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Reasons for, Advantages, and Disadvantages of Formal Organizational

Structure

Dr. Nancy Agens, Head,

Technical Operations, Phdassistance

info@phdassistance.com

In Brief

A network in which various cooperative

ties are formed between different positions

of organizations is a formal organizational

structure that has been intentionally

created for protecting Economic processes.

The Decision-making task is made simple

for individuals as a result of a formal

organizational structure.

Keywords: Formal organizations,

organizational structures, organizational

designs, digital organizational model.

I. INTRODUCTION

A well-constituted body that is mutually

established with a vow of loyalty to achieve

a specific purpose or pre-determined goal is

a formal organizational structure. It is

characterized by a well-defined

organizational structure, task specialization,

division of work, and consistency of

finished products, adhering to rules and

regulations that are Implemented in addition

to efficient communication networks. Thus,

the formal organizational structure functions

based on the operation of a well-structured

and organized network that is both

coordinated and well-managed by experts

and Researchers in various areas of

expertise.

Fig 1. Decision Making Task

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II. FORMAL ORGANIZATIONAL

STRUCTURES

Each individual is attached to various groups

or clusters within an organization. Some of

them are defined explicitly and more

formally like organizational units,

committees, departments, clubs, etc.,

whereas some groups are informal and they

emerge from more vague and hidden factors

like a community is connected due to their

daily interactions or an alliance network.

The formal organizational structure is a

network that constitutes various cooperative

ties between different positions in

organizations that have been created

intentionally for safeguarding economic

processes. This study is mainly focused on

the organizational structure, which is

defined by the top management. The

geographic structure is considered as an

intentionally formed structure, and therefore,

it is termed as formal.

Fig 2. Organizational Structure

III. REASONS FOR FORMAL

ORGANIZATIONAL STRUCTURE

1. The structure as an Empirical Object

This structure, rather macroscopic and

theoretical, it is important for organizational

communication mainly for two reasons.

First, most of the characters or dimensions

that are analyzed by the experts describe

particularly Weber’s stipulation of written

messages, communication processes, and

upright discussion about exceptional

problems. Second, an organization, which is

an information-processing entity, forms the

basis of many of these discussions.

2. The structure as an Information

Processing Tool

The task of the decision-making process is

eased for individuals by the formation of

organizational structure, in addition to many

other formalized organizational practices.

Information about organizational structure informs the employee about what

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has to be done, whose orders to be followed,

and whom to update about the employee's

activities and outcomes. The formal

structure is designed in such a way that

everyone has to do all tasks required by the

organization, and that employees are

enclosed by proper Information

Environment to make appropriate

decisions. Organizational structure varies

according to the needs of an organization.

3. The structure as System Form

Organizational Structure isolates and

restricts the limits of subunits. It also paves

the way for their integrative coordination.

To be brief, the organizational structure is

used to determine the arrangement or the

form of the system’s subunits significantly.

Systems theory serves both as an analytical

instrument which helps to stimulate

attention towards new features of

organizations and also forms the basis for

the integration of the assets of other

literature.

4. Structure as Negotiated

Decision making of organizations often

quits from the state of wisdom. Members of

an organization often have restricted

resources of attention, and, in the vague,

intricate situations, attention can be paid to

part of decisions and by formal criteria,

other issues should concern them. When

ambiguity and complexity of organizations

are distinctive, participants, problems,

solutions, and choice opportunities are badly

built in a random way.

5. The structure as Carrier of Social

Psychological Processes

The organizational structure serves as a

stimulus to other phenomena. Due to the

formal structure of organizations, its socio-

psychological processes have been

transformed.

