Chapter Three

The organizing function and organization

Organizing is the process of identifying and grouping tasks to be performed, assigning
responsibilities and delegating authority and establishing relation ships for the purpose of
enabling workers to work most effectively together in the accomplishments of objectives.
The organizing function involves the following sub functions:
1. Identification of activities required for the achievement of objectives and
implementation of plans.
2. Grouping of activities based on similarity of jobs so as to create self-contained jobs.
4. Assignment of jobs to employees.
5. Delegation of authority so as to enable them to perform their jobs and to command
the resources needed for their performance.
6. Establishment of a net-work of coordinating relationships.

Introduction to Management By Abdikadir A.lahi

Fig 4.1 steps in organizing process
1. Reviewing of objectives to be accomplished
Objectives are the most important things in organizing and organization as they affect the
results of organization so it is necessary to review objectives to be accomplished.

2. Determining tasks necessary to accomplish objectives

After objectives are reviewed the next activity is to list down activities necessary to
accomplish the objectives e.g. advertising, training, sales, budgeting, assembling

3. Grouping of activities according to their similarities to form department

In this step management classifies and group activities using the guide lines of
homogeneity or similarity of activities. Work that is similar in nature is placed together to
achieve organizational objectives.
E.g. Sales, Accounting, Advertisement, Budget, Hiring workers, Training etc.

4. Assigning work and delegating authorities

Managers have to assign individuals different tasks and make them authorize of their
activates to enable them perform their job assignments

5. Hierarchical relationship development

This step requires the determination of both vertical and horizontal operating relation ships
of organization as a whole
The result of organizing process is organization is predetermined manner to achieve
common goal.

4.2 Classification of organization

Formal and Informal Organizations
A. Formal organization is the official organizational structure created by management. It
is organization formed purpose fully to achieve well defined and formal objectives.

Introduction to Management By Abdikadir A.lahi

B. Informal organization is the network of personnel and social relation ships that arises
spontaneously as people associate with one another in a work environment. It is natural
grouping of people in the work situation based on their behavioral patterns, interests,
beliefs, objective etc.
The organization can be classified on the basis of authority and responsibility assigned to
the personnel and the relationship with each other. In this way, an organization can be
either formal or informal.

Formal organization
The formal organization represents the classification of activities within the enterprise,
indicates who reports to whom and explains the vertical journal of communication which
connects the chief executive to the ordinary workers. In other words, an organizational
structure clearly defines the duties, responsibilities, authority and relationships as
prescribed by the top management.
In an organization, each and every person is assigned the duties tend given the required
amount of authority and responsibility to carry out this job. It creates the co-ordination of
activities of every person to achieve the common objectives. It indirectly induces the
worker to work most efficiently. The inter-relationship of staff members can be shown in
the organization chart and manuals under formal organization.

Characteristics of formal organization

The important characteristics of a formal organization are given below
1. it is properly planned
2. It is based on delegated authority.
3. it is deliberately impersonal
4. The responsibility and accountability at all levels of organization should be clearly
defined.
5. organizational charts are usually drawn
6. unity of command is normally maintained
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 7. It provides for division of labor.

Advantages of formal organization

1. The definite boundaries of each worker are clearly fixed. it automatically reduces
conflict among the workers. The entire building is kept under control
2. Overlapping of responsibility is easily avoided. The gaps between the
responsibilities of the employees are filled up.
3. Buck passing is very difficult under the formal organization normally exact
standards of performance are established under formal organization. It results in
the motivating of employees.
4. A sense of security arises from classification of the task.
5. There is no chance for favoritism in evaluation and placement of the employee.
6. It makes the origination less dependent on one man Keith Davis observes that
formal organization is and should be our paramount organization type as a general
rule. It is the pinnacle of man's achievement in a disorganized society. It is man's
orderly, conscious and intelligent creation for human benefit.

Arguments Against formal organization

1. In certain cases, the formal organization may reduce the spirit of imitative.
2. Sometimes authority is used for the sake of convenience of the employee without
considering the need for using the authority.
3. it does not consider the sentiments and values of the employees in the social
organization
4. the formal organization may reduce the speed of informal communication
5. It creates the problems of coordination.

