Development of Formal Organizations

How and why have formal organizations come into ex­istence? The first large-scale formal organizations seem to have emerged as central governments became more complex. Under one theory, formal organizations became inevitable in societies which had state-controlled irrigation networks, such as Egypt, Mesopotamia, India, Peru under the Incas. Centralized decisions had to be made about water distribution, and networks for carrying out such policies had to be established.

The growth of formal organizations has been closely tied to the emergence of industrial socie­ties. Earlier societies had not developed large-scale organizations to their fullest extent because their technology was relatively underdeveloped. Consequently, there was no need to accumulate profits to invest in machinery. As mechanical in­novations evolved, more sophisticated manage­ment emerged to maximize production in order to serve new markets brought about by improved transportation networks and increased consumer demand (Barnouw, 1978:200-201; Braverman, 1974; Jacoby, 1973:9-19).

To see how a formal organization can develop, let us consider the example of a carpenter in colo­nial New England, whom we call James Wooley. Wooley began his adult life as a self-employed artisan who personally performed all the tasks of his trade. He cut the lumber, sawed it, made fur­niture, and sold his products himself. Generally, he worked alone in the building that served as his shop, store, and home.

As his village and business grew, Wooley con­cluded that he had more customers than he could personally serve. At first, he hired a single assist­ant. A few years later, as he was able to respond to demand in neighboring areas, he began to em­ploy a small group of workers. Each of them spe­cialized in a specific aspect of furniture making and took advantage of new tools and innovative carpentry techniques. One worker cut the wood, one made bedposts, one was in charge of staining, and another ran the store. Before long, a carpen­ter had become the manager of a small furniture factory (Stark et al., 1973:145).

Wooley discovered that by coordinating the work of several assistants efficiently, he could produce furniture more quickly and with less expense. However, this conversion from a one-person operation to a small assembly line illus­trates more than simply a change in production techniques. It reflects the emergence of a dramat­ically different form of organization, known as bureaucracy that has special significance for peo­ple's interactions and their relationship to work. A bureaucracy is a component of formal organi­zation in which rules and hierarchical ranking are used to achieve efficiency.

Characteristics of a Bureaucracy When we think of the term bureaucracy, a variety of images— mostly unpleasant—come to mind. Rows of desks staffed by seemingly faceless people, endless lines and forms, impossibly complex language, and frustrating encounters with red tape—all these have combined to make bureaucracy a dirty word and an easy target in po­litical campaigns. As a result, few Americans want to identify their occupation as "bureaucrat" de­spite the fact that all of us perform various bu­reaucratic tasks. Elements of bureaucracy are found in almost every occupation in an industrial society such as the United States.

In order to develop a more useful and objective definition of bureaucracy, we must turn to the writings of Max Weber (1947:333-340, original edition 1922). This pioneer of sociology, first directed research­ers to the significance of bureaucratic structure. In an important sociological advance, Weber emphasized the basic similarity of structure and process found in the otherwise dissimilar enter­prises of religion, government, education, and business.

Weber viewed bureaucracy as a form of organi­zation quite different from the family-run busi­ness. He developed an ideal type of bureaucracy, which reflects the most characteristic aspects of all human organizations. Since perfect bureauc­racies are never achieved, no actual organization will correspond exactly to Weber's ideal type (Blau and Meyer, 1987:19-22). Nevertheless, Weber argued that every bureaucracy—whether its purpose is to run a day care center, corpora­tion, or army—will have five basic characteristics. These characteristics, as well as dysfunctions (or potential negative consequences) of bureauc­racy.

1 Division of labor Specialized experts are employed in each position to perform specific tasks. Thus, the president of the United States need not be a good typist. A lawyer need not be able to complete an income tax form. By working at a specific task, people are more likely to become highly skilled and carry out a job with maxi­mum efficiency. This emphasis on specialization is so basic a part of our lives that we may not real­ize that it is a fairly recent development in west­ern culture.

Analysis of division of labor by interactionist researchers has led to scrutiny of how various employees at a workplace interact with one an­other. For example, after a cardiac patient is brought into a surgical recovery room, nurses and technicians independently make 10 or 20 connections between the patient and various monitoring devices. Later procedures, by con­trast, are more likely to involve the coopera­tive efforts of two or more workers. Through these tasks, medical personnel gain proficiency in delicate and essential procedures (Strauss, 1985:2).

