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 organization whose existence the Chief Executive Officer felt was necessary.
(ii) State any two advantages and two disadvantages of the type of organization identified in (i) above.

Hint:

Informal organizations complement formal structures, improving communication and morale, but must be managed to prevent disruptions.

Answer 1

(i) Informal Organization:
- Informal organization refers to the network of social relationships that develops naturally among employees beyond their official roles.
- It emerges from interactions among people and plays a crucial role in fulfilling their social needs.
(ii) Advantages:
1. Faster communication: As informal channels bypass official protocols, information spreads quickly, allowing quick feedback.
2. Fulfills social needs: It creates a sense of belongingness and enhances employee morale by fulfilling their social and emotional needs.
Disadvantages:
1. Spreads rumors: Informal communication can lead to rumors, creating misunderstandings.
2. Resistance to change: Informal groups may resist organizational changes, hindering progress.