Introduction to Management By Abdikadir A.lahi

Informal organization
Informal organization is an organizational structure which establishes the relationship on
the basis of the likes and dislikes of officers without considering the rules, regulations and
procedures. These types of relationships are not recognized by officers but only felt, the
friendship. Mutual understanding and confidence are some of the reasons for existing
informal organization, for example, a salesman receives orders or instructions directly from
the sales manager instead of this supervisor. The informal organization relationship exists
under the formal organization also. The informal organization relationship or informal
relations give a greater job satisfaction and result in maximum production.
According to C.J Bernard, "informal organization brings cohesiveness to formal
organization. It brings to the members of a formal organization a feeling of belonging,
status of self respect and gregarious satisfaction. Informal organizations are important
means of maintain the personality of the individual gains certain effects of formal
origination which tend to disintegrate personality." of the individual against certain effects
of formal organization which tend to disintegrate personality."

Characteristics of Informal organization

1. Informal organization arises without any external cause i.e. voluntarily.
2. It is a social structure formed to meet personal needs.
3. Informal organization has no place in the organization chart
4. It acts as an agency of social control.
5. Informal organization can be found on all levels of organization within the
managerial hierarchy.
6. The rules and traditions of informal organization are not written but are commonly
followed.
7. Informal organization develops from habits, conduct, customers and behavior of
social groups.
8. informal organization is one of the parts of total organization
9. There is no structure and definiteness to the informal organization.

Introduction to Management By Abdikadir A.lahi

 Advantages of informal organization
The advantages of informal organizations are briefly explained below
1. it fills up the gaps and deficiency of the formal organization
2. Informal organization gives satisfaction to the workers and maintains the stability
of the work.
3. it is a useful channel of communication
4. The presence of informal organization encourages the executives to plan the work
correctly and act accou7rdingly.
5. The informal organization also fills up the gaps among the abilities of the managers.
Disadvantages of informal organization
The disadvantages of informal organization are summarized below:
1. It has the nature of upsetting the morality of the workers.
2. It acts according to mob psychology.
3. Informal organization indirectly reduces the efforts of management to promote
greater productivity.
4. It spreads rumor among the workers regarding the functioning of the organization
unnecessarily.

formal organization informal organization

1. it arises due to delegation of authority it arises due to social interaction of people
2. It gives importance to terms of authority and It gives importance to people and their relationships.
functions.
3. It is created deliberately. it is spontaneous and natural
4. the formal authority is attached to a position The informal authority is attached to a person.
5. rules, duties and responsibilities of workers are No such written rules and duties followed in
given in writing informal organization

Introduction to Management By Abdikadir A.lahi

6. Formal organization comes from outsiders who are Informal organization comes from those persons
superior in the line of organization. who are objects of its control.

7. Formal authority flows from upwards to Informal authority flows upwards to downwards or
downwards. horizontally.
8. formal organization may grow to maximum size Informal organization tends to remain smaller.
9. It is created for technological purposes. it arises from man's quest for social satisfaction
10. Formal organization is permanent and stable. there is no such permanent nature and stability

Even though informal organization is not established officially it exists and it is there
always in the formal organization. It may affect the formal organization positively or
negatively and management should recognize that informal organization exist in the formal
organization; for the benefit of the formal organization.

Informal organizations have some characteristics

i. Group norms-are unwritten laws that govern the behavior of members
of the informal organization
ii. group cohesiveness:- the members of informal organization are stick
together
iii. group leader ship:- informal organization has a leader , i.e., the informal
leader, this person is the most active one from among the others
iv. Communication net worked. The organization has communicated net
work called grapevine.
v. Don't have boundary: - informal organization cut across the entire
formal organization without following chain of command so managers
can also be members of the informal group.

Informal and formal organization compared

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 1. Informal organization emphasizes on people and their relationships. the
formal organization emphasizes on formal organizational positions
2. The coverage or power of effectiveness in informal organization is informal
power that attached to the individual. In the formal organization the formal
authority comes directly from the positions and person has it only when
occupying that position
3. Formal organizations may grow to be extremely large, but informal
organizations tend to remain smaller in order to maintain the personal
relationships as a result large organization contains a number of informal
original
Impacts of the informal organization
The informal organization can affect the organization positively and negatively.
Positive impact
Informal organization can provide some benefits to formal organization
 Support management:- some times in providing advices, generate new ideas in
performing activities to attain organizational objectives.
 Creates stability in the work environment since workers have their own group to
satisfy their needs they tend to work for long period of time in the organization.
Informal groups increasing starlet decreasing turnover.
 Provides channels of communication:- individuals who are new for the organization
can easily be informed about the organization through informal organization
members.
Encourages development of management, managers can develop their ability of leading
because they may participate in leading of informal organizations besides formal
organization

Negative impact
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Creates Conflicts: - most of the times members of the informal organization may conflict
with their formal boss while they are trying to satisfy their informal leader.
Change resistance: - some times management may want to change operational systems.
But informal group may not agree to adopt the changes.
Can expand rumor and false information:- informal organization may of compurgation
inch is informal so the degree of passing mere gossips and incorrect information may be
high.

