Evaluating Estimates and MaterialityInstructionsReview the fo.docx

Evaluating Estimates and Materiality
Instructions:
Review the form 10-K or annual reports for Ford Motor
Company and Toyota Motor Corporation, then answer the
following questions by referring to the item number in the
forms:
1a. Some common numerical thresholds and benchmarks for
overall materiality judgments are 5% of net income and 1% of
assets. The materiality level at which items are considered
clearly trivial—materiality level where the auditor believes
errors below that level would not, even when aggregated with
all other misstatements, be material to financial statements—is
generally 5% to 10% of overall materiality. Calculate these
numerical thresholds for Ford and Toyota, assuming 5% for
misstatements considered clearly trivial.
1b. Assume that you discover a $10,000,000 error in inventory.
What difficulties would you encounter in deciding whether or
not that amount is material?
1c. The numerical thresholds differ across the two companies.
Why does that present a problem for the auditor? For third-party
users?
1d. What is the SEC’s position on the use of numerical
thresholds?
1e. What other characteristics of potential misstatements should
auditors consider when evaluating their materiality?
2a. What does the term netting mean in the context of
misstatement judgments?
2b. What is the SEC’s guidance concerning netting?
2c. Why is it helpful to financial statement users to have
companies avoid netting?
3. One of Ford’s most significant liabilities concerns pensions
and postretirement benefits. What is the nature of the estimates
required to value these liabilities? What risks do these estimates
pose for the audit firm?

4. Read Ford’s MD&A disclosure concerning goodwill and
impairments. Describe the nature of estimates that management
needs to make in order to estimate the impairments. What audit
evidence would you want to gather to be assured that
management’s estimates are reasonable?
5a. See the notes in Toyota’s and Ford’s financial statements
dealing with warranties. What are the amounts for accrued
warranty liabilities and annual warranty expense for each
company?
5b. What is the nature of estimates required for warranty
liabilities?
5c. What planning analytical procedures can you develop to
help you understand the relative size of warranty accounts for
both companies. What inferences do you draw from the
comparison of these analytics?
Your paper should meet the following requirements:
· 4-5 pages in length
· Formatted according to CSU-Global Guide to Writing and
APA Requirements
Include at least two or three outside sources. The CSU-Global
Library is a great place to start.
Friends, not foes?: Work design and formalization in the
modern work context
Author(s): TINA L. JUILLERAT
Source: Journal of Organizational Behavior, Vol. 31, No. 2/3,
Putting Job Design in
Context (FEBRUARY 2010), pp. 216-239
Published by: Wiley
Stable URL: http://www.jstor.org/stable/41683903

Accessed: 01-04-2017 21:17 UTC
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Journal of Organizational Behavior
J . Organiz. Behav. 31, 216-239 (2010)
Published online in Wiley InterScience
(www.interscience.wiley.com) DOI: 10.1002/job.654
Friends, not foes?: Work design and
formalization in the modern work context
TINA L. JUILLERAT*4
University of North Carolina at Chapel Hill, Chapel Hill ,
North Carolina , U.S.A.
Summary Scholars have long debated the advantages and
disadvantages of formalization. Although many
researchers have suggested that formalization is likely to be
disadvantageous in the dynamic
environments currently faced by organizations and employees,
formalization appears to be
increasingly pervasive in modern organizations. Since scholars
have suggested that the effects of
formalization may depend on the way it is implemented, I
examine work design as a key
contingency for the successful implementation of
formalization. Based on examination and
integration of work design, organizational theory, and
cognitive perspectives, I conclude that
formalization is actually more advantageous and viable in the
current work context. However,
neither work design nor formalization individually is sufficient
for organizations seeking to cope
with current challenges. Rather, both interact and thus
represent key levers for organizations
seeking to thrive in the modern work context. Copyright ©
2010 John Wiley & Sons, Ltd.
Introduction

Organizations face a business environment which is
significantly more uncertain, complex, and
interdependent (Brown & Eisenhardt, 1997; Friedman, 2005;
Rousseau & Fried, 2001) and has
compelled organizations to become more flexible and to rapidly
generate new capabilities (Christensen,
1997; Teece, Pisano, & Shuen, 1997). Not surprisingly,
scholars have chronicled dramatic changes in the
work environment including "a new employment contract"
(Kissler, 1994), a more transient and blended
workforce (Ashford, George, & Blatt, 2008), and significant
changes in the nature of work (Fried, Levi, &
Laurence, 2008). For example, work is increasingly designed to
provide more autonomy in response
to increased environmental uncertainty (Parker, Wall, &
Cordery, 2001); greater challenge in response to
rising employee expectations (Grant & Parker, 2009); and
increased interdependence in response to
growing environmental complexity (Grant, Fried, & Juillerat,
2009). Moreover, technological change
and increased competition have triggered greater time pressure
and cognitive demands for the work of
many employees (Perlow, 1999; Elsbach & Hargadon, 2006).
Organizational scholars have suggested that theories have not
kept pace with these changes and may
no longer be accurate (Barley & Kunda, 2001), and current
organizational phenomena appear to
validate some of these concerns. For example, formalization
appears to be alive and well, if not
* Correspondence to: Tina L. Juillerat, Kenan-Flagler Business
School, University of North Carolina at Chapel Hill, Campus
Box
3490, McColl Building, Chapel Hill, NC 27599-3490, U.S.A.

E-mail: [email protected]
tphD Candidate in Organizational Behavior.
Received 14 July 2008
Revised 25 June 2009
Copyright © 2010 John Wiley & Sons, Ltd. Accepted 30 June
2009
2017 21:17:40 UTC
WORK DESIGN AND FORMALIZATION 217
prospering, in modern organizations. Large formal
organizations continue to employ the vast majority
of workers (Marsden, Cook, & Knoke, 1994; Miller & Miller,
2005), formalization is prevalent in new
ventures and emerging sectors (Sine, Mitsuhashi, & Kirsch,
2006), and many organizations use highly
formalized procedures for essential activities including product
development (Jelinek & Schoonhoven,
1990), strategic planning (Adler & Borys, 1996), software
development (Cusumano, 1991; Rousseau,
2007), and project management (Crawford, 2006). Yet
traditional theoretical perspectives would
predict the decline of formalization due to the difficulty of
specifying the roles and behaviors which
contribute to effectiveness in a context characterized by
increased uncertainty, complexity, and
interdependence (Griffin, Neal, & Parker, 2007; Katz & Kahn,
1978).

