Informal Organization

The informal or unwritten organization refers to the many interpertionships that do not appear organization plan, the or". An informal organization evolves over time to meet the human needs of the workers, such as the need for recognition and socialization that are not explicitly provided in the formal organization plan.

The typical informal organization is composed of two or more persons who, by design or chance, develop mutually useful interaction concerning personal and job-related matters. For example, during coffee breaks, group assignments, or regular routine work activities, a closeness develops among certain individuals because of common interests and problems that are not resolved in any other way. Such people may extend their job associations to after-hour activities in the community including participation in professional meet­ings related to their work. It is inevitable that many of these associations concern company matters and "talking shop." Thus, there is ample opportunity for the attitudes and feelings of people to be vented, an important psychological outlet for the healthy employee.

One of the most important values of the informal organization is its capability for efficiently sending and receiving communications in the office. The term grapevine, describes the informal oral communication network that helps employees learn more about what is happening in the organization and how they, in turn, might be affected by it. Often such an informal channel is more effective than the formal line in passing information, obtaining feedback, solving problems, and revising procedures. The dotted lines in Figure 2-9 represent a common type of informal organization that exists alongside the formal organization (represented by solid lines in Figure 2-9) within one department. Similar patterns of informal activities are commonly found between departments.

Figure 2-9 Partial Organization of an Office Management Department-Formal and Informal Organization

Because the informal organization is ever-changing and in many cases undefined, it may be subject to abuse. A common example of abuse is the "buddy system" in which workers find "opportunities" to work together even though no such work assignments have been made. Also, there may be informal agreements among workers not to comply with official changes in policies and procedures.

The perceptive OM knows that the in­formal organization complements the formal plan. In fact, no company can exist without these interactions of people at all levels. Rather than trying to eliminate the informal organization, the effective man­ager will observe carefully the typical interactions of his or her office staff in order to identify such informal groups. Once this has been accomplished, the OM can work closely with such groups who then will feel an added sense of belonging and ultimately job satisfaction, even though their names do not appear on the company's organization chart.

CENTRALIZING/ DECENTRALIZING MANAGERIAL AUTHORITY

The word center has widespread use in today's society. Common examples are the computer center and learning resources center (or library) on college campuses as well as medical center, financial center, and shopping center in the business community. In each case, certain specialized functions are located in one place; that is, the functions are centralized. A similar structural plan is applied to the location of authority in an organization.

In an organization with centralized authority, similar functions are carried out in one place; and decisions tend to be made at or near the top of the organization. If, on the other hand, considerable authority is delegated to many lower levels in the organization, decentralized authority is said to exist. In a decentralized organization, usually there are fewer levels of management and the prevailing philosophy is that decisions should be made at the lowest levels possible.

Benefits of Centralization

A firm with centralized authority may realize the following benefits: (1) actions taken are in strict accord with policies, (2) there is a reduction in the risk of errors made by subordinates who lack either information or ability, (3) the skills of specialized experts are utilized, and (4) close control may be exercised over operations. As a rule, an organization that is still in the hands of its original owner is likely to retain a centralized form of authority.

Benefits of Decentralization

Firms having decentralized authority often cite the following benefits: (1) decisions are more speedily made; (2) action can be taken on the spot as needed without consulting higher levels of management; (3) decisions can be adapted to local conditions, such as in branch offices; (4) subordinates to whom authority and responsibility have been delegated show a great deal of interest and enthusiasm in their work; and (5) top-level executives can better utilize their time by setting policies as well as planning and organizing the firm's goals.

Generally the degree of centralization depends upon factors such as the nature, size, and complexity of the business; its products and markets; the extent of automated operations; and the managerial styles and skills of those involved. Large, diversified, and mature companies tend to benefit from the advantages of both cen­tralized and decentralized authorities.

Centralization of Office Operations

Office work is made up of a wide range of services, such as telecommunications, word processing, mailing, records man­agement, micrographics, reprographics, and accounting. Centralizing the manage­ment of information and the administration of office services fixes responsibility under a capable manager, lessens the duplication of machines and equipment, permits effective supervision, and balances the distribution of the work load. Thus, the bulk of office activities is often centralized under a capable, experienced, and well-trained AOM, who delegates to assistants the authority and responsibility for supervising the various decentralized support services. Many large firms install word processing centers that use the latest and most effective dictating and transcribing equipment. Also, filing, mailing, and reprographics departments may be established. These support services, each under the direction and control of a subordinate' who is accountable to the AOM, can be provided at minimum cost, and with expert supervision. In addition, in large companies there is often some decentralized office work performed by administrative assistants, executive secretaries, and others who maintain their own personal or confidential files.