How to work with informal organization

Management should not attempt to eliminate informal organization as it is impossible to
eliminate it. Rather they have to make use of informal organization for the benefit of
formal organization.
Managers should consider the following factors to use informal groups.
 Realize the existence of informal groups
 Identify the roles of members in each informal group
 Use information to work with informal groups
1.3 Organization Chart
Organization Chart- is graphic illustration of the organization’s management hierarchy and
departments and their working relationships. Each box indicates position with in the
organization and each line indicates reporting relationships and lines of communication.

Fig 4.2 organizational chart

Introduction to Management By Abdikadir A.lahi

Organizational chart remains useful because it provides different important information
regarding;
 Who reports to whom- that, chain of command.
 Span of control- how many subordinates does a manager have
 Channels of formal communication shown by solid lines that connect each job(box)
 Bases of departmentalization- how organization is departmentalized by function,
customer, or product, geographical etc
 Activities in each position- The labels in boxes describe each individual ‘s
activities
 The hierarchy of decision making - where the decision maker for a problem is
located
 authority relationships- solid connections between boxes illustrate line authority,
Zigzag lines show staff authority, and broken line show functional authority

Limitation of Organizational Chart

Organizational chart has some limitations since it doesn’t show

 informal communication channel
 Informal relationship among workers
 Degree of authority holds by individuals

1.4 Departmentalization :Meaning and Bases

Departmentalization; is grouping of related activities in to units. After reviewing the
plans, usually the first step in the organizing process is departmentalization. Once jobs have
been classified through work specialization, they are grouped so those common tasks can
be coordinated. Similar activities intimately related with a distinct function are grouped
together to form departments.
-It aims at achieving unity of direction, effective communication, coordination and control.

Bases of Departmentalization
There are some bases for departmentalization but there is no one best way to
departmentalize the activities and the choice of departmentalization depends on the needs
of the organization. The major bases of departmentalization include: function, Product,
customer, and territory.

Functional departmentalization- Functional departmentalization involves organizing

departments around essential input activities, Such as production, marketing and finance,
which are managerial or technological functions. The functions reflect the nature of the
business. The advantage of this type of grouping is obtaining efficiencies from
consolidating similar specialties and people with common skills, knowledge and
orientations together in common units.

Product Departmentalization- product departmentalization involves organizing

departments around products or services. Companies with multiple products commonly
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use product departmentalization. Each department may become self-contained company,
making and selling its own products. It assembles all functions needed to make and market
a particular product are placed under one executive. For instance, major department stores
are structured around product groups such as home accessories, appliances, women's
clothing, men's clothing, and children's clothing.

Customer Departmentalization- Customer departmentalization involves organizing

departments around needs of different types of customers. It is grouping of activities and
responsibilities in departments based on the needs of specific customer groups. . For
instance, a plumbing firm may group its work according to whether it is serving private
sector, public sector, government, or not-for-profit organizations.
A current departmentalization trend is to structure work according to customer, using
cross-functional teams. This group is chosen from different functions to work together
across various departments to interdependently create new products or services. For
example, a cross-functional team consisting of managers from accounting, finance, and
marketing is created to prepare a technology plan.

Territory (Geographic) Departmentalization- Involves grouping of activities and

responsibilities according to territory. All activities in a geographic area are assigned to a
particular manager. For example, Merck, a major pharmaceutical company, has its
domestic sales departmentalized by regions such as Northeast, Southeast, Midwest,
Southwest, and Northwest.
Departmentalization by process groups jobs on the basis of product or customer flow.
Each process requires particular skills and offers a basis for homogeneous categorizing of
work activities. A patient preparing for an operation would first engage in preliminary
diagnostic tests, then go through the admitting process, undergo a procedure in surgery,
receive post operative care, be discharged and perhaps receive out-patient attention. These
services are each administered by different departments.

