Formal organizations refers to the ‘official’ hierarchy and lines of authority, with their spans of control, and Informal organizations refers to the ways in which official rules are negotiated or subverted through the informal practices of subordinates. Formal and Informal structure in an organization refers to the distinction between procedures and communications in an organization which are prescribed by written rules, and those which depend more upon ad hoc, personal interaction within work groups (Pujari, 2015).
Eagle Buses started off as a formal organization. This can be seen in the case study where the director of Eagle Buses had been in charge of the service, although his decisions always had to be reached in negotiation with the chairman of the transport committee, an elected member of the local authority. Even after the change of ruling party, Eagle buses remained a formal organization as the new transport committee chairman determined to make the managers of the bus services, as he put it, ‘be accountable to the electorate’. He also made sure that every decision the Director wanted to make was fully discussed with him and put before his committee for further discussion. The required negotiations between the council officer (the director) and the elected members (led by the chairman) were no longer the formality they had been under the previous regime.
Work specialization then occurred as the Company Chairman established a new board of directors which members of it covered the full range of necessary expertise. A board of directors with 12 members was therefore established and it turned out that more than half of the members were former local authority employees and these were all executive directors. The Chairman tried to balance this fairly traditionally minded group of individuals by appointing Archie Leven as Chief Executive.
Eagle Buses turned to