Relationship Between Formal and Informal Structures

Nadeem Yousaf

The organizations’ decline and development depends upon the function of internal environment of organizations. The internal environment of organizations consists of two elements: Formal and Informal structures. The design of a formal structure is a conscious effort of human beings, whereas informal structures in organizations develop beyond the conscious efforts. The informal structure is an aftermath of formal structure and participants’ interaction in organizations.

Formal structures consist of various elements such as power structure, corporate policy, standard operating procedures and so on. Components of informal structure are informal grouping, organizational conventions and organizational culture. There is almost a consensus among researchers that individuals join organizations with differ­ent ambitions, motives and personalities; hence it is not possible for organizational formalization to satisfy everyone. Meeting in the formal set-up provides with the opportunity individuals to share ideas and interact with each other. Those who have similarities in views or share common interests develop social understanding with each other, which leads to develop various groups in an organization.  Freud argues that the binding force of a group is derived from the emotional ties of the members. This social understanding further leads to develop conventions in organizations (Roethlisbergaer & Dickson 1939; Selznick 1984). These common social understanding and conventions, at the later stage, turns into deep rooted taken-for-granted assumptions of the system, which is popularly known as organizational culture. In this article, three types of formal structures are presented and a theoretical relationship of these structures is seen to the types of informal structures, conventions and cultures. It should be noted that all these four elements has hierarchal link with each other.

http://it.corporatemanagementsolution.com

Rational Structure

The rational structure refers to the type that follows rule orientation and neglects human beings Weber (1978) and Taylor (1972) reflect on the concept of rational structure in their paradigm work on organizational structures. The crux of their thoughts is that organizations must strictly follow principles of planning, decision making process, division of work, written communication, official jurisdictional, and hierarchy of offices in order to grow. The classical thought believes that the best comprehensive planning is possible in all organizations. The rational theorists consider planning as a soul for the organization development, which is primarily responsibility of the top management.  The rational school of thought suggests more or less algorithmic way of planning where exact goal should be set after considering consequences of all alternatives (Weber 1978 ).

In rational structure, the power is vertical and author­ity is top-down (Greiner & Schein 1988), which is close to autocratic structure as it overemphasizes on hierarchal power and suppresses `voice' strat­egy of subordinates. Formalization is overemphasized and seen a sole way to control member of organizations. Rationalists believe that only those individuals should work in the organization who accepts instructions of the top management without questioning. Consequently, it can be drawn from their work that the classical rational structure allows participants to choose one of the Hirschman’s strategies of actions: Exit or Loyalty. This high demand for rule orientation and limited choice of action impinge on participants to have a calculative involvement.

The rational structure encourages rational type of informal grouping, which means those groups that disagree only accept existence of each other until there is no way out to completely eliminate the other. They will play on each others’ interests whenever they find the oppor­tunity and manipulate each other in the name of formaliza­tion; hence rule of the game is zero-sum. Groups present their hidden agenda and differences in a rational way so they should not be blamed for violations of the rules of the game. Thus, we can argue that adminis­trative and managerial prob­lems are simulta­neous­ly per­sonal & interpersonal problems expressed in organizational language.

In Rational structure, groups hardly internalized formalization of the organization therefore feel alienated and develop conventions which are apparently not be entirely seen conflicting with the formal­ization or accused of breaking the law. Interestingly, if someone by pass the formalization it will not be bothered until it affects nega­tively to the personal interests. Rational systems tend to be rigid and rigidity blocks the road of developing friendship between dif­ferent groups, whose interests differ from each other. In such an atmosphere, groups retaliate against each other by interpreting laws in their own favour. When one group wins, the other group feel disappointed and does not accept the change. Using Etzioni (1961) typology of involvement, groups prefer to have a calculative involvement and remain member of the organization until they do not find better opportunity.

http://bizcue.com

The above discussion indicates that conflicts are present and though discuss but do not resolve underlying reasons of conflicts. Organizational culture in rational structure develops on the assumption that formalization is more important and members of the organization must fulfil their duties at least at a minimum level without paying much attention on resolving underlying conflicts. Due to conflicts and promotion of self-interests raise to tense climate and prolonged tense climate leads to alienated culture. Cognitive dissonance is a prime reason for developing alienation in the organization. Cognitive dissonance spreads in the organization because single-loop learning becomes organizational norm and all efforts are made to restrict voice of individuals and groups, fosters non-accommodative behaviour among the individuals and groups. The basic assumption of the culture is, “don’t scratch back of the powerful and wait for the time to hit back.”

