Question

‘Rewton Ltd.’ was a reputed computer software company providing unique software all over India. The turnover of the company was very high resulting in good profits. The Chief Executive Officer, Vihaan, was very strict and disciplined. He specified the boundaries of authority and responsibility for achieving organizational goals. There was systematic coordination among the various activities and specific relationships among various job positions. The company provided facilities like a canteen, a gym, a library, a music room, and a rest area for its employees, which they could use during rest intervals. Using these facilities, the employees developed friendships and discussed not only their personal, social and emotional issues, but also the official ones.
The General Manager was of a different view. He told the Chief Executive Officer that there was no use providing these facilities to the employees as it is an extra financial burden on the organization on one hand and on the other hand, it encourages groupism and whenever any change is required in the organization, they all resist. He suggested that they should do away with these facilities. But the Chief Executive Officer, Vihaan, explained to the General Manager that this type of social interaction is necessary, and is in the best interest of the organization. These interactions among people at work give rise to a network of social relationships among employees and have many benefits.

• [(i)] Identify and explain the type of organisation whose existence the Chief Executive Officer felt was necessary.
• [(ii)] State any two advantages and two disadvantages of the type of organisation identified in (i) above.

Hint:

Informal organisation works in the background of the formal structure. While it is not officially recognised, it can greatly influence employee morale, speed of communication, and even organisational change.

Answer 1

(i) Type of Organisation: Informal Organisation The type of organisation highlighted in the case is the Informal Organisation. It refers to the network of social relationships that naturally form among employees within a formal organisational structure. These relationships are not defined by the official hierarchy but develop based on shared interests, friendships, and emotional bonds. Line from the case: “Using these facilities, the employees developed friendships and discussed not only their personal, social and emotional issues, but also the official ones.”
This shows that the CEO, Vihaan, recognised the importance of informal communication and relationships in building a collaborative and emotionally healthy workplace. Informal organisation helps in fulfilling the social and emotional needs of employees and supplements the formal organisation by facilitating faster communication and mutual support. (ii) Advantages and Disadvantages of Informal Organisation: Advantages:

• Faster Communication: Informal networks enable quick sharing of ideas and information, especially across departments or hierarchies, without going through formal channels. This improves responsiveness and coordination.
• Social Satisfaction and Team Spirit: It satisfies the social needs of employees by fostering a sense of belonging, trust, and emotional support. This can result in improved morale and reduced stress at the workplace.

Disadvantages:

• Spreads Rumours: Because the communication in informal networks is unstructured, it may lead to the spreading of rumours or misinformation, which can cause misunderstandings and reduce efficiency.
• Resistance to Change: Strong informal groups can sometimes create resistance to change. If the group as a whole is not convinced, they may collectively oppose new policies or organisational reforms, as mentioned in the case.