Fig. Formal Organizational Structure

IV. AN ORGANIZATIONAL

STRUCTURE THAT SUPPORTS

DIGITAL TRANSFORMATION

Digital Technologies assist organizations to

reinvent the whole process of business and

also to establish new ones. Some experts

realized the effectiveness of the use of an

organizational structure which has been

characterized by decentralized decision-

making, more flattening structure, rapid

transfer of knowledge among employees,

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greater coordination and collaboration, team

working, knowledge networking, parallel

communication, practical approach, agility,

and flexibility. As old technical models were

not flexible, with strong internal and

external boundaries, the progress of the new

structure of the organization is unavoidable.

Old models lack the potential to respond

rapidly to changes in a hyper-connected

environment. 4

V. FEATURES OF FORMAL

ORGANIZATION

(1) The process of organizing has

intentionally created a formal

organizational structure.

(2) The achievement of the goal of

organizations is the purpose of the formal

organization structure.

(3) Each individual has got a specific task in

the formal structure of organizations.

(4) Each individual has decision-making

power in the formal organizational structure.

(5) The superior-subordinate relationship

has been formed in the formal organizational

structure.

(6) A scalar chain of communication has

been formed in the formal organizational

structure.

VI. ADVANTAGES OF FORMAL

ORGANIZATIONAL STRUCTURE

1. Systematic Working: Organization has

got systematic and smooth functioning due

to the formal organizational structure.

2. Achievement of Organizational

Objectives: Organizational objectives have

been established by the formal

organizational structure.

3. No Overlapping of Work: Every

departments and employee have work

divided among them in the formal

organizational structure. So overlapping or

duplication of work can always be avoided.

4. Co-ordination: Activities of various

departments have been coordinated as a

result of formal organizational structure.

5. Creation of Chain of Command: superior-

subordinate relationship has been well-

established in the formal organizational

structure.

6. More Emphasis on Work: importance is

given to work than interpersonal relations in

the formal organizational structure.

VII. DISADVANTAGES OF FORMAL

ORGANIZATION

1. Delay in Action: Actions may get delayed

while following the chain of order and scalar

chain.

2. Ignores Social Needs of Employees:

Social and psychological needs of

employees were not given importance in the

formal organizational structure which leads

to a lack of motivation among employees.

3. Stresses on Work Only: Work is given

more importance in the formal

organizational structure. Human relations,

talents, and creativity were ignored. 5

VIII. CONCLUSION

Formal structures mean purposely designed

organizations that result from larger

institutional arrangements. Research carries

in various disciplines recommends that

formal organizational structure can form

beliefs, opinions, and behaviors of

individuals. In the literature of

organizational theory, formal organizations

are illustrated as the opinions and

characteristics of organizational members

that have been restricted by shared

organizational culture. 6 It is proved that the

process of informal organization has not

generally been damaging to the development

and growth of the formal organization.

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IX. FUTURE SCOPE

Researchers better understand the

consequences of formal organizational

structures on the apparent strategic

alignment. Organizations should look for the

lateral mechanisms to break the impact of

silos due to significance over the influence

of the functional division. Future research

should be carried out to identify a

mechanism that reveals the insights on the

alignments that progress in companies. It

could be both beneficial to both experts and

scholars to identify the evolution of insights

in the context of the structural changes by

conducting a study. 3

REFERENCES

1. Comfort R. Etor, 2019, Formal and informal

organizations.

2. Robert D. McPhee, 2018, Formal Structure and

Organizational Communication.

3. P. Lahdelma, The Effect of Formal and Informal

IntraOrganizational Structures on the Perceived

Strategic IT-Business Alignment.

4. Vladimir Mirković, Jelena Lukić, Snežana Lazarević,

Željko Vojinović, 2019, Key Characteristics Of

Organizational Structure That Supports Digital

Transformation, Strategic Management and Decision

Support Systems in Strategic Management

5. Therence Apostol, 2019, The formal and informal

organization structure.

6. Christina Prell, Mark Reed, Liat Racin, Klaus

Hubacek, 2019, Competing Structure, Competing

Views: The Role of Formal and Informal Social

Structures in Shaping Stakeholder Perceptions