Formalization refers to how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures. Highly formalized organizations have explicit job descriptions, numerous organizational rules, and clearly defined procedures covering work processes. Employees have little discretion over what’s done, when it’s done, and how it’s done. However, where formalization is low, employees have more discretion in how they do their work. Early management writers expected organizations to be fairly formalized, as formalization went hand-in-hand with bureaucratic-style organizations.

Although some formalization is necessary for consistency and control, many organizations today rely less on strict rules and standardization to guide and regulate employee behavior. For instance, consider the following situation:

A customer comes into a branch of a large national package delivery chain and drops off a package for same-day shipping 37 minutes after the store’s cut-off time. Although the counter clerk knows he’s supposed to follow the rules, he also knows he could get the package processed and shipped out with no problem and wants to accommodate the customer. So he accepts the package and hopes that his manager won’t find out.24 Did this employee do something wrong? He did “break” the rule. But by “breaking” the rule, he actually brought in revenue and provided good customer service.

Considering there are numerous situations where rules may be too restrictive, many organizations have allowed employees some latitude, giving them sufficient autonomy to make those decisions that they feel are best under the circumstances. It doesn’t mean throwing out all organizational rules because there always will be rules that are important for employees to follow—and these rules should be explained so employees understand why it’s important to adhere to them. But for other rules, employees may be given some leeway.25