The rising presence of formalization amidst the conditions
which would predict its demise is yet to
be explained. In this paper, I integrate work design,
organizational theory, and cognitive perspectives to
provide new understanding of the role of formalization in the
modern work context, including whether
its persistence might be attributed to desirable properties in
contrast to oft presumed inertia (Adler &
Borys, 1996). First, I will briefly summarize the literature
regarding the concept of formalization and its
theoretical advantages and disadvantages. Second, since the
effects of formalization are believed to be
contingent on the way it is implemented (Adler & Borys, 1996;
Jaques, 1990; Parker, 2003), I will
examine work design as a critical contingency for the
successful implementation of formalization,
focusing on the effects of increasingly prevalent work
characteristics such as autonomy, complexity,
interdependence, and time pressure. Third, I will introduce a
high level model which specifies how
formalization interacts with work design to influence both
proficiency and adaptivity dimensions of
performance. This model proposes that formalization provides
necessary structural and capacity
elements of proficiency and adaptivity which are increasingly
scarce and critical due to changes in the
nature of work, and thus that formalization will interact
synergistically with the focal work
characteristics to influence proficiency and adaptivity. Finally,
I will highlight theoretical and practical
implications and provide suggestions for further research.
Formalization
The concept of formalization has long been fundamental to
organizational theory and work design

researchers (Galbraith, 1977; Griffin et al., 2007; Lawrence &
Lorsch, 1967; Podsakoff, Williams, &
Todor, 1986; Pugh & Hickson, 1976; Thompson, 1967; Weber,
1947), but unfortunately has come to be
viewed and often even defined in terms of its perceived
pathologies (Stinchcombe, 2001). However, the
conception of formalization in Weber's (1947) bureaucratic
ideal type, which includes the core features
of formalization, specialization, and centralization, is quite
different from lay views of formalization.
According to Weber, formalization represents "the extent of
written rules, procedures, and
instructions" (Scott & Davis, 2006, p. 29), and is clearly
distinct from specialization or centralization,
which respectively represent the division of labor among
organizational positions and the locus of
authority to make decisions (Pugh, Hickson, Hinings, &
Turner, 1968). As a result, while formalization
is often equated with specialization and centralization,
formalization need not imply simple work tasks
or a lack of autonomy in making decisions. However, what is
central to Weber's conception of
formalization is that the procedures which guide action
facilitate the effective coordination of work
(Briscoe, 2007; Oldham & Hackman, 1981; Simon, 1997). As a
result, formalization provides several
distinct competencies for organizations including speed,
efficiency, and reliable and consistent
performance (Hannan & Freeman, 1984; Hofmann & Jones,
2005; Rockart & Mitchell, 2009).
Copyright © 2010 John Wiley & Sons, Ltd. J. Organiz. Behav.
31, 216-239 (2010)
DOI: 10.1002/job

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218 T. L. JUILLERAT
While Weber's conception of formalization depicts a rational
ideal of organizations at their best,
scholars applying a variety of theoretical perspectives have
highlighted a number of potential
disadvantages of formalization (Adler & Bory s, 1996; Briscoe,
2007), and formalization has also been
portrayed as a source of various pathologies rather than
rationality (Rockart & Mitchell, 2009). For
example, population ecology scholars working at the
organizational level (Hannan & Freeman, 1984),
scholars applying cognitive perspectives at individual and
organizational levels (Ford & Gioia, 2000;
Weick, Sutcliffe, & Obstfeld, 1999), and work design scholars
utilizing motivational perspectives at the
individual level (Parker, 2003; Raub, 2007) have argued that
formalization reduces flexibility,
adaptation, innovation, or motivation. These critiques of
formalization have often invoked the
organizational routines (Cyert & March, 1963; Gersick &
Hackman, 1990) or mindfulness (Langer,
1989; Weick et al., 1999) literatures to suggest that
formalization inhibits adaptivity by promoting rigid
or mindless adherence to routines.
However, scholars have increasingly suggested that such
critiques may be overly simplistic
(Levinthal & Rerup, 2006) and based on unrealistic
assumptions. First, routines are not inherently fixed
or rigid, but have both fixed and flexible properties (Feldman

& Pentland, 2003). Second, environments
are not entirely certain or uncertain (Griffin et al., 2007), and
thus individual actors perform work in a
context characterized by some level of uncertainty. As a result,
employees do not mindlessly execute
scripts, but make decisions about which routines to enact,
whether to adapt them, and how they should
be enacted in specific performance episodes (Feldman, 2000).
Third, routines are neither entirely
mindful nor entirely mindless since the selection, adaptation,
and enactment of routines require
mindfulness in both relatively stable (Feldman & Pentland,
2003; Levinthal & Rerup, 2006; Weick
et al., 1999) and dynamic and uncertain environments.
Similarly, as opposed to entirely mindless
execution of an existing formal organizational routine or
entirely mindful generation of a completely
new set of actions by individual actors, task performance
always involves an element of mindfulness
and some reliance on both existing and new routines. Given
new assumptions about routines,
uncertainty, and mindfulness, it is important to re-examine
their implications for the effects of
formalization. Since task performance in uncertain contexts
always involves some level of mindful
effort and reliance on both new and existing routines, I propose
that performance may be a function of
the interplay between the agency of individual actors and the
organizational routines which are
relatively fixed yet flexible. More specifically, since strong
theoretical traditions have linked individual
level theories of work design and organizational level theories
of formalization (Barley & Kunda, 2001 ;
Hackman & Oldham, 1980), I propose that work design
represents a critical contingency for the
successful implementation of formalization.

Work Design as a Contingency for the Successful
Implementation
of Formalization
Scholars have traditionally challenged the viability and
desirability of formalization amidst greater
uncertainty, complexity, and interdependence (Burns & Stalker,
1961; Griffin et al., 2007; Katz &
Kahn, 1978; Thompson, 1965). However, I propose that
successful formalization may be increasingly
viable and beneficial in the current work environment, and that
contemporary work design perspectives
which examine perceived tradeoffs between formalization and
work design (Morgeson & Campion,
2002), the elements of work role performance (Griffin et al.,
2007), and the nature of work in modern
organizations (Parker et al., 2001) can provide new insights
regarding the successful implementation
and effects of formalization in the current work context,
including whether it is perceived as coercive or
enabling (Adler & Borys, 1996; Parker, 2003).
Copyright © 2010 John Wiley & Sons, Ltd. J. Organic Behav.
31, 216-239 (2010)
DOI: 10.1002/job
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First, although a number of prior studies have suggested that
formalization can lead to negative
outcomes through the negative motivational consequences of
unenriched jobs (Parker, 2003; Rousseau,
1978), a body of research on formalization and work design
challenges the notion that formalization is
incompatible with enriched work (Michaels, Cron, Dubinsky, &
Joachimsthaler, 1988; Organ &
Greene, 1981; Podsakoff et al., 1986; Wallace, 1995), or that
managers have little discretion in how
formalization is implemented (Edwards, Scully, & Brtek, 2000;
Hackman & Oldham, 1980; Morgeson
& Campion, 2002). While prototypical examples have tended to
focus on high enrichment and low
formalization in professional jobs or low enrichment and high
formalization in assembly line jobs,
alternative combinations are neither impossible nor uncommon.
For example, jobs may involve
unenriched work and low formalization, such as a clerical
position in an organization with few formal
procedures, as well as enriched work and high formalization,
such as a product manager in a consumer
product company with formal product development processes.
Indeed, formalization can actually
support and enable enriched work, as organizations rely
increasingly heavily on formal procedures to
effectively coordinate highly complex, challenging, and
interdependent employee work (Nemeth,
O'Connor, Klock, & Cook, 2006).
Second, work design scholars (Griffin et al., 2007) have
increasingly recognized that contextual
changes require a broader conception of work performance,
which can also provide a useful lens for
examining the effects of formalization. In complex and

