Q.A company manufacturing sewing machines, set up in 1945 by British promoters, follows formal organisation culture in totality. It is facing a lot of problems, such as delays in decision making. As a result it is not able to adapt to the changing business environment. The workforce is also not motivated, since they cannot vent their grievances except through formal channels, which involve red tape. Employee turnover is high. Its market share is also declining due to changed circumstances and business environment. You are to advise the company with regard to the change it should bring about in its organisation structure to overcome the problems faced by it. Give reasons in terms of the benefits it will derive from the changes suggested by you.

The company is suffering from the classic drawbacks of a purely bureaucratic structure: excessive formalisation, slow decision-making, rigid communication channels, and low employee motivation. The textbook solution is to introduce elements of an informal organisation alongside the existing formal structure.

Specifically, the company should encourage the natural formation of informal groups among employees. This does not mean dismantling the formal hierarchy, but rather allowing social interactions, grapevine communication, and peer-level relationships to develop without bureaucratic interference.

The benefits are direct and practical:

• Faster decision-making — Informal channels bypass red tape, allowing quick feedback and problem-solving.
• Improved employee motivation — Workers can vent grievances and share ideas through informal networks, reducing frustration and turnover. …

The sewing machine company you describe is a textbook case of an organisation that has taken the principle of formal organisation to an extreme. Formal organisation, as the NCERT textbook explains, is a deliberately designed structure with clear rules, defined authority-responsibility relationships, and a fixed chain of command. It is essential for order and discipline — but when it becomes the only way of working, it suffocates the organisation.

Your company was set up in 1945 by British promoters, and it has clearly inherited a bureaucratic mindset. Every decision must travel up the hierarchy, every grievance must be filed through official channels, and every rule must be followed to the letter. This creates what we call 'red tape' — excessive paperwork and rigid procedures that slow everything down. The result? Delays in decision-making, inability to respond to a changing business environment, and a demotivated workforce that feels unheard.

The core problem is not that formal organisation is bad — it is that the company has no informal organisation to balance it. Informal organisation refers to the network of personal relationships, social interactions, and unofficial channels that naturally develop among employees. It is not shown on any organogram, but it exists in every workplace. The NCERT textbook emphasises that informal organisation is a powerful tool for communication, problem-solving, and employee satisfaction.

So what should the company do? It must consciously encourage the growth of informal organisation. This does not mean abolishing the formal hierarchy — that would create chaos. Instead, the company should create spaces and opportunities for employees to interact informally, share ideas, and build relationships outside the rigid chain of command.

Here are specific changes the company should bring about:

• Encourage open-door policies and informal meetings: Managers should make themselves approachable. Instead of requiring every grievance to be submitted in writing through the proper channel, supervisors should be trained to listen to employees face-to-face, in casual settings. This reduces red tape and makes employees feel valued.

• Form cross-functional teams and committees: Bring together people from different departments to work on specific problems. These teams can bypass the usual hierarchy for decision-making on routine matters. This speeds up responses to market changes.

• Promote social activities and team-building: Organise events, celebrations, or informal get-togethers. These help build trust and camaraderie among employees. When people know each other personally, they communicate more freely and solve problems faster.

• Allow some discretion in decision-making: Delegate authority to lower levels for certain types of decisions. The NCERT textbook notes that centralisation delays decisions; decentralisation speeds them up. Give branch managers or team leaders the power to handle customer complaints or minor operational changes without waiting for head office approval.

Now, let us look at the specific benefits the company will gain from these changes:

First, faster decision-making. When employees can discuss problems informally with colleagues or supervisors, they do not have to wait for a formal meeting or a written memo. A quick conversation can resolve a bottleneck in minutes. This allows the company to adapt quickly to changes in the business environment — for example, shifting customer preferences or new competitor strategies.

Second, higher employee motivation. The current workforce is demotivated because they cannot vent their grievances except through formal channels, which involve red tape. Informal channels give them an outlet. When employees feel heard and valued, their morale improves. The NCERT textbook points out that informal organisation satisfies the social needs of employees — the need for belonging, recognition, and friendship. A motivated employee is less likely to leave, which directly addresses the high turnover problem. …