What is Formal Organization, Definition and

Characteristics
Wed, 07/27/2011 - 12:57 -- Umar Farooq
What is Formal Organization
The formal organization is basically goal-oriented entity that exist to accurate the efforts of individuals and
it refers to the structure of jobs and positions with clearly defined functions, responsibilities and
authorities.
Definition of Formal Organization
According to Chester Banard “an organization is formal when the activities are coordinated towards a
common objective”. He found that the essence of formal organization is conscious common purpose and
that formal organization comes into being when persons:

1. Are able to communicate with each other

2. Are willing to act, and
3. Share a purpose
In this way, all business organizations are formal organizations they have a system of well defined jobs
bearing a definite measure of authority, responsibility and accountability. All this is designed to enable the
people working within the enterprise to work more effectively for achieving objectives.

Characteristics of Formal Organization

Following are the main characteristics of formal organization
1. Organization structure stands on division of labor which brings efficiency in organizations’
operations.
2. Policies and Objectives of organizations are determined
3. Individual activities are limited
4. Organizations communicate messages through straight chain of command
5. Arbitrary structure of organization
Also Read: What is Centralization Delegation of Authority Informal Organization
Example of Formal Organization
A main feature of such interrelationships is that they can be shown in organization charts or manuals as
one shown below. Example of formal organization with the help of an organizational chart of an electrical
Co