uncertain contexts, conceptualizations of work
performance cannot reflect only task proficiency, or the
prescribed and predictable requirements of a
job. Rather, adaptivity and proactivity, which include
responding to change or initiating change, are
increasingly relevant to both individual and organizational
performance. As a result, such frameworks
are especially suited to yielding new integrative insights
regarding the effects of formalization, including
potential tensions between proficiency and adaptivity. For
example, scholars have traditionally viewed
formalization as facilitating efficient and reliable task
proficiency (Adler & Borys, 1996; Weber, 1947),
which is essential in environments with increasing complexity
and interdependence, but also reducing
adaptive and innovative capabilities, which are similarly
critical in increasingly uncertain and dynamic
environments (Ford & Gioia, 2000; Griffin et al., 2007; Hannan
& Freeman, 1984).
Finally, contemporary work design research has highlighted
significant changes in the nature of work
which can be expected to influence the relative benefits and
viability of successful formalization. For
example, although critiques of formalization have often
suggested that it leads to mindless and
oversimplified jobs, these concerns may be less relevant in
current organizational contexts. Given that
work is increasingly characterized by greater autonomy (Parker
et al., 2001), complexity and cognitive
demands (Elsbach & Hargadon, 2006), interdependence (Grant
et al., 2009), and time pressure (Perlow,
1999), the ability to formalize without excessive simplification
appears more viable. Indeed, scholars
have noted that many workers may actually need less complex

and demanding jobs (Elsbach &
Hargadon, 2006; Xie & Johns, 1995).
Enabling or coercive formalization
Scholars have also suggested that the successful
implementation of formalization is likely to depend on
whether it is perceived as enabling rather than coercive (Adler
& Borys, 1996; Parker, 2003). I propose
that formalization is more likely to be perceived as enabling
rather than coercive when it is
implemented in work contexts which provide enriched and
intrinsically motivating work, autonomy
and freedom of choice, and needs for formalization's distinct
competencies. First, self-determination
theory or SDT (Deci & Ryan, 1985) suggests that individuals
are intrinsically motivated when they
experience autonomy in self-regulation as opposed to extrinsic
and introjected regulation (Deci &
31, 216-239 (2010)
DOI: 10.1002/job
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220 T. L. JUILLERAT
Ryan, 2000). As a result, when work is unenriched and lacking
in intrinsic motivation, formalization
will not facilitate intrinsically rewarding objectives (Amabile,
1993) and thus will not be perceived

as enabling (Adler & Borys, 1996). On the other hand, when
work is enriched and high in
intrinsic motivation, formalization has the potential to
facilitate intrinsically rewarding objectives and
is more likely to be interpreted as enabling (Adler & Borys,
1996; Parker, 2003) and autonomous
regulation.
Second, since formalization has often been associated with lack
of autonomy, scholars have typically
suggested that formalization will be perceived as extrinsic and
introjected regulation, which will be
interpreted as coercive rather than enabling, and thus
ultimately undermine motivation. On the other
hand, SDT suggests that formalization in the presence of
autonomy and choice may not undermine
autonomous self-regulation and be interpreted as coercive. For
example, behavioral decision research
(BDR) perspectives have highlighted that decisions can be
substantially improved by "nudge"
strategies, in which an informed choice which is likely to be
desirable is presented as a default option.
Moreover, many decision makers appreciate the availability of
a default since it conveys useful
information yet does not restrict their autonomy since selection
of the default is not mandatory (Thaler
& Sunstein, 2008). Building on both SDT and BDR
perspectives, I suggest that formalization combined
with choice and autonomy need not be interpreted as coercive
nor undermine intrinsic motivation and
initiative. Indeed, "nudge" formalization may be perceived as
enabling since it may not only provide
useful information to help individuals make more informed
choices, but also because individuals are
increasingly challenged to cope with the problem of too much

choice (Schwartz, 2000).
Finally, extrinsic motivators which facilitate task performance
can enhance intrinsic motivation by
increasing perceptions of competence and helping a person
perform what they feel intrinsically
motivated to do (Amabile, 1993). However, if work
characteristics do not provide challenges which
may benefit from formalization's distinct competencies,
formalization may not materially facilitate
and may even undermine perceptions of competence and task
performance. As a result, formalization
in the absence of needs for coordination, efficiency, reliability,
or speed of performance is relatively
unlikely to be perceived as enabling and more likely to be
perceived as coercive. In contrast, medical
professionals whose work is characterized by high levels of
task significance, cognitive demands,
interdependence, time pressure, and uncertainty may very well
believe that formalized practices for
surgical procedures, operating room scheduling, or patient care
facilitate their performance (Nemeth
et al., 2006) and thus perceive formalization as enabling.
Similarly, increasingly prevalent work
characteristics provide coordination, efficiency, reliability, and
temporal challenges which appear to be
linked to the theoretical strengths of formalization, and thus
suggest that formalization is more likely to
be perceived as enabling in the current work context.
Proposed Model
Building on the preceding findings from organizational theory,
work design, and cognitive
perspectives, I suggest that formalization enhances the effects

of individual job characteristics which
increasingly characterize the work context in promoting both
proficiency and adaptivity,1 and thus that
*1 have noted that task performance in uncertain environments
involves selection, revision, and enactment of routines. As a
result,
both proficiency and adaptivity involve elements of selection,
revision, and enactment of routines and thus may exhibit some
degree of overlap. For the sake of parsimony, I suggest that
proficiency primarily represents the effective enactment and
performance of a given routine, independently of the
appropriateness of the decision regarding its selection.
Conversely, I suggest
that adaptivity primarily represents the effective selection and
revision of routines, independently of how effectively they are
enacted or performed.
31, 216-239 (2010)
DOI: 10.1002/job
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Figure 1. Proposed model.
* = the first-stage moderation model and ** = individual
behaviors directed at individual team, or organizational
level

Formalization Performance
(Organizational (Organizational
Level) * Level)
Work
Characteristics Mediating Performance
(Individual Level) Level) Level)
» Autonomy « Mindfulness * Individual Proficiency **
•Job Complexity • Creative Innovation • Individual Adaptivity
**
• Interdependence • Effective Decision Making
♦Time Pressure
formalization will interact synergistically with the focal work
characteristics (e.g., autonomy,
complexity, interdependence, and time pressure) to influence
task proficiency and adaptivity. Figure 1
presents a theoretical model which illustrates how
formalization at the organizational level interacts
with work design characteristics at the individual level to
influence the proficiency and adaptivity
dimensions of individual performance, which ultimately
mediates relationships between work design
and organizational level outcomes.
First, given that task performance involves some level of
mindfulness, I suggest that mindfulness is a
prerequisite for task proficiency, and that formalization
interacts with the focal work characteristics to
influence individual task proficiency through the cognitive

mechanism of mindfulness. I propose that
work characteristics and formalization respectively support two
necessary elements of mindfulness,
and thus that formalization interacts with the focal work
characteristics to enhance proficiency by
providing increasingly scarce yet critical cognitive and
temporal capacity necessary for mindful task
performance in the current work context.
Second, while I suggest that formalization provides increasing
benefits for task proficiency in the
current work context, these benefits may not translate to
improved performance if formalization
significantly impedes adaptivity, as suggested by traditional
perspectives. However, I propose that
formalization will actually improve adaptivity in the current
work context. Although recent work
design research has conceptualized adaptivity as the extent to
which individuals adapt to changes
introduced by others (Griffin et al., 2007), scholars have
conceptualized adaptivity and adaptive
performance in a variety of ways, and this paper thus employs a
broader conception of adaptivity. Since
individual actors in uncertain environments must adapt to
events not only by generating or revising
routines, but also by making decisions regarding the
appropriateness of routines and potential
responses to events, I suggest that adaptivity is influenced by
both creative innovation and effective
decision making. As a result, I will examine cognitive
perspectives, including organizational learning
(Nelson & Winter, 1982), creativity (Amabile, 1996), and
behavioral decision research (BDR) (Moore
& Flynn, 2008), which are highly relevant to creative
innovation and effective individual decision
making. I propose that work characteristics and formalization

respectively support two necessary
31, 216-239 (2010)
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222 T. L. JUILLERAT
elements of creative innovation and effective decision making,
and thus that formalization interacts
with the focal work characteristics to enhance adaptive
performance by providing increasingly scarce
yet critical structural processes and capacity necessary for
creative innovation and effective decision
making in the current work context.
Work Design, Formalization, and Proficiency
Research on mindfulness and organizational routines has
highlighted a duality and tension between
structure and mindfulness, namely that structure and stability
are necessary preconditions for both
mindfulness and flexibility. For example, scholars have noted
that mindfulness requires not only
attentiveness or quality of attention, but also capacity or
conservation of attention, since cognitive
capacity and structure are needed to appropriately interpret and
respond to events (Bigley & Roberts,
2001; Weick, Sutcliffe, & Obstfeld, 2005). Given that
enactment of a routine is mindful (Levinthal &

