Formal Groups and Organisation


To prepare for GOVERNANCE for any competitive exam, aspirants have to know about Formal Groups and Organization. It gives an idea of all the important topics for the IAS Exam and the Governance syllabus (GS-II.). Formal Groups and Organization terms are important from Governance perspectives in the UPSC exam. IAS aspirants should thoroughly understand their meaning and application, as questions can be asked from this static portion of the IAS Syllabus in both the UPSC Prelims and the UPSC Mains exams. Even these topics are also highly linked with current affairs. Almost every question asked from them is related to current events. So, apart from standard textbooks, you should rely on newspapers and news analyses as well for these sections.


  • Formal groups are established by organizations to achieve some specific and intended objectives. These are organizations which are deliberately planned, designed and duly sanctioned by competent authority.
  • In formal organization, power is delegated and devolved from the top down to the bottom.
  • A formal group can be a command group or a functional group that is relatively permanent, is composed of managers and their subordinates.
  • These are the groups that influence the institution of any nation, from the foundation of government itself to day-to-day governance matters.
  • One type of formal organization is – Cooperatives. Different types of cooperatives are:




Farmers’ Cooperatives:

Farmers form a group or cooperatives that enable them to connect with the consumer on one hand, and ‘interface with the marketplace, on the other. Besides, through cooperatives they share their knowledge and experiences, and enhance their bargaining power in the purchase of inputs.

Dairy Cooperatives:

One of the important sources of development in many Indian states are dairy cooperatives. Milk producers ‘market the milk products of the milk produces and to after value addition to them. In addition, they receive technical inputs for the improvement of milk production.
Tribal Cooperatives: These are being formed for receiving assistance from the government and other agencies for development. The National Cooperative Development Corporation provides financial assistance.


Prominent formal groups/ Organizations in India:


National Cooperative Development Corporation (NCDC) The objects of IFFCO shall be to promote the economic interest of its members by conducting in affairs in professional, democratic and autonomous manner through self-help and mutual cooperation for undertaking manufacture/ production/development of chemical fertilizers: bio-fertilizers, Petro chemicals, refining industrial chemicals and hydro-carbon, their inputs etc.
Tribal Cooperative Marketing Development Federation of India Ltd To secure higher earnings and generate employment opportunities for the tribal people of the country.
National Cooperative Dairy Federation of India (NCDFI) Primary objective of NCDFI is to facilitate the working of dairy cooperatives through coordination, networking and advocacy.


Characteristics of Formal Groups/Organisation:
  • Stability: An important characteristic of a formal organization is its stability. Therefore, the formal organization grows and expands with the passage of time
  • Division of Labour: The structure of formal organization is based on jobs to be performed by the individual, and not vice versa. Roles are hierarchical and work is assigned to individuals on the basis of expertise and capability.
  • Structured: A formal organization is structured and organized to accomplish the organizational mission. One exponent has remarked that the “absence of structure is illogical, cruel, wasteful and inefficient”. Because of this feature, roles and responsibilities of individuals in an organization are clearly defined
  • Permanence: As the organization is structured, it has continuity of operations. They last for a long time and grow over the period of time.
  • Rules and regulations: Formal organizations follow rules and regulations. Individuals working in formal organizations do not perform activities, according to their whim. Rather, they act according to the rules and regulations framed by the organization. For example, if a cooperative bank has to sanction a loan to a Panchayat for its development, the manager of the bank has to follow guidelines before sanctioning the loan.


Advantages of Formal Organisation:
  • Systematic Working: Formal organisation structure results in systematic and smooth functioning of an organisation.
  • Achievement of Organisational Objectives: Formal organisational structure is established to achieve organisational objectives.
  • No Overlapping of Work: In formal organisation structure work is systematically divided among various departments and employees. So there is no chance of duplication or overlapping of work.
  • Coordination: Formal organisational structure results in coordinating the activities of various departments.
  • Creation of Chain of Command: Formal organisational structure clearly defines superior subordinate relationship, i.e., who reports to whom.
  • More Emphasis on Work: Formal organisational structure lays more emphasis on work than interpersonal relations.


Drawbacks of Formal Organisation:
  • Delay in Action: While following scalar chain and chain of command actions get delayed in formal structure.
  • Ignores Social Needs of Employees: Formal organisational structure does not give importance to psychological and social need of employees which may lead to demotivation of employees.
  • Emphasis on Work Only: Formal organisational structure gives importance to work only; it ignores human relations, creativity, talents, etc.



  • Informal work groups are based upon socio-psychological support and reasoning and depend upon the member’s interaction, communication, personal likings, and disliking and social contacts within as well as outside the organization.
  • The primary focus in the case of informal organization is the individual and his association with other individuals in the organization.
  • In an informal organization, power is derived from the membership of the informal groups within the organization.
  • While informal organization, the conduct of individuals within organization is governed by norms that are social rules of the behavior.

