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Formalization in organizational structure is a process in which managers specify (in writing), procedures, rules and responsibilities for the individual employees, organizational units, groups, teams and the organization as a whole, which leads to the development of processes, relationships, and operating procedures. The formalization of the organization is the result of the management's tendency towards bureaucracy and centralization.

Formalization creates a series of provisions that specify:

  • mission and goals,
  • tasks of basic posts and organizational units,
  • basic organizational relationships,
  • ranges of responsibilities and power,
  • patterns of action (main processes and procedures).

Formalization of organizational documents

Formalization in practice implies the development of such documents as:

  • organizational chart,
  • terms and conditions,
  • job description,
  • range of activities,
  • operating procedures,
  • process descriptions,
  • organizational statement,
  • orders,
  • commands,
  • circular letters.
Fig. 1. Organizational chart as a example of formalization

Stages of formalization

Formalization is a process occurring in three stages:

  • Stage 1. Creating legal documents for the company, to define its mission, goals, course of action and principles of operation. The result of the first stage is the development of such documents as the statute, procedures and organizational chart,
  • Stage 2. Development of a detailed description of units describing behavioural patterns in specific organizational situations, decision rules, etc.,
  • Stage 3. Continuous improvement of organizational documentation, adapting it to changing internal and external conditions.

Measurement of level of formalization

Formalization occurs in every organization, but there is a wide variety of its degree and scope. A common problem for management is therefore to find the so-called. optimum formalization, when it is not achieved they have to deal with:

  • over-formalization - occurs when there is too many organizational rules, which leads to a lack of flexibility,
  • under-formalization - existence of too small quantities of rules and documents, it leads to the freedom of action of workers, which in turn can result in chaos and a decline in the efficiency.

The degree in which managers are formalizing the system can be measured by:

  • the number of provisions governing the functioning of the organization,
  • degree of detail of these provisions,
  • degree of stringency (i.e. penalties for failure to comply with the rules).

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