Democratic Structure

Since investigations of the Human Relations School, literature on organizational development has been changing. It is more stress on the process than simply concentrating on the end-result to change the style of management and to improve level of productivity. The concept of algorithmic planning does not prevail in democratic structure due to cognitive limitations of human beings (March & Simon 1958). They do not believe on one best decision or planning as previously asserted by the rationalists. Views opposite to the rationalists accept that attentions and preferences shift from one value to another as the time passes (Simon 1965). In democratic structure, it is accepted it is almost impossible to take into account all the relevant factors and their consequences due to cognitive limitations and external constraints, therefore, organizations accept reasonable solution than the optimum (Simon 1965; March & Simon (1958); Offerdal (1989). The essence of the demo­cratic structure is that it is system and human oriented, simultaneously.

In democratic structure, power structure is more horizontally designed. Upward power is seen legitimate and downward power is barely tolerated (Greiner & Schein 1988). It allows person in offices whose spheres of authority are directly competing with each other. The administrative acts are only legitimate when they have been taken according to the principle of unanimity or majori­ty (Weber; Greiner & Schein 1988). It encourages interaction and participation in decision-making process whose interests are at stake. The need for direction & control is replaced by team work, collaboration and integration (Greiner & Schein 1988).

Using Hirschman terminology, the democratic structure provides room for "voice" & "loyalty" to the participants while working in the organization.  Voice strategy is seen as the way of understanding problems of the organization and a legitimate right of the participants. Participants have a provision of showing disagreements and expressing them openly. Expression of disagreement is not seen as a disloyalty towards organiza­tion. Loyalty based on consensus is encouraged than forced loyalty through formalization.

Democratic structure relies more on moral involvement which means internaliza­tion of norms and identification with authority (Etzioni 1961). Moral involvement develops because opportunity of voice to the participants that release tension, consequently, it strengthens the system. Participants are group oriented and raise voice to serve interests of the group and organization instead of self-interests. The democratic structure is a work­able idea at least for most of the people. The word "workable" is used deliberately, because we cannot devise a system that is best and perfect and acceptable to everyone.

It does not mean that informal groups have no conflict or are carry the same view all the time. The groups accept existence and differences of each others and strive to find a middle point where compromise could be met. They avoid the game of "who wins, who loses" and prefer to have non-zero-sum game. The groups accept others’ voice action and expect loyalty to the organization from each other. They can have differences but these differ­ences are used to learn from each other and to develop the organ­iz­ation instead of securing personal interests. They are of the believer that personal interests will be served automatically once collective interests are secured.

In democratic culture, the groups do have different understanding of laws but have the ability to discuss and find the appropriate interpretation of the law or policy which satisfies at least majority of the groups. The rigidity is at the lowest possible level. This behaviour helps organizations to inter­nalize formaliza­tion among its participants. Over the time conventions are developed, but these conventions do not steeply hurt for­malization of the organization. The paradigm of democ­ratic structure is moral involve­ment so the developed conventions are owned by the groups and they will support each other if their conven­tions are criti­cized from the outside.

The basic assumption behind democratic culture is to live and let live; therefore, con­flicts are brought on the surface so that they can be analyzed and resolved amicably.  The democratic structure is based on the assumption of reasonability and supports double-loop learning. It gives provision to voice action which means that participants can be disagreed without developing enmity for each other. It relies on accommodative behaviour and encourages compromises among groups. It is the consequence of compromising attitude that develops moral commitment among members of the organization. Friendly interactions among informal groups and permission of raising voice provide channel to release negative energies that helps to decrease cognitive dissonance.

http://shopping.bizcue.com

Laissez-Faire Structure

Laissez-faire structure lacks planning and process markedly different form the other two structures. Strategic planning and decisions are taken on Ad-hoc basis. Formalization seems to be an alien word for such a structure and lacks formal written communication. If there is any little formalization exists, it is neither accepted nor internalised; therefore participants act according to their own individual inter­preta­tion of formalization. Laissez-faire structure is analogous to a child who has not developed enough large chunks to see the reality. They fight with each other on petty things and ignore real issues. Long misguided meetings are held with negligible results.The decision making process is similar to Garbage-Can in which participants take decision making event as an opportunity to air their own personal agenda.