Matrix departmentalization- is departmentalization that combines the functional and

product structures. With matrix departmentalization, the employee works for a functional
department and is also assigned to one or more products or projects. The major advantage
of matrix departmentalization is flexibility. The major disadvantage is that each employee
has two bosses a functional boss and a project boss-conflict can result when two people
give orders.
Departmentalization by process groups jobs on the basis of product or customer flow.
Each process requires particular skills and offers a basis for homogeneous categorizing of
work activities. A patient preparing for an operation would first engage in preliminary
diagnostic tests, then go through the admitting process, undergo a procedure in surgery,
receive post operative care, be discharged and perhaps receive out-patient attention. These
services are each administered by different departments.

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Fig 4.3 Departmentation

4.5 Span of management (span of control)

Span of control refers to the number of employees reporting to manger, in other words, the
number of subordinates a manger directly supervises. No fixed number of subordinates is
there to be supervised by a single manger; the number depends on different actions which
include perplexity (puzzlement).
1. Complexity and variety of subordinates job:- if subordinates are dealing with
complex and many jobs, they will contact with managers frequently to get more
assistance, so for manger to give assistance to subordinates they need to lead only
few subordinates
2. Ability and competence of mangers:- if mangers are capable of grasping problems
easily and finding solutions for problems quickly then can supervise more number
of subordinates.
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 3. Managers willingness to delegate authority:- if mangers are permissible or
willing to delegate authority, they can mange or supervise many number of
subordinate
4. The geographic location of organizational departments:- if the departments are
located in one-area mangers can control many number of subordinates otherwise
few subordinates are advised.

Wide and narrow spans of control

Based on the numbers of subordinates supervised by mangers in organizational
departments, span of control can be classified in to wide and narrow span of control.
Wide span of control:-span of control in which as many as 10 or 15 people may report to
the same person, results in a flat organization structure.
 If the number of subordinates is many it is wide span of control.
A narrow span of control:- span of control in a tall organizational structure.
 If number of subordinates is few it is narrow span of control nearly, but not always
real, if number of subordinates is 10 to 12 and if it is <10. It is narrow span of
control.

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Fig 4.4 wide span of control

Fig 4.5 narrow span of control

Authority and power and their sources

Organizational structure is a means of facilitating the achievement of organizational
objectives. Such structures are not static, but dynamic. They reorganize in response to
changing conditions that occur in the environment, new technology, or organizational
growth. Organization structures are dependent upon the employees whose activities
they guide. Supervisors rely upon power and authority to ensure that employees
Authority: - is the formal and legitimate right of a manger to make decisions, give orders,
and allocate resources, is the right to command.
The organizational structure provides the framework for the formal distribution of
authority. Formalization is the degree to which tasks are standardized and rules and
regulations govern employee behavior. It influences the amount of discretion an employee
has over his or her job. In an organization with high degrees of formalization, job
descriptions and policies provide clear direction. Where formalization is low, employees
have a great deal of freedom in deciding how thy conduct their work. Within the same
organization, different departments may have different degrees of formalization. For
example, in a hospital, doctors have freedom in selecting treatments, drugs, and methods
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for treating patients. However, the hospital physical plant staff has a strict schedule for
cleaning buildings, mowing lawns, and maintaining the facilities

Source of authority-comes with the territory, “making that authority is legal right of
manager because of the position he or she occupies in the organization. Thus authority is
defined in each mangers job charter. The person who occupies a position has his/her formal
authority as long as he or she remains in that position. As the job changes in scope and
complexity, the amount and kind of formal authority possessed should be changed.

Types of authority
In an organization three different types of authorities are created by the relation ships
between individuals and departments.

i. Line authority – defines the relationship between superior and subordinates. Any
manager who supervises operating employees or other manger has line authority. It allows
mangers to give direct orders, evaluate the actions, reward and punish employees. It is
responsible to make decisions and issue orders down the chain of command.

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Fig 4.6 Line Authority Chain of Command

ii. Staff authority- is the authority to serve in an advisory capacity: - managers who
provide advice or technical assistance are granted advisory authority.
This staff or advisory authority provides no basis for direct control over the subordinates
or activities of other departments; however, with in the staff managers own department, he
or she can exercise line authority. Staff authority in the form of advice/ assistance flows
upward to the decision maker. Staff authority is more limited authority to advice. It is
authority that is based on expertise and which usually involves advising line managers.
Staff members are advisers and counselors who aid line departments in making decisions
but do not have the authority to make final decisions. Staff supervisors help line
departments decide what to do and how to do it. They coordinate and provide technical
assistance or advice to all advisors, such as accounting, human resources, information
technology, research, advertising, public relations, and legal services.