Rerup, 2006), particularly in uncertain contexts, proficient task
performance requires mindfulness and
its underlying elements of attentiveness and capacity. Building
on these points and recent work design
research (Elsbach & Hargadon, 2006; Ohly, Sonnentag, &
Pluntke, 2006) which has invoked cognitive
concepts from the mindfulness literature, I suggest that the
focal work characteristics promote
attentiveness but inhibit structural capacity, whereas
formalization provides structural capacity that is
increasingly scarce yet especially necessary in the current work
context.
Work design and attentiveness
Perhaps given the significant challenges in the current business
environment, many work
characteristics that are increasingly prevalent in the work
context promote attentiveness. For
example, both autonomy and complexity are intrinsically
rewarding for employees (Hackman &
Oldham, 1976) and promote activation of cognitive processes
hence attentiveness and mindfulness
(Brousseau, 1983; Pentland & Feldman, 2005; Weick et al.,
1999). Similarly, since individuals have a
need for relatedness (Deci & Ryan, 2000), work with higher
levels of social characteristics such as
interdependence is intrinsically motivating (Humphrey,
Nahrgang, & Morgeson, 2007), and also
promotes attentiveness and the mindful enactment of routines
by facilitating perspective taking (Grant
& Parker, 2009; Parker & Axtell, 2001) and providing feedback
(Levinthal & Rerup, 2006). Finally,
scholars have also noted that time pressure promotes greater
activation and attentiveness (Gardner,

1986).
Although these focal work characteristics which are
increasingly common in the work context
promote attentiveness, they may inhibit capacity and proficient
performance by depleting the cognitive
and temporal resources available to devote to mindful and
effortful task performance. For example,
autonomy and complexity consume significant cognitive
attention and temporal resources due to
coordination challenges (Jett & George, 2003; Parker & Ohly,
2008; Perlow, 1999), and thus reduce the
resource capacity available to support task performance.
Similarly, social characteristics consume
significant temporal and attentional resources due to
coordination difficulties, role ambiguity and
conflict, high emotional demands, and stressful interpersonal
interactions (Dormann & Zapf, 2004;
Langfred, 2007; Maslach, Schaufeli, & Leiter, 2001). Finally,
employees facing time pressure clearly
have fewer temporal resources to devote to task performance.
Copyright © 2010 John Wiley & Sons, Ltd. 7. Organiz. Behav.
31, 216-239 (2010)
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Formalization and capacity

Not only have organizational scholars long noted that
formalization increases efficiency by improving
coordination (Adler & Bory s, 1996) and providing decision
making economies by making problems
manageable for individuals who are boundedly rational (Simon,
1991), but organizational theory also
suggests that formalization provides increasing coordination
and decision making benefits given that
the nature of work is increasingly characterized by complexity,
interdependence, autonomy, and time
pressure. For example, effective coordination becomes more
critical to performance as tasks become
more complex and interdependent (Kozlowski & Bell, 2003),
and formalization improves coordination
and integration of complex, interdependent, and dynamic tasks
(Adler, 2005) by providing common
understandings of activities and relationships between tasks
(Mathieu, Heffner, Goodwin, Salas, &
Cannon-Bowers, 2000). Similarly, formalization can be
expected to provide even greater decision
making economies in the current work context where increasing
complexity and information
processing demands (Hodgkinson & Healey, 2008),
"relentlessly mindful" (Elsbach & Hargadon,
2006) work, and time pressure represent unprecedented
challenges for decision makers (Hambrick,
Finkelstein, & Mooney, 2005).
Consistent with this view, scholars have noted that spontaneous
collaboration often produces
inefficient patterns of group interaction which negatively
impact performance. For example,
unstructured patterns of coordination for software engineers'
interdependent and collaborative
activities such as integrating, testing, and troubleshooting can
hinder the performance of their

cognitively demanding individual activities such as designing,
developing, or debugging software code
by generating frequent interruptions and unnecessary volumes
of interactions which impede their
concentration and productivity. Similarly, engineers often
experience "time famine" due to the
depletion of temporal resources resulting from poor
synchronization of interdependent work activities
(Perlow, 1999). However, since the vast majority of
interdependencies and interactions are known and
can be coordinated in advance, formalized procedures can more
effectively synchronize interdependent
activities, conserve engineers' cognitive and temporal
resources, and ultimately improve both
individual and group performance.
Interactions between work design , formalization , and
proficiency
Since both attentiveness and capacity are required for
mindfulness hence task proficiency, I suggest that
neither work design nor formalization approaches alone may be
sufficient to enable proficient task
performance, particularly in complex environments with
resource constraints. For example, even work
characteristics which promote engagement and attentiveness
may not translate to proficient
performance if insufficient structure results in the depletion of
scarce cognitive and temporal
resources (Adler, 1999; Perlow, 1999) or limits the capacity to
interpret or respond to the environment
(Feldman & Pentland, 2003; Weick et al., 1999). Similarly, the
efficiencies and capacity achieved
through formalization may not result in proficient performance
if unenriched work inhibits the

attentiveness necessary to notice events and respond by
appropriately selecting, revising, and enacting
routines (Levinthal & Rerup, 2006; Weick et al., 1999).
However, I suggest that formalization at the organizational
level, combined with appropriate work
characteristics at the individual level, can provide both the
capacity and the attentiveness to enable
mindful and proficient task performance in the current work
context. As a result, I propose that
formalization enhances task proficiency in the current work
context by providing coordination and
decision making efficiencies which conserve critical cognitive
and temporal capacity increasingly
necessary for mindful and proficient task performance of work
characterized by autonomy, complexity,
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interdependence, and time pressure. In sum, formalization
represents a lever which significantly
enhances the effectiveness of the focal job characteristics, and
formalization and work characteristics
thus interact synergistically in promoting mindful task
performance.

