formal organization definition

Formal Organization: Definition, Features, & Difference with Informal Organization

What is a Formal Organization?

A formal organization is the structure of the organization that is officially formed by the management to achieve the defined goals. In other words, a formal organization refers to an organization that is formed under official rules and regulations to achieve defined objectives.

A formal organization is a structure of well-defined jobs with a prescribed system of communication, coordination, and delegation of authority. This structure is deliberately designed to enable people to work together for the achievement of common objectives.

Under this organization, there is a well-designed job for each individual. Besides, there is definite authority and responsibility for each individual to make the effectiveness of their efforts. There is a clearly defined official relationship between superiors and subordinates in the organization to achieve defined objectives.

Examples of formal organizations are Schools, Business Firms, Hospitals, Government Organizations, and other organizations that are officially formed.


By, Scott – A formal organization is a system of coordinated activities of a group working towards a common goal under authority and leadership.

Koontz and Weihrich – Formal organization means the intentional structure of roles in a formally organized enterprise.

The formal organization emphasizes working under established rules and regulations of the enterprise. There is an official line of communication among all the employees and a chain of official relations between superiors and subordinates.

Top-level management plays a key role to maintain coordination and mutual relation among all the formal structures to achieve common goals. However, the achievement of organizational objectives depends upon the ability of subordinates and management.


The important features of formal organizations are as follows:

  • It is officially formed by management to carry out a specific job.
  • It is based on the division of work on the basis of specialization.
  • The procedural rules and regulations are written.
  • It clearly defines the authority and responsibility of every individual.
  • It specifies the official line of communication.
  • It focuses on a job to be performed and not on the individual doing the work.
  • It has official leadership from the top to the subordinate level.

Difference Between Formal and Informal Organization

Basis of
Formal OrganizationInformal Organization
MeaningFormal organization refers to
an organization that is established to
achieve defined objectives through
official regulations.
Informal organization refers to the
an organization
that is formed without
having predefined rules and
regulations to interact with people.
ObjectivesIt is created for the achievement
of predetermined objectives.
It has no predetermined objectives.
HierarchyIt has an official hierarchy of relations
between various levels of management.
It has no specific hierarchy. It’s
the structure is completely based on
human emotions and sentiments.
PlanningUnder this, formal relationships
are well planned.
Under this, informal relations are
unplanned, and they are created
StableIt is usually stable.It is usually unstable and does not
last so long.
CommunicationCommunication is made
through proper channels.
There is no fixed and established
channel for communication.
Chain of
If follows the official chain
of command and is generally
It does not have any fixed chain
of command. It is sentimentally
based on members.
DisclosureIt reflects technological
It reflects human aspects.
Authority and
There is a well-defined authority
and responsibility.
Under this, personal relationships are
automatically developed when
people work together.
Size and
Usually formal organization size
is larger and has a larger scope that
informal organization.
It is usually small in size and limited
to a location or place.

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