An example of centralization found in some firms is the satellite administrative services center or substation. The substation is a compact workstation that handles information processing and general office activities that are usually scattered throughout a number of offices. The administrative services substation, under centralized direction and control, links together workstations that are in close proximity to the users of the office services.

A newly established substation may be organized to supply a minimum number of local administrative services, such as mail, stationery supplies, and fast copies, in a defined area that serves operations in close proximity. As the substation proves successful in meeting the needs of the users, additional services may be provided in a sort of building-block plan. Ideally, each of the substations is linked with one another, with the central services unit, and with the computer center.

Physical Decentralization

The decentralization of authority should not be confused with the physical decentralization or geographic dispersion of a company's management. In large organizations, the home-office managers may be geographically separated from the division or branch managers. If de­sired, the delegation of authority can be limited, however; thus, the firm is highly centralized even though the activ­ities of the organization are decentralized geographically.

When a firm maintains plants and offices in several locations, many of the information-processing activities and administrative services are often decentralized to permit more efficient operations. As a result, a certain amount of duplica­tion of supervision and investment in equipment occurs. Often, however, when the administrative support services are decentralized because of branch offices in many locations, the accounting operations are centralized in one location, such as the home office. This has been made possible by better telecommunication systems. Centralizing the accounting function is not only less costly but also more efficient. The work is done more accurately; and by means of more timely reports, management can make better use of the accounting and statistical information.

The operation of branch offices varies with different firms. In many firms, the branch office is a sales office under the direction of a branch sales manager who is provided as much clerical and accounting assistance as necessary. Under this arrangement, the AOM in the home office provides little guidance and control except, perhaps, to issue manuals or instruction sheets for office procedures developed by the home office. The rest of the work is ordinarily directed by the branch sales manager.

Some branches are established on a somewhat independent basis, with each branch acting like a separate unit. In such a branch, the OM is assigned the same duties and responsibilities as any other OM. In some firms, there is a greater vol­ume of office work than in others. For example, in life insurance companies, banks, and brokerage firms, the amount of information processing is much greater than in a manufacturing or a retail organization. With all the foregoing thoughts in mind, the question of centralized versus decentralized authority tends to become an individual problem to be solved by each firm.

SUMMARY

In their daily activities of planning, organizing, leading, and controlling, AOMs are aided by basic principles of management. These principles are designed to provide a healthy organizational climate in which human resources are effectively used to produce results. These principles pertain to the objectives of the organization, scope and assign­ment of responsibilities, unity of functions, use of specialization, delegation of authority and responsibility, unity of command, and span of control. In putting the management principles to work, OMs select a style of leadership that mirrors their individual personalities, philosophies, and behavioral traits. Some OMs may exhibit an autocratic, bureaucratic, diplomatic, participative, or free-rein style; other OMs may adopt a managerial style that represent a mix of the best features of the several styles.

Although the line and the functional forms of organization are rarely found in a pure state in today's offices, the workable features of these two forms are effectively blended together in the commonly found line-and-staff organization. In large organizations, various kinds of committee organizations and the relatively new matrix form are used in conjunction with the line-and-staff plan. Within any one of these organization forms, employees group themselves into informal relationships that must be recognized, understood, and effectively used by the OM. However, only the formal relationships, span of control, and lines of authority and responsibility are graphically displayed on the organization chart.

The AOM may be in an organization where the authority is centralized or decentralized. More often, however, today's organizations combine the positive features of both centralized and decentralized authority, whether the organization is housed in one building or geographically dispersed throughout the United States and abroad.

GLOSSARY

Assistant-to - a personal assistant with staff authority whose administrative duties vary widely, depending upon responsibilities assigned.

Authority - the right to command, to give orders, and the power to make decisions.

Autocratic leader - one who rules with unlimited authority; an authoritarian.

Bureaucratic leader - one who sets and follows fixed rules; a hierarchy of authority; and narrow, rigid, formal routines.

Centralized authority - similar functions are carried out in one place.

Chain of command - the means of transmitting authority from the top (the chief executive officer) through successive levels of management to the workers at the lowest operative level.

Committee organization - a structure where authority and responsibility are jointly held by a group of individuals rather than by a single manager.

Decentralized authority - the delegation of considerable authority to many lower levels in the organization.

Delegation - the process of entrusting work to employees at lower levels who are qualified to accept the responsibility for doing the work.

Departmentation - the process of intentionally organizing work into distinct areas.

Diplomatic leader - one who is skillful in helping people solve their problems; prefers "selling" rather than "telling."

Formal organization - the plan of organization graphically pictured on an organization chart.

Free-rein leader - one who sets goals and develops guidelines for subordinates and then lets them operate freely with no further direction unless the subordinates ask for help.

Functional organization - a structure that provides specialists at the supervisory level who are in charge of work related to their specialties in departments other than their own.

Grapevine - an informal oral communication network within an organization.