Proposition 1 : Formalization and job characteristics
(autonomy, job complexity, interdependence,
and time pressure) will interact synergistically to influence
proficiency through mindfulness
mechanisms such that the positive relationship between job
characteristics and proficiency will be
stronger when formalization is high.
Work Design, Formalization, and Creative Innovation
Organizational scholars have long highlighted the need for
firms to successfully navigate the
simultaneous challenges of exploration and exploitation
(March, 1991), which traditionally have been
viewed as competing demands, to generate innovations and
successfully adapt to environmental
changes. Although a number of work characteristics are
believed to provide creative environments
which promote exploration, learning, and the generation of
innovations, they have traditionally been
viewed as inhibiting exploitation and the ability to harvest the
benefits of innovation (Gilson, Mathieu,
Shalley, & Ruddy, 2005; Oldham & Cummings, 1996).
Similarly, many organizational factors which
promote exploitation by providing the structure and processes
to support the implementation of
innovations (Klein & Sorra, 1996), have typically been viewed
as inhibiting exploration, learning, and
the generation of innovations (Hannan & Freeman, 1984;
March, 1991).
However, scholars are increasingly recognizing that
exploration and exploitation are not
dichotomous or competing demands, but mutually dependent
(Bledow, Frese, Anderson, Erez, &
Farr, 2009). Creative environments do not translate to learning

and innovation without sufficient
structure (Gilson et al., 2005) or vice versa. For example,
whether exploration translates to learning is
significantly influenced by organizational processes to capture
and embed acquired knowledge in
organizational practices (Pisano, Böhmer, & Edmondson,
2001). Similarly, creative innovations often
occur through a process of "juggling" (Amabile, Hadley, &
Kramer, 2002) in which existing ideas and
best practices are combined in new ways and applied to new
problems and contexts (Hargadon &
Sutton, 1997). According to the juggling model, creativity and
innovation are significantly impacted by
organizational processes for generating new ideas, capturing
good ideas, keeping ideas alive, and
imagining new uses for ideas (Hargadon & Sutton, 2000).
Additionally, structure and processes can
increase the capacity for creativity and innovation by providing
temporal and cognitive resources to
devote to juggling (Ohly et al., 2006), supplying processes and
practices which promote juggling
activity (Sutton & Hargadon, 1996), and increasing the number
and availability of ideas or "balls" to
juggle (Amabile et al., 2002) and ultimately combine to
generate innovations. Moreover, since
innovations are often generated by combining available
knowledge in new ways (Taylor & Greve,
2006), the "balls" (Amabile, 1996; Ericsson, 1999) which
determine the structural capacity for
innovation are not composed solely of new ideas. Rather,
creative and innovative capacity are
significantly influenced by the volume of accumulated ideas
embedded in organizational knowledge
and practices. Building on these points, I suggest that the focal
work characteristics promote
creative environments but inhibit structural capacity, whereas

formalization provides structural
capacity that is increasingly scarce yet especially necessary in
the current work context.
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Work design and creative environments
Perhaps reflecting a need for greater creativity and innovation
in the current work context, work
characteristics which promote creative environments are
increasingly prevalent. For example, the focal
work characteristics of autonomy, job complexity, and
interdependence have been linked to intrinsic
motivation (Grant & Parker, 2009; Hackman & Oldham, 1976;
Humphrey et al., 2007), which scholars
have suggested promotes creativity by increasing curiosity,
engagement, and cognitive flexibility
(George, 2008; Shalley, Zhou, & Oldham, 2004). Similarly,
time pressure (Elsbach & Hargadon, 2006)
has been linked to innovation and creativity (George, 2008)
based on activation theory (Gardner, 1986),
although other scholars have suggested that time pressure may
exhibit curvilinear (Ohly et al., 2006) or
negative relationships (Amabile et al., 2002) with creativity
and innovation.

The focal work characteristics which increasingly characterize
the work context appear to provide
creative environments which often promote exploration and
learning. However, they may inhibit
structural capacity and creative innovation, not simply by
failing to promote the acquisition and
retention of organizational resources (e.g., organizational
knowledge and best practices), but by
depleting the cognitive and temporal resources available to
devote to innovation. For example, enriched
work characteristics may promote exploration which could
stimulate idea generation, but do not
directly promote juggling activities or the capture of
organizational knowledge and ideas. More
importantly, employees with limited resources to devote to task
performance (Fay & Sonnentag, 2002;
Xie & Johns, 1995) may be especially constrained in their
ability to pursue creative and innovative
activities. As noted earlier, autonomy, job complexity, and
interdependence consume significant
temporal and attentional resources due to coordination
difficulties. As a result, challenging and
demanding jobs, as well as time pressure, limit the cognitive
and temporal capacity for creativity and
innovation (Elsbach & Hargadon, 2006; Ohly et al., 2006).
Formalization and the structural capacity for creativity and
innovation
Building on prior research which has highlighted the role of
structure and processes in promoting
creativity and innovation (Taggar, 2002), I propose that
formalization provides structural capacity for
creativity and innovation by conserving temporal and cognitive
resources to devote to juggling

providing; processes and practices which promote juggling
activity; and increasing the availability of
"balls" of ideas and knowledge to juggle. First, the
coordination and decision making efficiencies
provided by formalization provide additional temporal and
cognitive resources (Ohly et al., 2006) to
devote to exploration activities such as "finding balls to
juggle" or "juggling the balls" (Amabile et al.,
2002). Second, the use of formalized best practices for
generating new ideas, capturing good ideas,
keeping ideas alive, and imagining new uses for ideas
(Hargadon & Sutton, 2000) not only promotes
juggling activity and increases the number of available ideas,
but also increases the likelihood of
creating effective combinations of ideas which translate to
useful innovations. Finally, formalization is
particularly relevant to creative and innovative capacity given
the role of deep knowledge and expertise
in promoting creativity and innovation (Amabile, 1996;
Ericsson, 1999). Formalization provides a
mechanism for knowledge capture and transmission and
promotes the development of an
organizational memory (Darr, Argote, & Epple, 1995; Walsh &
Ungson, 1991), which supports
the retention and retrieval of knowledge and best practices
(Hargadon & Sutton, 1997). As a result,
formalization ultimately increases the likelihood of developing
useful innovations by creating new
combinations of existing knowledge or applying existing ideas
to new problems or domains.
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Interactions between work design , formalization , and creative
innovation
Since both creative environments and structural capacity are
required for innovation, I suggest that
neither work design nor formalization approaches alone may be
sufficient to enable creative
innovation, particularly in complex environments with resource
constraints. For example, the creative
environments provided by enriched work design may not
translate to creativity and innovation in the
absence of structures to capture organizational knowledge and
ideas. Conversely, the efficiencies of
formalization may provide slack and additional resources
(Cohen & Levinthal, 1990) to promote
creativity and innovation (Damanpour, 1987; Singh, 1986), but
slack in the absence of engaging work
may be directed toward "banana time" (Roy, 1959) rather than
generation of creative ideas and
innovations. Similarly, the structural capacity provided by
formalization may not result in creative
innovation if unenriched work decreases motivation or reduces
exploration and learning.
characteristics at the individual level, can provide the
structural capacity and creative environment to
enable creative innovation in the current work context. As a

result, I propose that formalization can
enhance creative innovation in the current work context by
providing the structural capacity
increasingly necessary for creativity and innovation when work
is characterized by autonomy,
complexity, interdependence, and time pressure. In sum,
formalization represents a lever which
significantly enhances the effectiveness of the focal job
characteristics, and formalization and work
characteristics thus interact synergistically in promoting
creativity and innovation. Consistent with this
view, the combination of engaging work and structure at
organizations such as Google, including slack
time to devote to exploration activities and formalized
practices to promote knowledge capture and
transmission, does appear to promote enhanced levels of
innovation (Bledow et al., 2009). Similarly,
knowledge capture and transmission practices have enabled
website developers to develop new
applications such as peer rating or certification systems for
online community members (Stewart, 2005)
based on design elements from Internet security applications;
consultants to create new solutions for
new clients by combining successful practices from multiple
previous client engagements; and
engineers to develop innovative designs for printers based on
available disk drive designs ((Hargadon &
Sutton, 1997).
Proposition 2: Formalization and job characteristics (autonomy,
job complexity, interdependence,
adaptivity through creative innovation
characteristics and adaptivity will be

Work Design, Formalization, and Effective Decision Making
While the preceding analysis indicates that formalization
promotes adaptivity by providing necessary
structural capacity for creativity and innovation, creative
innovation is not the sole determinant of
adaptive performance. Many variations generated are ultimately
undesirable (George, 2008), and
successful adaptation requires individuals in complex and
uncertain environments to make effective
decisions about the appropriate responses to events, such as the
appropriate selection or revision of
routines. As a result, it is essential to examine not only how
formalization impacts creative innovation,
but also the effectiveness of decisions. Organizational theory
and work design scholars have
traditionally maintained that providing motivated individuals
with freedom and discretion will promote
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more effective decision making and adaptation in uncertain and
complex environments (Katz & Kahn,
1978; Griffin et al., 2007; Ilgen & Hollenbeck, 1991).

