TYPES OF ORGANIZATIONS

FORMAL ORGANIZATIONS

Formal organizations refer to organizations formed by the company

owner or manager to help firm accomplish its goals; made up of
formal groups
(work groups/project team/committee) similarly formed by
company authorities to support their activities and achieve their
objectives.
FUNCTIONS OF FORMAL ORGANIZATIONS

• Accomplish goals that require cooperation or collaboration among formal

groups in the organization;
• Produce or bring about new and creative ideas and solutions to company
problems;
• Coordinate interdepartmental activities;
• Implement company rules/regulations and policies; and
• Orient/train new employees.
ADVANTAGES OF FORMAL ORGANIZATIONS

• Working systematically;
• Established on and for the organization’s objectives;
• No duplication or overlapping of work;
• Efficient coordination among departments; and
• Implementation of chain of command and professional relationship.
DISADVANTAGES OF FORMAL
ORGANIZATIONS

• Delay in feedback and action due to the established chain of command;

• Ignores the psychological and social needs of employees; and
• Emphasis on work only and overlooks the human relations, talents, and
creativity of employees.
INFORMAL ORGANIZATIONS

• Informal organizations refer to organizations that exist because of

friendship or common interest; made up of informal groups which
exist for the members’ need for social affiliation.
FUNCTIONS OF INFORMAL ORGANIZATIONS

• Satisfy the members’ need for affiliation;

• Give the individual members a chance to develop their self-esteem;
• Give individual members an opportunity to share their ideas;
• Lessen individual members’ insecurities; and
• Provide a mechanism to solve members’ personal and interpersonal
problems.
ADVANTAGES OF INFORMAL
ORGANIZATIONS

• Fast communication due to the absence or standard operating procedures and

protocols;
• Gives importance to psychological and social needs of employees;
• Top managers can solicit feedback directly from the employees on new
policies and plans.
DISADVANTAGES OF INFORMAL
COMMUNICATION

• More susceptible to rumor mongering;

• There is no systemtic workflow in place;
• Difficulty in implementing new rules and policies; and
• More emphasis on individual interest of each employee rather than the
overall goal of the company.
THE END