Definition of a Formal Organization

An Overview of the Concept with Examples

Students wearing uniforms and raising hands in a classroom signal the rules, hierarchy, and division of labor that characterize formal organizations.
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A formal organization is a social system structured by clearly laid out rules, goals, and practices that functions based on a division of labor and a clearly defined hierarchy of power. Examples in society are wide ranging and include business and corporations, religious institutions, the judicial system, schools, and government, among others.

Overview of Formal Organizations

Formal organizations are designed to achieve certain goals through the collective work of the individuals who are its members.

They rely on a division of labor and hierarchy of power and authority to ensure that the work is done in a unified and efficient manner. Within a formal organization, each job or position has a clearly defined set of responsibilities, roles, duties, and authorities to whom it reports.

Chester Barnard, a pioneering figure in organizational studies and organizational sociology, and a contemporary and colleague of Talcott Parsons observed that what makes a formal organization is the coordination of activities toward a shared objective. This is achieved by three key elements: communication, willingness to act in concert, and a shared purpose.

So, we can understand formal organizations as social systems that exist as the sum total of the social relationships among and between individuals and the roles they play. As such, shared norms, values, and practices are necessary for the existence of formal organizations.

The following are the shared characteristics of formal organizations:

  1. Division of labor and related hierarchy of power and authority
  2. Documented and shared policies, practices, and goals
  3. People act together to achieve the shared goal, not individually
  4. Communication follows a specific chain of command
  5. There is a defined system for replacing members within the organization
  1. They endure through time and are not dependent on the existence or participation of specific individuals

Three Types of Formal Organizations

While all formal organizations share these key characteristics, not all formal organizations are the same. Organizational sociologists identify three different types of formal organizations: coercive, utilitarian, and normative.

Coercive organizations are those in which membership is forced, and control within the organization is achieved through force. A prison is the most apt example of a coercive organization, but other organizations fit this definition too, including military units, psychiatric facilities, and some boarding schools and facilities for youths. Membership in a coercive organization is compelled by a higher authority, and members must have permission from that authority to leave. These organizations are characterized by a steep power hierarchy, and the expectation of strict obedience to that authority, and the maintenance of daily order. Life is highly routinized in coercive organizations, members typically wear uniforms of some sort that signal their role, rights, and responsibilities within the organization and individuality is all but stripped from them.

(Coercive organizations are similar to the concept of a total institution as formulated by Erving Goffman and further developed by Michel Foucault.)

Utilitarian organizations are those that people join these because they have something to gain by doing so, like companies and schools, for example. Within this control is maintained through this mutually beneficial exchange. In the case of employment, a person earns a wage for giving their time and labor to the company. In the case of a school, a student develops knowledge and skills and earns a degree in exchange for respecting the rules and authority, and/or paying tuition. Utilitarian organizations are characterized by a focus on productivity and a shared purpose.

Finally, normative organizations are those in which control and order are maintained through a shared set of morals and commitment to them.

These are defined by voluntary membership, though for some membership comes from a sense of duty. Normative organizations include churches, political parties or groups, and social groups like fraternities and sororities, among others. Within these, members are unified around a cause that is important to them. They are socially rewarded for their participation by the experience of a positive collective identity, and a sense of belonging and of purpose.

Updated by Nicki Lisa Cole, Ph.D.