Which of the following is NOT a demerit of formal organisation?

It may lead to spreading of rumours.

The correct answer is option 2- It may lead to spreading of rumours.

Option 2 is related to informal organisation.

Formal organisation refers to the organisation structure which is designed by the management to accomplish a particular task. The formal organisation suffers from the following limitations:

(a) The formal communication may lead to procedural delays as the established chain of command has to be followed which increases the time taken for decision making.

(b) Poor organisation practices may not provide adequate recognition to creative talent, since it does not allow any deviations from rigidly laid down polices.

(c) It is difficult to understand all human relationships in an enterprise as it places more emphasis on structure and work. Hence, the formal organisation does not provide a complete picture of how an organisation works.