---
title: "Formal, informal organization and principles"
subject: "Organization and Management"
chapter: 1
key: "semester_7/organization_and_management:formal-informal-principles"
source: https://www.bctengineer.com/q/semester_7/organization_and_management/formal-informal-principles
site: BCT Engineering
---

# Formal, informal organization and principles

Organization and Management · Chapter 1: Organization

- Asked in: 2074 Chaitra, 2+6 marks; 2071 Shrawan, 4+4 marks; 2070 Asar, 4+4 marks (asked 3 times)
- Video: [FORMAL and INFORMAL ORGANIZATION | Organization and Management](https://www.youtube.com/watch?v=-XZ1poxYt84) — I HOPE
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/organization_and_management/formal-informal-principles
- Whole chapter: https://www.bctengineer.com/md/semester_7/organization_and_management/chapter-1

## Question

Define formal and informal organization. Discuss the principles of organization.

## Short answer

A formal organization is a deliberately designed structure with defined authority and rules; an informal organization arises spontaneously from social relationships. Principles include unity of objective, division of work, unity of command, scalar chain, span of control, authority–responsibility parity, delegation, coordination, flexibility, and efficiency.

## Answer

#### Formal organization
A formal organization is a deliberately designed structure with defined authority, responsibility, rules and relationships, created by management to achieve organizational goals. Example: the organization chart of Nepal Telecom from the Managing Director down to technicians, with written job descriptions.

#### Informal organization
An informal organization is the network of personal and social relationships that grows spontaneously among employees, outside the official chart. Example: a group of engineers who have lunch together and share work advice, or friends from the same district.

| Basis | Formal | Informal |
|---|---|---|
| Creation | Planned by management | Arises naturally |
| Based on | Rules and positions | Personal liking and interests |
| Authority | Flows from top | Flows from group acceptance |
| Communication | Official channels | Grapevine |
| Documented | Yes, chart and manuals | No |

#### Principles of organization
1. **Unity of objective:** Every unit should support the common goal.
2. **Division of work:** Work is divided by specialization.
3. **Unity of command:** One person, one boss.
4. **Scalar chain:** Clear line of authority from top to bottom.
5. **Span of control:** Limited number of subordinates per manager.
6. **Authority equals responsibility:** Responsibility should not exceed or fall short of authority.
7. **Delegation:** Authority is passed to lower levels.
8. **Coordination:** Efforts are integrated for harmony.
9. **Flexibility:** Structure must adjust to change.
10. **Efficiency:** Objectives are achieved at the lowest cost.

A manager should use the informal group positively (for feedback and morale) while keeping formal rules clear.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Which description fits a formal organization?
   A. A deliberately designed structure with defined authority, rules and relationships created by management
   B. A network of friendships that grows spontaneously among employees
   C. A group formed only for lunch and social talk
   D. A structure with no written job descriptions
   Answer: A. Formal organizations are planned by management with defined roles. (Key point: Formal organization)

2. In an informal organization, authority flows from:
   A. The top of the organization chart
   B. Group acceptance
   C. Written job descriptions
   D. Government regulation
   Answer: B. Informal authority comes from personal influence and group acceptance, not from position. (Key point: Informal authority)

3. Informal organizations mainly communicate through:
   A. Official channels
   B. The scalar chain
   C. The grapevine
   D. Written manuals
   Answer: C. The grapevine is the informal channel of communication. (Key point: Communication channel)

4. How should a manager treat the informal group?
   A. Ban it completely
   B. Ignore it since it has no effect
   C. Replace formal rules with it
   D. Use it positively for feedback and morale while keeping formal rules clear
   Answer: D. The answer advises using the informal group positively alongside clear formal rules. (Key point: Manager's use of informal group)

## Related in Organization and Management

- [Difference between formal and informal organization](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Aformal-informal-difference) — Organization and Management, chapter 1
- [Need for organization and its principles](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Aorg-need-principles) — Organization and Management, chapter 1, asked 3×

## Related in other subjects

- [Central ideas of formal and informal proofs](https://www.bctengineer.com/question.md?key=semester_4%2Fdiscrete_structure%3Aformal-informal-proofs-central-ideas) — Discrete Structure, chapter 1