Question

‘Rewton Ltd.’ was a reputed computer software company providing unique software all over India. The turnover of the company was very high resulting in good profits. The Chief Executive Officer, Vihaan, was very strict and disciplined. He specified the boundaries of authority and responsibility for achieving organizational goals. There was systematic coordination among the various activities and specific relationships among various job positions. The company provided facilities like a canteen, a gym, a library, a music room, and a rest area for its employees, which they could use during rest intervals. Using these facilities, the employees developed friendships and discussed not only their personal, social and emotional issues, but also the official ones.
The General Manager was of a different view. He told the Chief Executive Officer that there was no use providing these facilities to the employees as it is an extra financial burden on the organization on one hand and on the other hand, it encourages groupism and whenever any change is required in the organization, they all resist. He suggested that they should do away with these facilities. But the Chief Executive Officer, Vihaan, explained to the General Manager that this type of social interaction is necessary, and is in the best interest of the organization. These interactions among people at work give rise to a network of social relationships among employees and have many benefits.

• [(i)] Identify and explain the type of organisation whose existence the Chief Executive Officer felt was necessary.
• [(ii)] State any two advantages and two disadvantages of the type of organisation identified in (i) above.

Hint:

Informal organisation works in the background of the formal structure. While it is not officially recognised, it can greatly influence employee morale, speed of communication, and even organisational change.

Answer 1

(i) Type of Organisation: Informal Organisation The case study identifies the organisation as Informal. This refers to the natural social connections that emerge among employees within a formal structure. These relationships are not dictated by the official hierarchy but develop from shared interests, friendships, and emotional ties. Line from the case: “Using these facilities, the employees developed friendships and discussed not only their personal, social and emotional issues, but also the official ones.”
This indicates CEO Vihaan's acknowledgement of informal communication and relationships in fostering a collaborative and emotionally supportive workplace. Informal organisations fulfil employees' social and emotional requirements, complementing formal structures by enabling swifter communication and mutual assistance. (ii) Advantages and Disadvantages of Informal Organisation: Advantages:

• Rapid Communication: Informal networks facilitate swift idea and information dissemination, often bypassing formal channels and hierarchies, thereby enhancing responsiveness and coordination.
• Social Fulfilment and Cohesion: They address employees' social needs by cultivating a sense of belonging, trust, and emotional support, which can elevate morale and reduce workplace stress.

Disadvantages:

• Propagation of Rumours: The unstructured nature of informal communication can lead to the spread of rumours or misinformation, potentially causing misunderstandings and decreasing productivity.
• Resistance to Change: Established informal groups may resist change. If the group is unconvinced, they might collectively oppose new policies or organisational reforms, as noted in the case.