However, I propose that formalization promotes
more effective decisions, since BDR indicates that individual
decision makers display both undesirable
inertia and undesirable variation due to motivational biases,
cognitive limitations, and challenges of
learning from experience.
Behavioral decision research (BDR)
A long tradition of BDR research indicates that individuals
have cognitive limitations and are often
prone to err on important judgments and decisions due to
limited ability to perceive, remember, and
process information (Simon, 1956). For example, individual
decision makers often employ relatively
habitual decision strategies (Bargh & Chartrand, 1999; Langer,
1997) based simply on what they have
done in the past or are comfortable doing (Pfeffer & Sutton,
2006). As a result, individual decision
makers often fail to introduce desirable innovations or changes
to routines and display the same inertia
often invoked in critiques of formalization. For example, even
when conditions change, people display
undesirable consistency by favoring the status quo and
persisting in outmoded strategies due to
motivational biases such as overconfidence and the desire to
avoid the risk of losses (Dunning, Heath, &
Suis, 2004).
It is often believed that the shortcomings of individuals'
habitual decision tendencies can be
overcome by motivating decision makers to adopt more
effortful decision strategies. However,
although decision outcomes can be improved when individuals
are more motivated to make accurate
decisions (Lerner & Tetlock, 1999), BDR research highlights

that appropriate decision making is not
simply a matter of effort (Nosek, Greenwald, & Banaji, 2007).
Even when highly motivated to make
accurate judgments and employing effortful decision strategies,
individuals' decisions are marred by
optimism (Vallone, Griffin, Lin, & Ross, 1990),
overconfidence (Dunning et al., 2004), and the
tendency to be overly influenced by information which is
highly available due to its vividness or
recency (Tversky & Kahneman, 1974).
Interestingly, the more effortful strategies employed by highly
motivated decision makers often
display not the undesirable consistency of habitual decision
strategies, but undesirable variation. For
example, decision research in a variety of work domains which
appear to represent highly motivating
and enriched jobs including medicine, engineering, investment
management, software development,
project management, and human resources, illustrates that the
judgments of both perceived experts and
non-experts are often remarkably wrong and significantly
worse than chance (Camerer & Johnson,
1991; Dawes, 1971; Gigerenzer, 2007; Heath, Larrick, &
Klayman, 1998; Rynes, Bartůněk, & Daft,
2001). Given that many individual judgments appear to be
inferior to a coin toss, many individual
discretionary decisions regarding the appropriate response to
events can be expected to represent
unnecessary and undesirable variation, particularly since
individuals over-react to events by
inaccurately perceiving that they represent actual patterns
rather than simply random variation
(Gigerenzer, Gaissmaier, Kurz-Milcke, Schwartz, & Woloshin,
2007).

Although BDR research highlights various limitations of
individual decision makers, scholars may
be similarly pessimistic about the ability of formalization to
promote effective decisions in the current
work context (Griffin et al., 2007). However, I propose that
formal procedures can be much more
effective in uncertain and complex environments than
traditionally conceived by organizational
scholars. First, the viability of developing effective procedures
is much greater if formalization is
viewed as a continuous and dynamic process of "formalizing"
akin to the concept of organizing (Heath
& Sitkin, 2001; Weick, 1979). As suggested by established
perspectives, achieving a steady state of
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formalization with fully prescribed work roles may indeed be
infeasible and possibly detrimental in an
uncertain and rapidly changing environment. However,
although a priori formalization may not always
be viable, I propose that a continuous process of formalizing,
which often may occur post hoc , is
viable and provides valuable benefits for organizations. Indeed,
organizational scholars are
increasingly advocating the adoption of evidence-based

management based on the premise that
consistent implementation of proven practices will improve
outcomes over time (Pfeffer & Sutton,
2006; Rousseau, 2006). Moreover, many formalized practices
are designed specifically to
promote ongoing performance improvement (Hackman &
Wageman, 1995) by establishing tentative
processes as a starting point, recognizing needs for ongoing
modification of practices based on
experimentation and learning, and realizing that current
practices may not work in every situation
(Edmondson, 2008).
Second, although organizational scholars have suggested that
formal procedures are too simplistic to
be effective in complex environments which seemingly require
similarly complex solutions (Weick,
1979), decision research challenges the notion that complex
procedures are required to produce
effective performance in complex, dynamic, and uncertain
environments. Rather, BDR research
illustrates that simple processes can be surprisingly effective.
While necessarily imperfect, simple
systems often perform better than more elaborate strategies
(Dawes, 1971), particularly in challenging
and dynamic environments with high variability, low
predictability, and limited opportunities for
learning (Gigerenzer, 2000) such as the current work context.
Even when individuals have substantial
domain expertise, simple procedures can mitigate cognitive
limitations by providing decision aids to
help ensure that relevant information is utilized to make
decisions, or by providing reminders for
complex tasks with critical steps or interdependencies which
otherwise can easily be forgotten or
overlooked (Gigerenzer, 2007). For example, hospitals rely on

protocols to ensure that health care
professionals collect all relevant diagnostic information (Heath
et al., 1998), rather than focusing on
injuries and symptoms which are highly vivid but less
threatening (e.g., a broken nose) compared to
less salient but potentially more serious injuries (e.g., internal
bleeding).
Third, one reason formal procedures can be especially effective
is that they can specifically mitigate
the potential shortcomings of individual decision makers
(Heath et al., 1998; Roberts, 1990). Although
the BDR perspective has often been criticized for an overly
negative focus on individual flaws,
knowledge about individual limitations can be utilized to create
environments which enable them to be
more effective (Todd & Gigerenzer, 2007). Consistent with this
view, scholars have noted that many
organizational procedures are effective precisely because they
represent "cognitive repairs" for the
limitations of individual decision makers (Heath et al., 1998).
For example, formal project management
methodologies employ objective estimating procedures,
comprehensive testing procedures, and
specification of key stakeholders and necessary integration
points (Crawford, 2006), which respectively
can help mitigate biases such as overconfidence (Vallone et al.,
1990), confirmation bias (Nisbett &
Ross, 1980), and coordination neglect (Heath & Staudenmayer,
2000). Similarly, formal procedures for
performing job interviews or conducting performance
appraisals can mitigate individual tendencies to
be overly influenced by highly accessible, vivid, or affective
information (Tversky & Kahneman, 1974)
including perceptions of individual personal characteristics
(Ross, 1977).

