Royal Ltd. decided that whenever an employee reaches a particular age the employee will be promoted. Influenced by this plan of the company several employees from other companies also joined the firm. But within few days they realized that the firm has pre-determined relation structure without free communication.
On the basis of this, answer the following questions.
(a) Identify the type of organization described here.
(b) Point out any two limitations of this type of organisation.

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Solution

Formal Organisation.
Formal organisation is “a system of well-defined jobs, each bearing a definite measure of authority, responsibility and accountability, the whole consciously designed to enable the people of the enterprise to work most effectively together in accomplishing their objectives.”
Limitations of Formal organisation:
1. Loss of initiative: As too much emphasis is placed upon formal rules and regulations, workers do not use their creative and innovative skills to perform organisational tasks. There is loss of initiative and innovative abilities due to strict adherence to rules.
2. Unsatisfied social needs: Man is a social being. He needs to interact with people and share his feelings at-work and off-work with others. In a formally designed organisation structure, social needs remain unsatisfied as people are related to each other through a formal chain of command to discuss only official matters with each other. Social interactions are altogether ignored.

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