Although division of labor has certainly been beneficial in the performance of many complex bureaucracies, in some cases it can lead to trained incapacity; that is, workers become so specialized that they develop blind spots and fail to notice obvious problems. Even worse, they may not care about what is happening next to them on the as­sembly line. Some observers believe that, through such developments, Americans have become much less productive on the job.

Although trained incapacity has negative impli­cations for the smooth running of organizations, it is especially disastrous for the individual who loses a job during a layoff. An unemployed worker may have spent years becoming proficient at highly technical work and yet may be totally unsuited for other positions, even those which are directly related to his or her former job. As an example, an automotive machinist who pushes buttons on an automobile assembly line in Michigan will lack the proper training and skill to work as an oil industry machinist in Texas (Wallis, 1981).

In some instances, the division of labor (as re­flected in the fragmentation of job titles) may actually contribute to sex discrimination by creat­ing unnecessary and inappropriate distinctions between female and male employees. In a study of 368 businesses in California, sociologists James Baron and William Bielby (1986) found that proliferation of job titles tended to increase as men and women reached parity in their le­vel of employment. Apparently, separate job titles—ostensibly designed to reflect a division of labor—were actually being used to preserve traditional occupational segregation by gender.

2 Hierarchy of authority Bureaucracies follow the principle of hierarchy; that is, each position is under the supervision of a higher authority. A professional baseball team is run by an owner, who hires a general manager, who in turn hires a manager. Beneath the manager come the coaches and last the players. In the Roman Catholic church, the pope is the supreme authority; under him are cardinals, bishops, and so forth. Even large medical group practices have boards of directors, executive committees, and administrators (Kralewski et al., 1985).

Recent research suggests that bureaucracies may be a positive environment for women at the lower but not the upper echelons of the hierar­chy. Political scientist Kathy Ferguson (1983, 1984) observes that many traits traditionally as­sociated with the feminine gender role—such as valuing warm, supportive, cooperative rela­tionships—are conducive to participation in a bureaucratic organization. However, upwardly mobile women may find their career progress hindered because they function more as facili­tators than as innovators, and then are not viewed as aggressive enough to serve in higher manage­ment posts. Consequently, although traditional feminine values may be functional for women in the lower levels of bureaucratic structure, they appear to become dysfunctional as women aspire to greater power and prestige.

3 Written rules and regulations Wouldn't it be nice if a bank teller cashed your check for $ 100 and deliberately handed you six $20 bills, saying: "You have such a friendly smile; here's an extra $20"? It would certainly be a pleasant surprise, but it would also be "against the rules."

Rules and regulations, as we all know, are an important characteristic of bureaucracies. Ide­ally, through such procedures, a bureaucracy ensures uniform performance of every task. This prohibits us from receiving an extra $20 at the bank, but it also guarantees us that we will receive essentially the same treatment as other custom­ers. If the bank provides them with special ser­vices, such as monthly statements or investment advice, it will also provide us with those services.

Through written rules and regulations, bu­reaucracies generally offer employees clear standards as to what is considered an adequate (or exceptional) performance. In addition, proce­dures provide a valuable sense of continuity in a bureaucracy. Individual workers will come and go, but the structure and past records give the organization a life of its own that outlives the ser­vices of any one bureaucrat. Thus, if you are brought in to work as the new manager of a book­store, you do not have to start from scratch. Instead, you can study the store's records and ac­counting books to learn about the payroll, financial dealings with distributors, discount poli­cies on "sale" books, and other procedures.

Of course, rules and regulations can over­shadow the larger goals of an organization and become dysfunctional. If blindly applied, they will no longer serve as a means to achieving an objective but instead will become important (and perhaps too important) in their own right. This would certainly be the case if a hospital emer­gency room physician failed to treat a seriously injured person because he or she had no valid proof of American citizenship. Robert Merton (1968:254—256) has used the term goal displace­ment to refer to overzealous conformity to official regulations.

It is widely believed that the rules and regula­tions of bureaucracy tend to suppress or destroy the individuality of employees. However, studies conducted by Melvin Kohn (1978) suggest that bureaucracies often encourage intellectual flexi­bility, tolerance for nonconformity, and willingness to accept change. The complexity and diver­sified responsibilities of most bureaucratic jobs appear to play an important role in promoting flexibility and openness to change.

