It is necessary for every leader or manager to become sensitive to diversity and fully understand how to effectively handle difficult and controversial situations. As a boss, you also need to understand that they are the ones making the decisions, not the employee. There are two types of disciplinary action plans, formal and informal. A formal disciplinary action plan benefits companies that operate a centralized organizational structure, where decisions stem from an individual. The benefit of a formal disciplinary action plan is that all rules and regulations are distributed fairly and consistently among employees. An informal disciplinary action plan benefits companies that operate a decentralized organizational structure, where employee decisions are made by each individual department on a detailed basis.