Page 121 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 7: Organising

9. Span of Management: No superior at a higher level should have more than six immediate Notes
subordinates. The average human brain can effectively direct three to six brains (i.e.,
subordinates).
10. Communication: A good communication sub-system is essential for smooth flow of
information and understanding and for effective business performance.

11. Flexibility: The organisation is expected to provide built in devices to facilitate growth
and expansion without dislocation. It should not be rigid or inelastic.

Task Choose three organisations of your choice in the FMCG industry.
1. Analyse their organisational design and structure.
2. Differentiate among their productivity on the basis of their structures.

3. Analyse the effect of their different structures on their success.

7.3.4 Formal and Informal Organisation

The formal organisation refers to the structure of jobs and positions with clearly defined functions
and relationships as prescribed by the top management. This type of organisation is built by the
management to realise objectives of an enterprise and is bound by rules, systems and procedures.
Everybody is assigned a certain responsibility for the performance of the given task and given
the required amount of authority for carrying it out. Informal organisation, which does not
appear on the organisation chart, supplements the formal organisation in achieving
organisational goals effectively and efficiently. The working of informal groups and leaders is
not as simple as it may appear to be. Therefore, it is obligatory for every manager to study
thoroughly the working pattern of informal relationships in the organisation and to use them
for achieving organisational objectives.

1. Formal Organisation: Chester I Bernard defines formal organisation as -"a system of
consciously coordinated activities or forces of two or more persons. It refers to the structure
of well-defined jobs, each bearing a definite measure of authority, responsibility and
accountability." The essence of formal organisation is conscious common purpose and
comes into being when persons:
(a) Are able to communicate with each other
(b) Are willing to act, and
(c) Share a purpose.

The formal organisation is built around four key pillars. They are:
(a) Division of labour
(b) Scalar and functional processes
(c) Structure, and

(d) Span of control
Thus, a formal organisation is one resulting from planning where the pattern of structure
has already been determined by the top management.

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