4 Impersonality Max Weber wrote that in a bu­reaucracy, work is carried out sine ira el studio, "without hatred or passion." Bureaucratic norms dictate that officials perform their duties without the personal consideration of people as individu­als. This is intended to guarantee equal treatment for each person; however, it also contributes to the often cold and uncaring feeling associated with modern organizations.

We typically think of big government and big business when we think of impersonal bureaucra­cies. Interestingly, during the most turbulent years of the 1960s, student activists bitterly pro­tested the bureaucratic nature of the American university. One of the symbols of the free speech movement at the University of California at Berkeley was an IBM computer card which stated: "Student at U.C.: Do not bend, fold, or mutilate." In the view of dissidents, the university had become one more giant, faceless, unfeeling bureaucracy which cared little for the uniqueness of the individual (P. Jacobs and Landau, 1966:216-219).

5 Security Within a bureaucracy, hiring is based on technical qualifications rather than on favorit­ism, and performance is measured against spe­cific standards. This is designed to protect bu­reaucrats against arbitrary dismissal. Promotions are dictated by written personnel policies, and people often have a right to appeal if they believe that particular rules have been violated. Such procedures give employees a sense of security and encourage loyalty to the organization.

In this sense, the "impersonal" bureaucracy can be an improvement over nonbureaucratic organi­zations. A federal bureaucrat in a civil service position, for example, has ideally been selected on the basis of merit, not because he or she did favors for a political machine. Above all, the bu­reaucracy is expected to value technical and pro­fessional competence, which is essential in the day-to-day functioning of a complex, industrial society such as the United States.

Unfortunately, personnel decisions within a bureaucracy do not always follow this ideal pattern. Dysfunctions within bureaucracy have be­come well publicized, particularly because of the work of Laurence J. Peter. According to the Peter principle, every employee within a hierarchy lends to rise to his or her level of incompetence (Peter and Hull, 1969:25). This hypothesis, which has not been directly or systematically tested, re­flects a possible dysfunctional outcome of struc­turing advancement on the basis of merit. Tal­ented persons receive promotion after promotion until, sadly, they finally achieve positions that they cannot handle. Thus, at least in some cases, the very security offered by bureaucracies may contribute to incompetence (Blau and Meyer, 1987:21; Chinoy, 1954:40-41).

Bureaucratization as a Process As stated earlier, Weber's characteristics of bureaucracy should be seen as describing an ideal type rather than as offering a precise definition of an actual bureauc­racy. Sociologist Alvin Gouldner (1950:53—54) notes that not every formal organization will pos­sess all Weber's characteristics. In fact, there can be wide variation among actual bureaucratic or­ganizations.

Stanley Udy (1959) compared the structure of formal organizations in 150 nonindustrial socie­ties. Like their counterparts in modern industrial nations, these organizations possessed many of— but not necessarily all—the bureaucratic charac­teristics identified by W⁷eber. Similarly, Richard Hall (1963) tested Weber's ideal type against 10 formal organizations within the United States, including a hotel and a stock brokerage firm. His findings concurred with those of Udy: bureauc­racy must be viewed as a matter of degree, that is, as more, or less, bureaucratic. Therefore, in de­scribing organizations, we need to apply the Weberian model carefully, with the understand­ing that an organization can be more or less rule-oriented, more or less hierarchical, and so forth.

Sociologists have used the term bureaucratiza­tion to refer to the process by which a group, or­ganization, or social movement becomes increas­ingly bureaucratic. Earlier in the chapter, we saw the beginnings of this process as carpenter James Wooley became the manager of a small furniture factory in colonial America. Wooley's factory, even early in its operation, took on at least two of Weber's characteristics of bureaucracy: division of labor and hierarchical authority. If the factory continued to grow—and Wooley took on more and more employees—his organization would undoubtedly become more impersonal and he would probably develop more rules and regula­tions to ensure efficiency.

Normally, we think of bureaucratization in terms of large organizations. In a typical citizen's nightmare, one may have to speak to 10 or 12 individuals in a corporation or government agency to find out which official has jurisdiction over a particular problem. Callers can get trans­ferred from one department to another until they finally hang up in disgust. Interestingly, though, bureaucratization also takes place within small-group settings. Children organizing a school club may elect as many officers as there are club members and may develop various rules for meetings.