Building on the work design literature which suggests that
engaging work is necessary to
motivate individuals to make effective decisions, as well as
BDR evidence which suggests that even
highly motivated individuals are subject to many decision
making limitations, I suggest that the
focal work characteristics promote decision motivation but
exacerbate the effects of potential
decision maker limitations, whereas formalization provides
structures (e.g., supporting decision
tools and processes) which are increasingly necessary for
effective decision making in the current
work context.
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Work design and decision motivation
Work design research has indicated that challenging and
engaging work, including autonomy, will
improve adaptivity by promoting cognitive activation, learning,
and change-oriented behaviors (Ohly
et al., 2006; Parker, 1998). Similarly, since enriched work is
intrinsically motivating (Hackman &
Oldham, 1976), work design research suggests that engaging

work can help support effective decision
making by motivating individuals to make better decisions and
thus to adopt more effortful decision
strategies. However, BDR research suggests that the decision
motivation provided by challenging and
engaging work may not translate to learning or effective
decisions since individual learning is often
inhibited by cognitive limitations and motivational biases
(Dunning et al., 2004; Heath et al., 1998). For
example, medical professionals have challenging jobs,
meaningful work, and considerable autonomy
and discretion, which would be expected to provide ample
motivation to make effective decisions. Yet
recent studies of physician treatment patterns have revealed
that less than half of patients receive
recommended care (Mangione-Smith et al., 2007; McGlynn et
al., 2003), and thus that decision
motivation may not translate to effective decisions.
Moreover, BDR research suggests that individual decision
maker limitations may be exacerbated by
increasingly prevalent work characteristics such as uncertainty,
autonomy, job complexity,
interdependence, and time pressure. First, decision scholars
have noted that uncertainty and autonomy
exacerbate decision biases because individuals exhibit greater
reliance on automatic and habitual
decision processes when facing uncertainty and unstructured
problems (Dane & Pratt, 2007), and since
uncertainty and autonomy also provide greater opportunity to
justify one's motives (Hsee, 1996).
Second, since optimal decision making is most challenging
when problems are difficult (Thaler &
Sunstein, 2008), the escalating complexity and interdependence
of the work environment make
decisions increasingly challenging. As a result, organizations

rely heavily upon formal procedures to
distribution cognition across employees and to enable
interdependent employees who have only partial
awareness of the complete work system to effectively
coordinate their work and make appropriate
decisions (Nemeth et al., 2006). Finally, increasingly prevalent
temporal characteristics of work,
including time pressure, also represent greater challenges for
decision making, as individuals facing
time pressure exhibit greater reliance on automatic and habitual
decision processes (Hambrick et al.,
2005). Similarly, scholars have noted that decisions are
particularly difficult for activities characterized
by ambiguous feedback, relative infrequency (Thaler &
Sunstein, 2008), high variability, or low
predictability (Gigerenzer, 2007), which increase the
challenges of learning from experience
(Levinthal & Rerup, 2006). Yet the current work context
increasingly involves tasks with limited
feedback and long time horizons (Steel & König, 2006; Parker
& Ohly, 2008), as well as increased
variability and reduced predictability (Brown & Eisenhardt,
1997; Hambrick et al., 2005), increasing
the challenges of making effective decisions based on learning
from individual experience.
Formalization and decision debiasing
As noted earlier, BDR research indicates that decisions can be
substantially improved by "nudge"
strategies, in which an informed choice is presented as a
default option yet its selection is not mandated
(Thaler & Sunstein, 2008). Since presenting even one well-
specified alternative can help debias
decisions (Milkman, Chugh, & Bazerman, 2009), I suggest that
providing formalized procedures as

default options or choices can improve decisions by mitigating
the limitations and biases of individual
decision makers. For example, since a default option conveys
an implicit recommendation (Thaler &
Sunstein, 2008), "nudging" people to choose procedures that
they might not otherwise consider fosters
learning and helps mitigate individual habituation and
undesirable consistency. Similarly, "nudging"
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people to consider an intelligent default procedure can also
help mitigate undesirable variation by
promoting greater accountability (Tetlock, 1985) and more
informed assessment of potential
discretionary adaptations and responses to events.
Interactions between work design , formalization , and
effective decision making
Since both decision motivation and the ability to mitigate
individual decision maker limitations are
required for effective decisions, I suggest that neither work
design nor formalization approaches alone
may be sufficient to enable effective decision making,
particularly in uncertain and complex

environments. For example, the decision motivation provided
by enriched work design may not
translate to effective decisions if individuals lack the structures
(e.g., processes and tools) to mitigate
their cognitive limitations, biases, and learning challenges.
Similarly, formalization alone may also fail
to promote effective decisions if employees with unenriched
work are not motivated to make effective
decisions or provided with sufficient autonomy and freedom to
deviate from formalized processes and
procedures.
characteristics at the individual level, can provide the
structures and decision maker motivation to
enable more effective decision making in the current work
context. As a result, I propose that
formalization enhances decision making effectiveness in the
current work context by providing the
structure increasingly necessary for effective decision making
when work is characterized by
autonomy, complexity, interdependence, and time pressure. In
sum, formalization represents a lever
which significantly enhances the effectiveness of the focal job
characteristics, and formalization and
work characteristics thus interact synergistically in promoting
effective decision making.
Proposition 3: Formalization and job characteristics (autonomy,
job complexity, interdependence,
adaptivity through decision effectiveness
characteristics and adaptivity will be

Discussion
Organizational scholars have suggested that foundational work
design and organizational theories may
not reflect current realities given significant changes in
organizational and work contexts (Barley &
Kunda, 2001; Parker et al., 2001). For example, traditional
theoretical perspectives suggest that
formalization improves organizational efficiency at the expense
of individual initiative and innovation
(Adler & Borys, 1996; Lawler, 1994). However, highly
formalized organizations, such as Toyota and
Google, manage to achieve high levels of both efficient and
innovative performance (Adler, Goldoftas,
& Levine, 1999; Iyer & Davenport, 2008). I have developed a
model which suggests that integration of
work design, organizational theory, and cognitive perspectives
can yield new insights for important
organizational phenomena such as the role of formalization in
the current work context. This model
suggests that successful formalization is increasingly viable
and provides significant benefits in modern
organizations, and that synergistic relationships between
formalization and work design explain and
are key to exploiting these benefits.
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Theoretical contribution and implications
This paper attempts to further understanding of the effects of
formalization and contributes to three
primary research domains by explaining how organizations can
reap the benefits of formal
organizational structure without undermining individual
initiative. First, this paper contributes to the
macro organizational theory literature by integrating
organizational theory with the study of work
(Barley & Kunda, 2001) and elaborating underlying
"mechanisms" (Hedstrom & Swedberg, 1996)
through which organizational structure influences individual
and organizational outcomes, such as
individual work characteristics (Hackman & Oldham, 1976;
Oldham & Hackman, 1981) and cognitive
processes. Second, the model contributes to the work design
literature by applying a more
contextualized perspective (Johns, 2006), providing additional
understanding of how processes at
multiple levels influence the effects of work design on
outcomes (Parker et al., 2001), and illustrating
how work design and formalization interact to influence
proficiency and adaptivity through cognitive
mechanisms from the mindfulness, organizational learning,
creativity and innovation, and BDR
perspectives. Finally, the model contributes to the literature on
the relative advantages and
disadvantages of formalization by providing potential
explanations to reconcile conflicting findings
(Adler & Borys, 1996; Miner, 2006), including specific
elements of formalization which will influence
whether it is perceived as enabling or coercive and the critical