In this structure, considerable ambiguity in the power structure exists. Therefore power structure appears to be a vicious circle in which no one takes the respon­sibility when things go wrong; however at the time of success everybody tries to take the major credit. Each party pursues its own goal(s) and personal agenda. Conflicts are though viewed as a normal part of the game but the process of handling conflicts leads to antagonistic feeling for each other.  In this structure, power and political behaviour are dependent on a wide range of people outside the formal author­ity chain to get decisions made and work accom­plished (Greiner and Schein 1988).

The available strategies of actions are "exit" and "voice". The strategy of voice is not used in the same fashion as it is used in the democratic structure; rather, it is used to attack each other because participants are more self-interest oriented.

Participants’ involvement is alienative because they feel that they will not get what they expect. The alienation takes place when participants have less trust in each other and everyone is working for his/her own self interest. The individ­ualistic approach is adopted that creates problems for the system to work properly.

Even within informal groups membership is not permanent.  The members of a group are not united because they have a similarity in views or ideology but they join together to gain temporary advantage; hence individuals shift groups according to the time and personal interest. Groups have a tug of war where both want to win. Any group can seek outside interventions if it servers its interest. All groups expect submission from each other to their own ideology and views.

 Lack of formalization and frequent shift form one informal group to another lead to develop free type of conventions – any action that benefits the group or individuals is a convention. If things go wrong, blame is transferred to the other group.  The mem­bers develop a distant rela­tion­ship with the organization. Conventions and formalization have little relation­ship because both change quickly as per the desire of the participants.  

Culture of the laissez-faire structure is antagonistic, which is based on the assumption ‘you do what you think and I do what I deem correct.’ This culture provides room for non-accommodative behaviour with the provision of voice action. Both single-loop and double-loop learning tactics are employed. The single-loop learning is usually employed at the organizational level that leads partici­pants to a conflicting level where they do not real­ize what is good or profitable for the whole organ­ization. They act in such a manner because they are afraid of opponent manipulation or afraid that they will lose power if they cooperate with each other. Double-loop learning is employed for a personal interest; it is used to finding legitimacy and defending personal actions and motives. In laissez-faire structure, each group sees the other as an enemy; each group describes the other in terms of negative stereo­types; interac­tion and communication between the groups decrease, each group begins to prize itself and its products more positively and to denigrate the other group and its products and, under certain circum­stances, the groups may commit acts of sabotage (of various kinds) against the other group whenever there is tension, conflict, or competition among groups (Schein 1979)

 REFERENCES

Etzioni, A (1961): A comparative analysis of complex organizations; on power, involvement, and their correlates; the Free Press, New York.

March, J.G. & H.A. Simon (1958): Organizations; J. Willey and Sons.

Offerdal, A (1989): Politicl expertise or raitonality and reasonableness in political descion making; workshop on the politics of modeling and forecasting of social systems; Foundation nationale des science politiques, Paris 10th-15th April.

Roethisberger, F.J., W.J. Dicson etl.al (1939): Management and the worker; Harvard university press; Massachusets.

Schein, E.H (1979): Organizaitonal culture and leadership; Joseey bass Publishers; San Francisco.

Selznic, P (1984): TVA and the grass roots; a study of politics and organiztion; Univesity of California Press; London.

Simon, H.A. (1965): Administrative behavior; a study of decision-making process in administrative organization; The Free Press

Taylor, F.W (1972): Scientific Management; comprising shop mangement, the principle of scientific management; testimony before the special house committee; Greenwood Press; West Port.

Weber M. (1978) Economy and Society; An outline of interpretaive sociology; University of California Press; London.

Griener, H.F., V.E. Schein (1988): Power and Organization development; moblizing power to implement change; Addison-Wesley publishing company, New York.

http://management.corporatemanagementsolution.com/structurerelationship.htm