Fig 4.7 Staff Authority

Staff authorities are responsible to advice and assist other personnel.

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Functional authority; is an authority which permits staff mangers make decision on
specific activities performed by employees with in other departments. Staff departments
often use functional authority to control their procedures in other departments.
 Is the right of staff personnel to issue orders to line personnel in established areas
of responsibility?
 Ex. The maintenance department assists production by keeping the operating
activity. If the maintenance determines that a machine is unsafe, the department
may issue an order to line manger to use the machine, but it cannot suggest which
products are produced

President
Fig 4.8 Functional authority

Maintaining Mekeg Product Finance H/RESOU

RS
Responsibility and Accountability

Equally important to authority is the idea that when an employee is given responsibility for
a job, he or she must also be given the degree of authority necessary to carry it out. Thus,
for effective delegation, the authority granted to an employee must equal the assigned
responsibility. Upon accepting the delegated task, the employee has incurred an obligation
to perform the assigned work and to properly utilize the granted authority. Responsibility
is the obligation to do assigned tasks. The individual employee is responsible for being
proficient at his or her job. The supervisor is responsible for what employees do or fail to
do, as well as for the resources under their control. Thus, responsibility is an integral part
of a supervisor's authority.

Responsibilities fall into two categories: individual and organizational. Employees have
individual responsibilities to be proficient in their job. They are responsible for their
actions. Nobody gives or delegates individual responsibilities. Employees assume them
when they accept a position in the organization. Organizational responsibilities refer to
collective organizational accountability and include how well departments perform their
work. For example, the supervisor is responsible for all the tasks assigned to his or her
department, as directed by the manager.

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When someone is responsible for something, he or she is liable, or accountable to a
superior, for the outcome. Thus, accountability flows upward in the organization. All are
held accountable for their personal, individual conduct. Accountability is answering for
the result of one's actions or omissions. It is the reckoning, wherein one answers for his or
her actions and accepts the consequences, good or bad. Accountability establishes reasons,
motives and importance for actions in the eyes of managers and employees alike.
Accountability is the final act in the establishment of one's credibility. It is important to
remember that accountability results in rewards for good performance, as well as discipline
for poor performance.

Power and Its Sources

Power is ability to exert influence in the organization. OR Power is the ability to exert
influence in the organization beyond authority, which is derived from position. In addition
to authority; supervisors have more personal sources of power to draw upon for getting
things done. Everyone has power in one form or another and it is by exercising this power
that organizations get things accomplished. Supervisors who are capable of achieving their
objectives independently of others are said to possess strength. When these "strong"
supervisors involve and incorporate others into their plans and activities they are making
use of power, and in fact increasing the total amount of power available to incorporate into
a particular situation or problem. Involving employees in setting objectives and making
decisions as it relates to their jobs empowers everyone, and results in greater job
satisfaction and commitment, as well as increased productivity. Empowering employees
provides them with greater autonomy
- It is ability to influence others’ behavior.
Power can be positional and personal.
Position power is derived from top management and is delegated down the chain of
command.
Personal power is derived from the follower based on the individual behavior.
* A person does not need to be manager to have power. Some administrative assistants of
top mangers have considerable power, but no authority. Manager can a acquire power from
several different sources, based on these sources power can be:

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 Sources of Power
Reward
Power
Legitimate Coercive
Power Power
Enable managers to be
leaders & influence
subordinates to
achieve goals

Expert Referent
Power Power

Fig 4.9 Source of Power

(i). Legitimate or position power – The power possessed by manger and derived from the
positions they occupy in the formal organization. . This position power is broader than the
ability to reward and punish, as members need to accept the authority of the position
(ii) Reward power- The power that comes from the ability to promise or grant rewards.
Mangers have the ability to decide on raises, promotion favorable performance appraisals,
and preferred work shifts. Reward power results in people doing what is asked because
they desire positive benefits or rewards. Rewards can be anything a person values (praise,
raises, and promotions)

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(iii) Coercive power – is a power which enables mangers to force individuals to attain their
work assignments or to punish those workers who failed to attain their job assignments.
Coercive power is the threat of sanctions. It is dependent on fear and includes, but is not
limited to the ability to dismiss, assign undesirable work, or restriction of movement. The
punishment may include; demotion, terminating employment etc
(iv) Referent (charismatic) power – is the power that is based on the kind of personality
or charisma an individuals has and how others perceive it. Referent power refers to a
person who has desirable resources or personal traits. It results in admiration and the desire
to emulate. It is the power obtained from the attitude of people toward some one or from
idea that one has on himself.
(iv). Expert Power- is power derived from an individual’s knowledge and expertise.
Others listen to and follow the person with expert power because she/he is regarded as
capable and knows how to do things right. Employees with expert power are often
promoted to management.

