A formal organisation is a well-defined structure of authority and hierarchy that clearly specifies the boundaries of authority and responsibility in an orgnisation. The rules and policies to be followed are clearly stated. A formal organisation structure is deliberately created by the managers of organisation to ensure its smooth and systematic functioning.
The following points highlights the advantages of the formal organisation:
(i) Fixed responsibility: A formal organisation clearly defines the working relationship and the hierarchy. It clearly specifies who should report to whom. In this way, it facilitates unity of command, thereby reducing confusion in the working operations.
(ii) High stability : By defining the procedures and rules clearly, a formal organisation makes the behaviour of the employees more predictable, bringing stability to the organisation.
(iii) Reduced duplication of work : Since, the responsibilities are clearly defined, there is no room for ambiguity in the roles of various employees. This helps in avoiding duplication of work and efforts.