Features of Informal Groups/Organisation:
  • The formation of informal organizations is a natural process. People who share common values, codes of behaviors, and goals come together to form these organizations.
  • Membership is voluntary. The informal organization is based on human relationships and there is hardly any compulsion. A person can become a member of more than one informal organization.
  • According to D.C. Miller and William H. Form, informal organization is based on the network of personal and social relation which are not defined or prescribed by formal organizations
  • Informal leadership: Leadership in informal organizations cannot be autocratic. Individuals with similar motivations and amicable nature can become a successful leader of an informal organization.
  • Follow common rules – Informal organization formulate its own rule foreword and punishment of its members. As it is based on human relation, the common rules is flexible and having less rigid clauses.


Some types of informal organisations are:
  • Traditional Panchayats
  • Caste Associations
  • Temple Committees
  • Sports Groups
  • Cultural Groups
  • Festival Committees Neighbourhood Associations.


Few examples of informal groups/organisations are:
  • Religious Groups – RSS, VHP, Bajrang Dal, Jamaat-e-Islami etc.
  • Caste Groups – Harijan Sevak Sangh, Nadar Caste Association etc.
  • Tribal Groups – NSCN, TNU, United Mizo federal org, Tribal League of Assam etc.
  • Caste Groups – Harijan Sevak Sangh, Nadar Caste Association etc.


Advantages of Informal Organisation:
  • Fast Communication: Informal structure does not follow scalar chain so there can be faster spread of communication.
  • Fulfills Social Needs: Informal communication gives due importance to psychological and social needs of employees which motivate the employees.
  • Correct Feedback: Through informal structure the top level managers can know the real feedback of employees on various policies and plans.
Strategic Use of Informal Organisation.
  • Informal organisation can be used to get benefits in the formal organisation in the following way:
  • The knowledge of informal groups can be used to gather support for employees and improve their performance.
  • Through grapevine important information can be transmitted quickly.
  • By cooperating with the informal groups the managers can skillfully take the advantage of both formal and informal organisations.


Major Issues With Informal Groups And Organisations:


1. Resistance to Change:

· Most dynamic organizations want change in work methods and routines, but informal groups have a tendency to resist change. Because whenever a new change is introduced, employees have to make new adjustments and acquire new skills. But groups want to maintain the status quo.

· This creates obstruction in implementing new ideas for organizations survival and growth in the changing environment.

· Often groups resist change because they are bound by conventions, customs and culture. An individual member cannot resist the change, but as a group, all the members strongly resist the change.

2. Role Conflict:

· Organization interests are likely to suffer in case of conflicts between formal and informal roles. Every member of the group is also a member of the formal organization.

· Since informal groups try to meet the social needs of their members, there is a natural tendency to produce role conflict, because what the informal group requires of a member, may be just opposite of what is expected of him by the formal organization.

· In such a situation, group members may conform to their social norms. Such a conflict may be dysfunctional from an organization’s point of view.

3. Rumours:


· Rumour is a phenomenon of informal communication which supplements the transmission of information through formal communication.

· This is not desirable from an organisation’s point of view because rumour deals with temporary events in a way that implies that whatever is said is true even though there is not much information to support it.

· The basic reason for the circulation of rumours is ambiguous circumstances and relieving of emotional tensions felt by people in those ambiguous situations. Since most of the time rumours carry false information, they become detrimental to organisational functioning.

4. Conformity:

· The informal group exerts strong pressure on its members for conformity. The members may become so loyal to their group that following the group norms becomes a part of their life.

· Accordingly, they hardly realize the powerful pressures which it exerts to get them to conform to its code of conduct.

· The conformity to informal groups implies that members become subject to willful control of an informal leader who may manipulate the group towards selfish or undesirable ends.

· This will lead to dilution of the effect of organizational policies and practices on the group members.


Roles Of Formal And Informal Groups/ Organisations In Indian Polity:
  • Some of the needs of the people cannot be satisfied by state institutions and markets. So, formal organisations/groups provide space for people to generate collective actions independently from state and market.
  • Formal groups/organizations can play a critical role in changing the social structure in favour of the poor and marginalized. In India civil society organizations have contributed to the empowerment of women, Dalits, and Tribals.
  • These groups help in active constructive participation of numerous groups in polity. This in turn helps to reconcile general interest with individual group interests.
  • Both of them can work for the development of village society by bringing new ideas to the village.
  • Both can play a role in building organizations like user groups, watershed committees, village education committees, village health committees and village environment committees.
  • Informal Groups/Organisations can play a role in promoting issues of public good at grass root levels
  • The villagers normally are not encouraged by the state agencies to collectively negotiate with them. Due to poverty, caste, and religious diversities, and illiteracy, marginalized individuals are not able to join together to demand their rights and justice.
  • They try to individually struggle to meet their livelihood needs. They do not demand an enhanced ability of the services delivery of government agencies and local governments. Both formal and informal groups/organisations can play a key role in preparing the people for such activities.


Way forward
  • The role conflict can be avoided by carefully cultivating and integrating formal interests with informal interests. The more the interests, goals, methods and evaluation systems of formal and informal organizations can be integrated, the more productivity and satisfaction can be expected.
  • The best course of action to deal with rumours is the identification of their source and cause. Getting at cause is wise use of the preventive approach rather than a tardy curative approach. When people feel secure and understand the things that matter to them, there are few rumours because there is very little ambiguity in the situation.


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