As we have seen, bureaucratization is not a fi­nite process, nor does it inevitably lead to a spe­cific structure. For example, sociologists have rec­ognized that organizations may take quite different forms in different cultures.

In addition to varying from society to society, bureaucratization also serves as an independent (or causal) variable affecting social change. Con­flict theorists have argued that bureaucratic orga­nizations tend to inhibit change because of their emphasis on regulations and security for office­holders. As one example, some public assistance (or welfare) caseworkers are so preoccupied with the required forms for clients that they forget to see whether people's basic needs are being sat­isfied. Paper becomes more meaningful than people; numbers take precedence over needs.

Oligarchy: Rule by a Few The bureaucratizing influences on social movements has also been a concern of conflict theorists. German sociologist Robert Michels (1915), in studying socialist par­ties and labor unions in Europe before World War I, found that such organizations were be­coming increasingly bureaucratic. The emerging leaders of these organizations—even some of the most radical—had a vested interest in clinging to power. If they lost their leadership posts, they would have to return to full-time work as manual laborers. Similarly, a team of sociologists studied bureau­cratization in "crisis centers." These organiza­tions, born in the counterculture of the 1960s (see Chapter 3), were established to offer counseling and support to persons experiencing divorce, death of a family member, drug and alcohol problems, and other types of emotional crisis. Despite their initial commitment to less bureau­cratic, nonhierarchical structures, crisis centers increasingly turned to written job descriptions, organization charts, and written policies regard­ing treatment of cases and clients (Senter et al., 1983; for a different view, see Rothschild-Whitt, 1979).

Through his research, Michels originated the idea of the iron law of oligarchy, under which even a democratic organization will develop into a bureaucracy ruled by a few (the oligarchy). Why do oligarchies emerge? People who achieve lead­ership roles usually have the skills, knowledge, or charismatic appeal (as Weber noted) to direct, if not control, others. Michels argues that the rank and file of a movement or organization looks to leaders for direction and thereby reinforces the process of rule by a few. In addition, members of an oligarchy are strongly motivated to maintain their leadership roles, privileges, and power.

Michels's insights are as relevant today as they were 85 years ago. Contemporary labor unions in North America and Europe bear little resem­blance to those organized after spontaneous ac­tivity by exploited workers. Conflict theorists have expressed concern about the longevity of union leaders, who are not always responsive to the needs and demands of membership. As Michels noted in his iron law of oligarchy, leaders may become more concerned with maintaining their own positions and power.

It should be added, however, that bureaucra­cies are not always a conservative force within a society. Political scientist Gregory Kasza (1987) studied military regimes in Japan (in the period 1937-1945), Peru (1968-1975), and Egypt (1952-1970). He found that the civilian bureauc­racies serving these military governments actually promoted radical policies. For example, Egyptian bureaucrats introduced sweeping land reforms that redistributed 20 percent of all land suitable for cultivation to the country's peasants. In criti­cizing previous work on bureaucratic conservatism, Kasza emphasizes that different types of regimes may encourage radical, liberal, or con­servative bureaucratic policies.

In a real sense, the work of Michels and Kasza underscores the impact that bureaucratization can have on all human organizations. However, while the "iron law" may sometimes help us to understand the concentration of formal authority within organizations, sociologists recognize that there are a number of checks on leadership. Groups often compete for power within a formal organization, as in an automotive corporation in which divisions manufacturing heavy machinery and passenger cars compete against each other for limited research and development funds. Moreover, informal channels of communication and control can undercut the power of top offi­cials of an organization. This is bureaucracy's "other face."

Bureaucracy's Other Face How does bureau­cratization affect the average individual who works in an organization? The early theorists of formal organizations tended to neglect this ques­tion. Max Weber, for example, focused on man­agement personnel within bureaucracies, but he had little to say about workers in industry or clerks in government agencies.

According to the classical theory of formal or­ganizations, also known as the scientific manage­ment approach, workers are motivated almost en­tirely by economic rewards. This theory stresses that productivity is limited only by the physical constraints of workers. Therefore, workers are treated as a resource, much like the machines that have begun to replace them in the twentieth cen­tury. Management attempts to achieve maximum work efficiency through scientific planning, es­tablished performance standards, and careful supervision of workers and production. Planning under the scientific management approach in­volves time and motion studies but not studies of workers' attitudes or feelings of job satisfaction.