Delegation, Centralization and Decentralization

Delegation is the process of assigning authority and creating obligation to accomplish
objectives.
 Is the down ward transfer of formal authority from one person to another

Process of Delegation
Delegation- involves some activities which include
1. Assignment of Tasks- identifying tasks to be performed and assign the tasks to
subordinates. It is a primary activity in delegation of authorities.
2. Delegation of Authority- Once tasks are assigned, employees should be given
as much authority as possible which enable them to make decision regarding their
job assignments.
3. Creation of Obligation- Managers have to create accountability with
subordinates for fair use of authority and effective performances of activities.

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 4. Establishment of Control System- The fourth step in delegation process is
establishing adequate control system for evaluating the results of delegation.
Because the delegated manager is responsible for the performance of his
subordinates. S/he has to evaluate their progress from time to time to ensure that
authority is utilized effectively for right purpose. Delegation is an integral
component of the organizing process. Since a manager is responsible for the
performance of such a large variety of tasks, activities and functions that s/he can
not perform them all by hem/her self. S/he assigns a part of his/her work to his/her
subordinates.

Fig 4.10 Steps in Delegating

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Merits of delegation
 It freed managers from routine activities and enables them to focus on critical ones.
 It acts as a tool of development and motivation of employees.
 It is means of pushing down decision to lower level so decisions are likely to be
timelier as well as realistic.
Obstacles to Delegations
 Managers believe that they can do better decisions
 Managers are afraid of loosing importance
 Some managers do not know how or what to delegate
 Subordinates lack confidence in their activities etc.
Centralization and decentralization
Centralization is a philosophy of management that focuses on systematical retaining of
authority in the hand of higher level managers. I.e. it is the degree to which decision-
making is concentrated in top management's hands.

Decentralization is a philosophy of management that focuses on systematical delegation

of authority through out the organization to middle and lower level managers. ; is the extent
to which decision-making authority is pushed down the organization structure and shared
with many lower-level employees.
If authority is decentralized:
-Greater number of decision will be made at lower level
-Important decisions are made at lower level, and subordinates will
refer less their superiors to make decisions.
The reverse is true if authority is centralized.
In centralization decision making criteria are limited to top level management. But In
decentralization are delegated to lower level. Centralized organizations have more levels
of management with narrow spans of control. Employees are not free to make decisions.
Decentralized organizations have fewer levels of management with wide spans of control
giving employees more freedom of action. All other things being equal, a wide span of
control is more efficient because it requires fewer managers. However, it is important to
recognize that, at some point, effectiveness will decline.

The current trend is toward broadening decentralization. As competition intensifies the

need for organizations to be responsive increases. This has made employees, usually those
at the lower levels, who are closest to customers extremely important. They are an excellent
source of knowledge and implement changes that directly impact performance. Giving this
group more input into certain decision-making activities can result in increased firm

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performance. Generally; tall organization structures are more of centralized. Flat
organizations Structures are more of decentralize.

Groups and committees

Group;-is a social unit consisting of two or more interdependent, interactive individuals

who are striving to attain common goals.

Types of groups
Formal groups are groups established by an organization, their membership and structure
are formed by the management of the organization

Formal groups are may be classified as follows

I. Task group/work group consists of people with different skill for performance
of a common task.
II. Command group consists of managers and their employees formed due to
authority and responsibility relationship.
III. Mediating group a group formed to resolve conflict that may arise between
departments and individuals.
IV. Policy making group:- a group established to formulate operating policy.
Informal groups are groups created spontaneously when member join together voluntarily
because of similar interest.

Committees
Committee is a group of members that represents functional areas of expertise.
It is best example of formal group
The primary function of committee is to make or suggest decisions on problems requiring
integration of different departments.

Types of committee
Generally committees can be ad hoc or standing
i. Adhoc committees: - are those formed for a particular purpose. If the
objectives are for which they are established have been met, they are disbanded
(dispersed). They are temporary.
ii.
iii. Standing committee- are permanent in nature. They are not disbanded. In
large organizations they often take the form of finance committees and
personnel committee and there is always enough work to justify their existence

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