The effect of formalization in the enterprise

Abstract

Formalization is one of the pillars of a bureaucratic company. It is manifested by a high number of formally given rules, procedures and written guidelines. These documents guide the way of employees’ conducting and their activities. Precisely defined rules determine the way of work and based on rules the activities are divided among the employees of the company. They feel that the rules are readable, clear and valid for everyone. Research shows a positive correlation between the effectiveness of business activities and the degree of formalization. On the other hand too detailed rules prevent creativity, initiative and self-development. Employees require rules and written materials from the sovereign’ supervisor to solve every problem, often one that the employees themselves can easily solve. Our contribution is dedicated to formalization and its impact on employee initiative to make changes in the organization. In a sample of 190 companies, we confirmed that with the increasing formalization, the initiative of employees to change has been decreasing.

Gender and decision-making styles in male and female managers of Chilean SMEs

“…In large companies, internal bureaucracies and clearly defined roles and responsibilities of officials are common. However, limitations inherent to SMEs, such as restricted capacity, logistics and infrastructure (Skorková, 2020), often require CEOs to be involved in multiple aspects of the production process (Brouthers et al. , 1998; Hsu et al.…”

The Influence of the Manufacturing Industry Environment, Organizational Structures, and Economic Trends on Employee Responsibilities in the Manufacturing Industry

“…Formalization greatly impacts worker training and development, ultimately leading to permanent changes in job responsibilities. Formalization also affects workers' obligations from the framework setting (Skorková, 2020). Businesses can create training programs tailored to the specific jobs and competencies required for each person's role by clearly delineating individual job duties.…”

“…However, maintaining the right approach is of the utmost importance as too much emphasis on formalization can be detrimental to an employee's career and may pose specific disadvantages such as inhibition of initiative, creativity, and personal development of personnel (Sievert et al, 2022). Moreover, it can shift towards a mindset more concerned with processes rather than achieving specific objectives, thus making the system vague and rigid (Skorková, 2020).…”