Organisational Structure
Formal vs Informal Structure
" A formal organizational structure is one in which the social positions and the relationships among them
have been explicitly specified and are defined independently of the personal characteristics of the
participants occupying these positions" Scott p. 18. The process of creating and maintaining a formal
structure is formalization.
In an informal structure it's impossible to separate the role from the person, and as participants enter and
leave the system their roles develop and change as a function of their personal characteristics Scott p. 18i
Organisations have a formal structure which is the way that the organisation is organised by those with
responsibility for managing the organisation. They create the formal structures that enable the
organisation to meet its stated objectives.
Often these formal structures will be set out on paper in the form of organisational charts. However, in the
course of time an informal structure develops in most organisations which is based on the reality of dayto-day interactions between the members of the organisation. This informal structure may be different
from that which is set out on paper.
Informal structures develop because:

people find new ways of doing things which they find easier and save them time

patterns of interaction are shaped by friendship groups and other relationships
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people forget what the formal structures are
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it is easier to work with informal structures.
Sometimes the informal structure may conflict with the formal one. Where this is the case the
organisation may become less efficient at meeting its stated objectives. However, in some cases the
informal structure may prove to be more efficient at meeting organisational objectives because the formal
structure was badly set out.
Managers need to learn to work with both formal and informal structures. A flexible manager will realise
that elements of the informal structure can be formalised i.e. by adapting the formal structure to
incorporate improvements which result from the day-to-day working of the informal structure.ii
In the informal organization, the emphasis is on people and their relationships; in the formal organization,
the emphasis is on official organizational positions. The leverage, or clout, in the informal organization is
informal power that's attached to a specific individual. On the other hand, in the formal organization,
formal authority comes directly from the position. An individual retains formal authority only so long as
he or she occupies the position. Informal power is personal; authority is organizational.
Firmly embedded within every informal organization are informal groups and the notorious grapevine;
the following list offers descriptions of each:

Informal groups. Workers may create an informal group to go bowling, form a union, discuss
work challenges, or have lunch together every day. The group may last for several years or only a
few hours.
Sometimes employees join these informal groups simply because of its goals. Other times, they
simply want to be with others who are similar to them. Still others may join informal groups
simply because they want to be accepted by their coworkers.

The grapevine. The grapevine is the informal communications network within an organization. It
is completely separate from — and sometimes much faster than — the organization's formal
channels of communication.
Formal communication usually follows a path that parallels the organizational chain of command.
By contrast, information can be transmitted through the grapevine in any direction — up, down,
diagonally, or horizontally across the organizational structure. Subordinates may pass information
to their bosses, an executive may relay something to a maintenance worker, or employees in
different departments may share tidbits.
Grapevine information may be concerned with topics ranging from the latest management
decisions to the results of today's World Series game to pure gossip. The information may be
important or of little interest. By the same token, the information on the grapevine may be highly
accurate or totally distorted.
The informal organization of a firm may be more important than a manager realizes. Although managers
may think that the informal organization is nothing more than rumors that are spread among the
employees, it is actually a very important tool in maintaining company-wide information flow. Results of
studies show that the office grapevine is 75 percent to 90 percent accurate and provides managers and
staff with better information than formal communications.
Rather than ignore or try to suppress the grapevine, managers should make an attempt to tune in to it. In
fact, they should identify the people in the organization who are key to the information flow and feed
them information that they can spread to others. Managers should make as big an effort to know who their
internal disseminators of information are as they do to find the proper person to send a press release.
Managers can make good use of the power of the informal organization and the grapevine.iii
Mechanistic vs Organic Organisational Structure
Today, many people view bureaucracies negatively and recognize that bureaucracies have their limits. If
organizations rely too much on rules and procedures, they become unwieldy and too rigid—making them
slow to respond to changing environments and more likely to perish in the long run. But management
theory doesn't view all bureaucratic structures as inevitably flawed. Instead, they ask these critical
questions:

When is a bureaucracy a good choice for an organization?

What alternatives exist when a bureaucracy is not a good choice?
Research, conducted in England by Tom Burns and George Stalker in the early 1960s, attempted to
answer these questions. Burns and Stalker studied industrial firms to determine how the nature of each
firm's environment affected the way the firm was organized and managed. They believed a stable,
unchanging environment demanded a different type of organization than a rapidly changing one.
Although a stable environment worked well under a bureaucracy, managers in constantly changing,
innovative environments needed an organizational structure that allowed them to be responsive and
creative. As a result, two distinct frameworks, the mechanistic and organic structures, were identified.
The mechanistic structure
The mechanistic structure, sometimes used synonymously with bureaucratic structure, is a management
system based on a formal framework of authority that is carefully outlined and precisely followed. An
organization that uses a mechanistic structure is likely to have the following characteristics:

Clearly specified tasks

Precise definitions of the rights and obligations of members

Clearly defined line and staff positions with formal relationships between the two

Tendency toward formal communication throughout the organizational structure
Perhaps the best example of a mechanistic structure is found in a college or university. Consider the very
rigid and formal college entrance and registration procedures. The reason for such procedures is to ensure
that the organization is able to deal with a large number of people in an equitable and fair manner.
Although many individuals do not like them, regulations and standard operating procedures pretty much
guarantee uniform treatment. But those same rules and procedures, with their time-consuming
communication and decision-making processes, tend to bog down organizations.
Mechanistic organizations are appropriate when the external environment is fairly stable. The biggest
drawback to the mechanistic structure is its lack of flexibility, which may cause an organization to have
trouble adjusting to change and coping with the unexpected.
The organic structure
The organic structure tends to work better in dynamic environments where managers need to react
quickly to change. An organic structure is a management system founded on cooperation and
knowledge-based authority. It is much less formal than a mechanistic organization, and much more
flexible.
Organic structures are characterized by:





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Roles that are not highly defined.
Tasks that are continually redefined.
Little reliance on formal authority.
Decentralized control.
Fast decision making.
Informal patterns of both delegation and communication.
Because the atmosphere is informal and the lines of authority may shift depending on the situation, the
organic structure requires more cooperation among employees than does a bureaucracy. One example of
an organic structure is the Salvation Army. Although branches are located throughout the nation, the
organization does not have a complex structure; it encourages different units to take on new challenges.
The Salvation Army does not rely heavily on written rules and procedures. Therefore, this organization
can create the procedures that work best as different situations arise. The Salvation Army's ability to take
on new tasks and to fulfill its mission regardless of the circumstances it faces is one reason why it's a
hallmark of organic organizationsiv
http://faculty.babson.edu/krollag/org_site/encyclop/form_structure.html
http://www.thetimes100.co.uk/theory/theory--company--308.php
iii CliffsNotes.com. The Informal Organization. 20 Jun 2010 <http://www.cliffsnotes.com/study_guide/topicArticleIdi
ii
8944,articleId-8877.html>.
iv
CliffsNotes.com. Bureaucracy Basics. 20 Jun 2010 http://www.cliffsnotes.com/study_guide/topicArticleId8944,articleId-8880.html