups are also an element of the internal environment, but their activities are less predetermined and regulated. Communication, liking and relationships play an important role here, what is called the psychological climate of the working group.

Formal and informal groups in the organization structure

The complex structure of organizations, especially large ones, involves the allocation within small working groups to solve various problems. They can be formal or informal. The role of formal groups is to solve production and economic problems at the direction of management. Such groups are created for the duration of any work, for example, to create a project. Their activities are regulated by documents, for example, orders that distribute powers and set tasks. But in large companies, informal organizations are always spontaneously created. Examples of such associations can be found in any enterprise. They develop spontaneously on the basis of personal sympathies and interests. They also play an important role in the organization, as they unite the team, form and maintain the climate in the organization, and contribute to the improvement of corporate culture.

The concept and role of a group leader

Informal andformal organizations rely on leaders in their functioning. The concept of a leader implies that this person has special psychological characteristics and qualities. A leader is a person who has the trust of the group, he must have authority. If in formal groups there is an officially appointed leader who is not a leader, then in informal groups there is always a leader who is nominated for this role due to his personal qualities. The leader of the groups unites people and motivates them to take any action, he does not need to put pressure on them, because the employees voluntarily delegated authority to him. Modern management recommends managing leadership based on their power resource in groups.

Formal organization management

The management of a formal organization is based on traditional managerial functions: planning, organizing, controlling, motivating and coordinating. In such organizations, the division of labor is decisive, which gives each employee a place in the production chain. State organizations, for example, work on the basis of job descriptions, which very clearly prescribe the scope of work, powers, rights and responsibilities of various employees. In such teams, the role of management is extremely high, since the performers do not have to make decisions, they are not supposed to do this according to the instructions. A formal group needs a leader who is empowered to take responsibility. The management of a formal organization is determined by its organizational structure, goals, scopeactivities, factors of the internal and external environment.

Informal group management

Informal social organization implies a certain freedom, it is not characterized by a hierarchy of power, the main thing here is social ties and relationships. Management of such a group is carried out in several directions at once, horizontally, from bottom to top and from top to bottom. An informal organization can be managed by formal leaders, but most often the reins of government are given to informal leaders who are endowed with authority over the group. In such organizations, it is impossible to use the usual management tools in the form of instructions and orders; more often, management is carried out using psychological methods of influence and influence. The management of an informal group depends on the cohesion and size of the group, status and composition.