It was not until workers organized unions— and forced management to recognize that they were not objects—that theorists of formal organizations began to revise the classical approach. Along with management and administrators, so­cial scientists became aware that informal groups of workers have an important impact on organi­zations (Perrow, 1986:79-118). One result was an alternative way of understanding bureaucratic dynamics, the human relations approach, which emphasizes the role of people, communication, and participation within a bureaucracy. This type of analysis reflects the interest of interactionist theorists in small group behavior. Unlike plan­ning under the scientific management approach, planning based on the human relations perspec­tive focuses on workers' feelings, frustrations, and emotional need for job satisfaction.

The gradual move away from a sole focus on physical aspects of getting the job done—and toward the concerns and needs of workers—led advocates of the human relations approach to stress the less formal aspects of bureaucratic structure. Informal structures and social net­works within organizations develop partly as a result of people's ability to create more direct forms of communication than the formal struc­tures mandate. Charles Page (1946) has used the term bureaucracy's other face to refer to the unoffi­cial activities and interactions which are such a basic part of daily organizational life. Two studies—one of a factory, the other of a law en­forcement agency—illustrate the value of the human relations approach.

At the Hawthorne studies, which reminded sociologists that research subjects may alter their behavior to match the experimenter’s expectations? This methodologi­cal finding notwithstanding, the major focus of the Hawthorne studies was the role of social fac­tors in workers' productivity. As one aspect of the research, an investigation was made of the switch­board-bank wiring room where 14 men were making parts of switches for telephone equip­ment. These men were found to be producing far below their physical capabilities. This was espe­cially surprising because they would earn more money if they produced more parts.

Why was there such an unexpected restriction of output? According to the classical theory, pro­ductivity should be maximized, since workers had been given a financial incentive. However, in practice the men were carefully subverting this scheme to boost productivity. They feared that if they produced switch parts at a faster rate, their pay rate might be reduced or some might lose their jobs.

As a result, this group of workers established their own (unofficial) norm for a proper day's work. They created informal rules, sanctions, and argot terms to enforce this standard. Workers who produced "too much" were called "speed kings" and "rate busters," while those judged to be "too slow" were "chiselers." Individuals who violated this agreement were "binged" (slugged on the shoulder) by coworkers. Yet management was unaware of such practices and had actually come to believe that the men were working as hard as they could (Etzioni, 1964:33—34; Roethlisberger and Dickson, 1939).

In another study of interactions within bu­reaucracy, Peter Blau (1963) observed agents working in a federal law enforcement agency. Their work involved auditing books and records and also interviewing employees and employers. If agents encountered a problem or procedure that they could not handle, they were required to consult their superior (a staff attorney) rather than ask each other. However, many were re­luctant to follow this established policy for fear that it would adversely affect their job ratings. Therefore, they usually sought guidance from other agents—even though this clearly violated the official rules.

How does one get advice without asking for it? To put it another way, how does one officially respect a policy while in fact subverting it? Typi­cally, when faced with this problem, an agent would describe an "interesting case" to col­leagues, slowly allowing them to interrupt. Lis­teners would remind the agent of new data that might be helpful or suggest other ways of ap­proaching the problem. Yet, of course, the agent had never asked—at least directly—for assist­ance. These maneuvers permitted law enforce­ment agents to maintain face, in Goffman's terms, with both their coworkers and their superiors.

Both the Hawthorne studies and Blau's re­search testify to the importance of informal struc­tures within formal organizations. Whenever we examine sufficiently small segments of such orga­nizations, we discover patterns of interaction that cannot be accounted for by the official structure. Thus, while a bureaucracy may establish a clear hierarchy and well-defined rules and standards, people can always get around their superiors. Informal understandings among workers can redefine official policies of a bureaucracy. Re­cently, some large corporations have recognized the potential value of informal structures and have formally granted certain employees unusual autonomy through arrangements which promote intra partnership.

Interest in sociological investigation of labor-management relations and workplace behavior has led not only to research opportunities but also to employment opportunities for applied sociolo­gists. According to a 1984 report by the American Sociological Association, about 12 percent of all those who hold degrees in sociology are currently working with corporations. Among their job titles are "management consultant," "training and de­velopment manager," "systems analyst," and "personnel director" (B. Huber, 1984a, 1984b).

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