role of work design in the successful
implementation of formalization.
Practical implications
While formalization may provide increasing returns in current
work contexts, the ability to realize these
benefits is contingent on successful implementation, including
appropriate work design, so
practitioners need to carefully evaluate their organizational
structure and work design decisions in
light of these influences. First, since formalization provides
benefits beyond the efficiency gains
highlighted by traditional theoretical perspectives, managers
should evaluate the effects of
formalization according to broader criteria. For example, given
the challenges of maintaining up
to date knowledge in a work context characterized by
information overload (Rousseau, 2006),
formalization could also represent an active strategy to improve
adaptivity and future task proficiency
by providing a source of useful knowledge to promote ongoing
individual learning and development of
expertise.
Second, managers should more carefully consider potential
options and challenge their underlying
assumptions (Campion & Stevens, 1991; Heath &
Staudenmayer, 2000) when making work design
decisions. While scholars have suggested that work design
interventions are especially promising since
work design is much more malleable than organizational
structure (Grant et al., 2009; Hackman &
Oldham, 1980), formalized procedures may be even more
adaptable than work design, enabling
significant flexibility without requiring changes to

organizational structure or formal job descriptions.
For example, an integration difficulty between two different
departments within an organization might
be mitigated by simply establishing a process to coordinate
interdependent activities, as opposed to
restructuring the departments or the jobs within them.
Additionally, managers should recognize that
formalization need not translate to work simplification and
unenriched jobs, but may actually be an
effective strategy to enable the creation of more challenging
and meaningful work, which might be
much less viable without the benefit of formalization's distinct
competencies.
Finally, since I have argued that formalization is more likely to
be perceived as enabling when it
facilitates task performance and perceptions of competence,
whether formalization is perceived as
enabling will ultimately depend on the efficacy of specific
formalized procedures. I propose that formal
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232 T. L. JUILLERAT
procedures will be most effective and therefore perceived as
enabling when they recognize and address
environmental uncertainty and complexity, as well as the

limitations of individual procedure users and
creators. For example, early generation software development
and project management methodologies
were based on a rational logic of efficiency and a sequential
approach (Yourdon, 1979) akin to an
assembly line. Of course, such an approach also presumed that
individuals would have the foresight and
capability to envision and specify all of the necessary
requirements for a complex system, that the
environment would remain stable such that the specifications
would not change over the life of a
project, and that the creators of the methodologies could
foresee and conceive solutions for any
possible contingency. Not surprisingly, such approaches
experienced mixed success. On the other hand,
based on more realistic views of individual capabilities and
environmental stability, more recent
methodologies have adopted iterative prototyping approaches
(Cockburn, 2001) which explicitly
acknowledge and accommodate these challenges by providing
specific techniques to manage and
coordinate processes of experimentation, learning, revision,
and ongoing refinement. Similarly, meta
routines (Feldman & Pentland, 2003), or procedures to change
procedures (Adler et al., 1999),
explicitly recognize and mitigate the limitations of both
procedure creators and users by permitting
appropriate revision of a process as environmental conditions
change or the potential shortcomings of a
procedure become known. As a result, I suggest that the
presence or existence of a meta-routine can
serve as a useful "acid test" for the likely effectiveness of a
formal procedure, and thus whether it is
likely to be perceived as enabling rather than coercive and
constraining.

Limitations and suggestions for future research
While this study provides benefits for researchers and
practitioners, it represents a preliminary
examination of model relationships, and should be extended via
a number of promising opportunities
for future research. First, while the model suggests that work
characteristics are a critical influence on
the successful implementation of formalization, the model does
not elaborate the underlying processes
through which managers make work design decisions, which
remain poorly understood (Grant et al.,
2009). I suggest that managers' implicit organizational and
personal theories (Devoe & Iyengar, 2004;
Ferraro, Pfeffer, & Sutton, 2005; Ghoshal, 2005; Heath &
Staudenmayer, 2000) are likely to
significantly influence work design decisions and are
especially worthy of future research.
Second, although the model highlights a number of job
characteristics which are expected to interact
with formalization to influence proficiency and adaptivity, a
number of other job characteristics,
organizational practices, and outcome variables may be
relevant. It would be useful for future
researchers to extend the model by considering the role of
additional social characteristics (Grant &
Parker, 2009), such as interaction outside the organization.
Additionally, scholars could examine the
effects of additional organizational practices, such as goal
setting, particularly since goals have been
noted as an important mechanism for breaking the habitual
routines (Aarts & Dijksterhuis, 2000) often
invoked in critiques of formalization. Similarly, future research
could extend the model to include other
relevant outcome variables, including proactivity (Parker,

1998).
Finally, by highlighting the new insights generated by
emergent work design research and the key
role of work design in the successful implementation of
organizational structures and practices, the
model challenges the view that a clear and complete picture of
the effects of work design has emerged
(Ambrose & Kulik, 1999). Rather, further work design research
and continued integrative efforts are
likely to benefit organizational research and practice in both
micro work design and macro
organizational domains. Given the increasing information
intensity, complexity, and uncertainty of the
work context, further efforts to explore cognitive mechanisms
to explain how work design and
organizational structures impact outcomes are especially
worthy of further attention.
31, 216-239 (2010)
DOI: 10.1002/job
2017 21:17:40 UTC
Conclusion
Based on the findings of this study, negativistic metaphors of
formalization such as an "iron cage"
(Briscoe, 2007; Weber, 1978) appear to be outdated. Although

organizational metaphors are often
overly simplistic (Cappelli, 2006), a new metaphor may help
scholars and practitioners better
conceptualize how work design and formalization can be
leveraged to meet the needs of modern
organizations and employees. As a result, I suggest that
scholars consider the potential metaphor of
formalization as a "friend" in the quest to provide more
engaging and meaningful work without
adversely impacting organizational performance, and perhaps
an especially modest, wise, and tactful
one. For example, this modest friend does not harbor false
illusions about their wisdom or pressure us to
follow their advice. Yet this wise friend also realizes that we
are not infrequently forgetful or lacking
perfect judgment. As a result, our modest yet wise friend
"nudges" us to more carefully consider our
habitual or intuitive decisions by advising us of reasonable and
prudent options based on proven
knowledge. Similarly, our friend is also tactful, and manages to
provide discrete reminders so that we
do not overlook or forget important information or tasks.
Friendly metaphors aside, this paper should
provide a "nudge" for scholars and practitioners to more
carefully consider their habitual or instinctive
reactions to formalization, and to explore new options for work
design and organizational structure
which will improve both individual and organizational
outcomes.
Acknowledgements
I am grateful to Associate Editor Sharon Parker and three
anonymous reviewers for their insights and
recommendations. I also thank Sarah Birken, Richard
Blackburn, Adam Grant, John Sumanth, and

Steffen Raub for valuable feedback on earlier drafts of this
work.
Author biography
Tina L. Juillerat is a PhD candidate in the Organizational
Behavior program at the University of North
Carolina at Chapel Hill Kenan-Flagler Business School. She
earned her MBA from the University of
Chicago Booth School of Business and her BS from Miami
University summa cum laude in economics.
Her research examines decision making; managerial work in
complex and dynamic environments; how
employees who face challenging and often competing work
demands manage their professional
reputations and relationships; individual and organizational
status; and evidence-based management.
She has published in the APA Handbook of Industrial and
Organizational Psychology and is a member
of the Academy of Management, the Society for Judgment and
Decision Making, and the Society for
Industrial and Organizational Psychology.
31, 216-239 (2010)
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234 T. L. JUILLERAT
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