Formal groups are the groups that are formed and defined according the organization structure and have designated work duties, tasks and responsibilities (Australian National University, 2006). In these formal groups the activities performed by the individuals are limited and the communication in these groups takes place through a straight chain of command. These formal groups show behaviour that is defined as well as directed towards the broader organizational goals. The main function of the formal groups is to establish division of work based on specialization in a formal structure (Farivar & Esmaeelinezhad, 2012). This division of work in a formal group is based on the division of labour theory, which defines the roles based on the work that an individual has to perform in an organization (Farivar et. al., 2012). The other function is to create formal teams that are responsible for fulfilling a particular task that would eventually contribute to the fulfilment of the overall organizational goals. This in turn increases the efficiency of the organization and its employees. Another function of the formal groups is to create a structure that provides effective division of power, authority and accountability (Aghion & Jean, 1997). As already mentioned, formal groups have straight chain of command, this ensures that the power is effectively distributed and the individuals at the top of the organizational hierarchy have the supreme power, with the power then distributed as per the role down the hierarchy.
The formal groups in an organization have ample benefits related to them. These groups in an organization provide a basic structure for the division of the responsibilities and work (Robbins, DeCenzo, Coulter & Woods, 2011). This structure enables the management to use the organization’s human resources in the best possible way as it is easier to divide work and responsibilities among employees if their designation and the scope of the work that they can perform is known. This also makes easier for the employees as well, as they know what is required of them. In addition, formal structure enables effective management of the large sized organizations and the organizations that tend to increase with time (Robbins, et. al., 2011).
Apart from the benefits, the formal groups also tend to negatively affect an organization based on different aspects. According to Blau & Scott as cited in (Farivar et. al., 2012) generally the employees in a formal setup