Formalization is the rules and procedures followed by an
organization to a degree which includes trainings. It standardizes or regulates
the behavior and determines the relationship between the organization such as
the relationship between the leader and the followers (Malay Patel 2013). In
terms of designs, formalization make use of high specialization of labour and
usually have a wide span of control. The main objective of formalization is to
reduce differences in the behaviors of the employees. This can be done by both
formal and informal means. Formal is standardized based on written rules.
Makes employee behavior more predictable since they respond to
problems in similar ways (Anon, ND).
When there is a problem the employee can turn to a handbook or a
procedure guidelines (Taylor Bauer and Berrin Erdogan, ND).
Allows people in the same sector to communicate and share
Have the same goals and the divisional structure coordinate well
Since employees are behaving in the same manner, this can lead to
innovativeness in a high degree of formalized company. (A high degree of
formalization can lead to innovativeness because employees are used to behave
in a certain manner) (Anon, ND).
Since the employees are behaving in the same manner this leads to
a reduced motivation and job satisfaction which also reduces the pace of
decision making (Anon, ND).
Not all answers are specified in the rulebook or guideline book
since customers have various questions (Taylor Bauer and Berrin Erdogan, ND)
Reduced information flow in the organization due to always
referring to the guidelines so they have less understanding of how other
departments affects the company (Sophie Johnson, ND).
Cooperation and coordination suffers (Sophie Johnson, ND).
Motivated employees tend to solve problems in their own ways when
they can’t find the solution in the handbook (Malay Patel 2013).
Formalization in Toyota
is really important due to the Toyota Production System (TPS) having a unique
principle called the “just-in-time” production (Mike Mozart, ND)
Rules and Regulations:
Raw materials are delivered to the assemble line exactly at the
time they are to be used.
Front-line employees are given the power to stop the production
when they see a problem
Requires all the employees to be an expert in what they do
Do not accept flaws in the manufactured line
This principle reduces wastage of resources and emphasizes the
importance of efficiency for the employees. In TPS they want their customers to
have a perfect product even though stopping the production may be costly. This
increases their image in the market (Mike Mozart, ND).
Huawei has a high formalization and is highly influenced by the
company. If the higher ups make a rules the employees have to follow them
without questioning the authority.
Rules and Regulations:
Employees cannot simply use their logic and their creativeness to
perform their tasks.
One of their goals is to keep improving their products
As the market shifts and changes they have to try and adapt with
As they adapt Huawei uses a step-by-step approach which minimizes
Due to Huawei having high formalization it is said that it has the
ability to shape and transform the market with innovative products (Ajay Gupta
2017). The step-by-step approach includes the preparation of the change,
adjustments and process optimization, and the completion of transformation
(Richard Wong & Shan Yifan, ND).
Both Toyota and Huawei make use of formalization and have always
been by the book. As the technology improves and as their companies gets better
and larger the use of formalization in the companies get higher. All the
employees have to follow the guidelines and they can’t do what they want. Both
the companies give their employees authority to stop the manufacturing when
they see a fault in the system.
To conclude, formalization in an organization is using systematic
rules and procedures which control the employee’s activities and actions. Like
every other organizational structure, formalization has its own advantages and
disadvantages. One of the advantages in having a formal organization is that
when there is a problem employees know where to look for answers. One of the
disadvantages is that due to them behaving in the same manner they lose their
motivation to work. In the above companies, both Huawei and Toyota have a high
formalization which is good in terms of their business structure. But for some
business the use of formalization is not suited especially in huge companies
where there are many sectors and many employees.