Advantages of formal organizations include systematic working, achievement of organizational objectives, proper coordination and a defined chain of command. Formal organizations also help to ensure that there is no work overlap.
An organization can either be formal or informal. Formal organizations are characterized by a set of rules of intra-organizational procedures and structures, including an organization chart, hierarchical reporting relationships and work processes. An informal organization, on the other hand, is an interlocking structure that governs how people work together in everyday life. It refers to the manner in which organizations function from a practical viewpoint.
Formal organizations have clearly defined roles and responsibilities that ensure accountability. Duties of each member of the organization are well defined, and it is easy to address inefficient employees. Formal organizations also have structures that ensure everything moves on in an organized manner. This makes sure that there is no overlap of functions and no work is left out. This type of organization is characterized by a clear chain of command. Formal organizations benefit from simplified goal-setting because of a well-defined structure.
Within a formal organization, the structure should not become too rigid, as the employees may not maximize their potential if they feel stifled by arbitrary rules.