Evolution of Formal Organizations
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An organizational model which was also referred to as the scientific model of management gave rise to what is now known as the formal organization. Defined by Frederick Winslow Taylor in 1911 as “the application of scientific principles to the operation of a business or other large organization,” this model consisted of three steps. The first step required managers to observe the tasks being performed by his or her employees. During this process of observation, the operations involved were being identified, and then the time needed by each employee to perform a certain task was measured. The second step consisted of analyzing the data gathered (the specific operations and the time involved) for the purpose of improving overall performance.
The specific objective of this step was to enable managers to consider alternative tools and methods of doing the jobs so that employees could perform more efficiently. The third and final step was for management to come out with guidelines so that employees could be informed about the new tools and the new methods of production and then provide them with the proper incentives to motivate them into using the new tools and employing the new method of doing things. It was observed that when these steps were properly followed, business organizations achieved higher productivity, allowing businesses to provide their employees with higher wages and better benefits. Out of this model, today’s formal organization emerged sometime during the 20th century (Macionis, 2006).
Employing the concept of a formal organization enabled companies to realize more profits. Later, formal organizations gave way to bureaucratic organizations which were specifically designed to improve efficiency. As defined, a bureaucracy is an “organizational model rationally designed to perform tasks efficiently.” A bureaucratic organization has six main elements, namely: specialization, hierarchy, rules and regulations, technical competence, impersonality, and formal, written communication (Macionis, 2006).
The first element, “specialization,” means that workers are assigned to perform specialized functions. In other words, everybody has his or her specific task to perform which forms part of a whole process. No one worker could be involved in more than one phase of a process. The second element is “hierarchy of offices.” Employees are organized vertically according to their rank. In other words, the lowest-ranked workers are being directed and controlled by a supervisor who is, in turn, under the supervision of a middle manager, and so on and so forth. In a vertical organization, therefore, supervision is “ladderized” (Macionis, 2006).
Then a bureaucratic organization is governed by established “rules and regulations” which guide the overall operations of the organization. This means that employees are expected to act within the confines of these regulations and deviant acts are dealt with accordingly. This also means that performance evaluation in a bureaucratic organization not only concerns employee productivity but is affected to a certain extent by how an employee observes the established rules and regulations of the company. The fourth element is “technical competence.” In a bureaucratic organization, only qualified applicants are being hired. Job descriptions are not only adhered to during the hiring process but employee performance is periodically monitored and evaluated. To maintain a high level of technical competence, employees are being made to undergo trainings to keep them abreast of new developments in their fields (Macionis, 2006).
The fifth element is “impersonality,” which simply means that the organization considers its rules and regulations more important than its employees. In spite of this element of impersonality, however, everybody is being treated equally according to the rules of the organization. The final element is “formal, written communication.” In a bureaucracy, all communications are in written form. Examples of written communication favored by a bureaucratic organization are reports and memos. Oral communications are not only considered informal but unreliable as well (Macionis, 2006).
Unfortunately, bureaucratic organizations, in spite of the fact that they were designed to achieve efficiency through the scientific method of operation, have been observed to possess certain inherent weaknesses. One of these is what is called “bureaucratic alienation” – this means that individual workers are being “dehumanized” because personal needs and desires are being sacrificed for efficiency and the accomplishment of assigned tasks. Second is “bureaucratic ritualism” which is described as the tendency of the employees to stick to the established rules and regulations even if the ultimate objectives of the organizations are being undermined. Then there is also what they call the “bureaucratic inertia” which means that the organization tends to continue perpetuating itself even after its goals have already been achieved. This also refers to the behavior of certain bureaucratic officers to protect their personal interests to the detriment of the organization’s principles and objectives. Another fault of bureaucracy is what experts call “oligarchy.” This means that the organization is being run by a few. This also refers to the fact that in a bureaucratic organization, the top executives are no longer as accessible to the lower-ranked employees. In other words, workers could no longer communicate directly with top executives but have to pass through bureaucratic layers (Macionis, 2006).
It has been observed that in some cases, these weaknesses have become the cause for bureaucratic organizations to fail. Milgrom and Roberts (1991) explained that a decentralized informal organization actually results to “structural autonomy, higher-powered incentives, and local decision making.” This puts informal organizations in a position where they are able to give more incentives to their workers and greater decision making powers to their supervisors or middle managers. In contrast, centralization, which characterizes formal or bureaucratic organizations, results to “lower-powered incentives and centralized decision making” resulting to less motivated workers and supervisors and middle managers who have less decision making authorities (Zenger, Lazzarini, and Poppo, 2001).
Another reason for the employees’ lack of motivation was possibly raised by Serenko, Bontis and Hardie (2007) when they said that in bureaucratic organizations, “…interpersonal relationships deteriorate, the level of interpersonal trust decreases, connective efficacy diminishes, and interpersonal communication reduces…” In effect, what Serenko, Bontis and Hardie were suggesting was that when workers are forced to act like automatons, motivation suffers. In other words, if organizations really want to sustain their profitability, they should return to the practice of treating their workers as human beings who are allowed to interact freely not only with their co-workers but also with their superiors.
These deficiencies of formal organizations have caused some organizations to consider becoming more flexible, thereby adopting at least some of the characteristics of informal organizations. Hodge (1996) observed that the “bureaucratic structures and autocratic management styles [have become] ineffective ways to respond and interact in today’s dynamic and competitive economic environment.” He reviewed the book entitled “Corporation on a Tightrope” which was written by John G. Sifonis and Beverly Goldberg who discussed a model called strategic management. According to the authors, the “interactive and dynamic effect” of hiring temporary workers, downsizing of companies and acquiring new technologies can result to a more flexible organization where the involvement of employees is emphasized. Hodge said that Sifonis and Goldberg maintained that the business organization of the future is flexible and adaptive to change (Hodge, 1996).
These observations might well prove that bureaucratic organizations might not be around much longer. As researchers and observers have pointed out, this model is no longer effective in the face of rising competition brought about by globalization. If these observations prove accurate, one could expect that the organizations of the future will strive to achieve some degree of flexibility in their business operations or perhaps look for a model that would be a compromise between an organization which exercises some degree of bureaucratic control and one which is informal and flexible.
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