Types of Formal Organizations

Learning Outcomes

  • Explain the different types of formal organizations
  • Explain bureaucracy as an ideal-type

A complaint of modern life is that society is dominated by large and impersonal organizations. From schools to businesses to healthcare to government, these organizations, referred to as formal organizations, often leave us feeling like a cog in a machine. What is it like to track down a health insurance billing question? Have you ever tried to get technical support on a computer or cell phone? How long did it take and how many different times were you placed on hold? If you went back to the store where you purchased the device, were you asked to wait in line? Does your college or university have a streamlined process for questions related to advising or financial aid?

Sociologist Max Weber developed a conceptual framework to help us understand formal organizations and to work on moving from the particular (“I had this experience with my cell phone service provider”) to the general (“Formal organizations have similar characteristics such as…”). Weber’s ideal-type is a model or a collection of characteristics that could describe most examples of the item under discussion. We will discuss bureaucracies as an ideal-type of organization.

Types of Formal Organizations

Figure (a) shows a parade float made by Girl Scouts. Figure (b) shows the hallway of a correctional facility.

Figure 1. Girl Scout troops and correctional facilities are both formal organizations. (Photo (a) courtesy of moonlightbulb/flickr; Photo (b) courtesy of CxOxS/flickr)

Sociologist Amitai Etzioni (1975) posited that formal organizations fall into three categories. Normative organizations, also called voluntary organizations, are based on shared interests. As the name suggests, joining them is voluntary and typically done because people find membership rewarding in an intangible way. The Audubon Society and a ski club are examples of normative organizations. Coercive organizations are groups that are forced to join. These may include prison or a rehabilitation center. The third type is utilitarian organizations, which, as the name suggests, are joined because of the need for a specific material reward. High school and the workplace fall into this category—one joined in pursuit of a diploma, the other in order to make money.

Table of Formal Organizations. This table shows Etzioni’s three types of formal organizations. (Table courtesy of Etzioni 1975)
Normative or Voluntary Coercive Utilitarian
Benefit of Membership Intangible benefit Corrective benefit Tangible benefit
Type of Membership Volunteer basis Required Contractual basis
Feeling of Connectedness Shared affinity No affinity Some affinity

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Bureaucracies

All formal organizations are, or likely will become, bureaucracies. Weber utilized the ideal-type to conceptualize bureaucracies as having a hierarchy of authority, a clear division of labor, explicit rules, and an atmosphere of impersonality (1922). Bureaucracies are not a new social phenomenon—they have been around for nearly a century! Today, people often complain about bureaucracies—declaring them slow, rule-bound, difficult to navigate, and unfriendly. Let’s take a look at Weber’s ideal-type of bureaucracies in the early twentieth century and see whether it describes bureaucracies we encounter today

Hierarchy of authority refers to the aspect of bureaucracy that places one individual or office in charge of another, who in turn must answer to her own superiors. For example, at your college or university, the Board of Trustees is the governing body of most institutions of higher education. The president (or chancellor) answers to the Board, and the divisions arranged under the president have their own leaders, who in turn manage other subordinate employees. Faculty (even tenured faculty) are much more autonomous than in other professions, but each department has its own organizational structure and will typically answer to a dean or provost. Often there are elaborate organizational charts to show who answers to whom. Delegation of tasks and duties flows downward and responsibility flows upward. For example, if there was a major incident such as a mass shooting on a college campus, the college president would be asked to explain what happened and would be held accountable for any lapses in security, delayed response time, etc.

A clear division of labor refers to the fact that within a bureaucracy, each individual has a specialized task to perform. For example, psychology professors teach psychology, but they do not attempt to provide students with financial aid forms. In this case, it is a clear and commonsense division. Students often go to faculty for advising. On some campuses, faculty are trained to advise students and on other campuses, there are counselors who provide advising. For students, this might be frustrating—why do you have to go to so many different people just to have questions answered?

The existence of explicit rules refers to the way in which rules are outlined, written down, and standardized. For example, at your college or university, the student guidelines are contained within the Student Handbook. As technology changes and campuses encounter new concerns like cyberbullying, identity theft, and other hot-button issues, organizations scramble to ensure that there are explicit rules addressing these emerging topics. College employees are also governed by a system of rules and might be asked, or mandated, to complete training (i.e., concerning sexual harassment) as part of their employment.

Finally, bureaucracies are also characterized by impersonality, which takes personal feelings out of professional situations. This characteristic grew, to some extent, out of a desire to protect organizations from nepotism, backroom deals, and other types of favoritism, simultaneously protecting customers and others served by the organization. Depending on the size of your college or university, impersonality is likely the most variable characteristic in this type of bureaucracy. Some students are in Introduction to Sociology classes comprised of 15 students, while others are taking classes with 200 or more students. Many colleges and universities, regardless of size, prioritize individual students and put in place a number of procedures to reduce the impersonality that is common in formal organizations. Large business organizations like Walmart often situate themselves as bureaucracies. This allows them to effectively and efficiently serve large volumes of customers quickly and to offer affordable products based on volume. This results in an impersonal organization. Customers frequently complain that stores like Walmart care little about individuals, other businesses, and the community at large.

Bureaucracies are, in theory at least, meritocracies, meaning that hiring and promotion are based on proven and documented skills, rather than on nepotism or random choice. In order to get into a prestigious college, you need to perform well on the ACT or SAT and have an impressive transcript. In order to become a lawyer and represent clients, you must take the LSAT, obtain a law degree, and pass the state bar exam.

Of course, there are many well-documented examples of success by those who did not proceed through traditional meritocracies. Think about technology companies with founders who dropped out of college, or performers who became famous after a YouTube video went viral. How well do you think established meritocracies identify talent? Wealthy families hire tutors, interview coaches, test-prep services, and consultants to help their kids get into the best schools. This starts as early as kindergarten in New York City, where competition for the most highly-regarded schools is especially fierce. Are these schools, many of which have copious scholarship funds that are intended to make the school more accessible, really offering all applicants a fair chance?

There are several positive aspects of bureaucracies. They are intended to improve efficiency, provide equal opportunities, and ensure that most people can be served. And there are times when rigid hierarchies are needed. But remember that many of our bureaucracies grew large at the same time that our school model was developed––during the Industrial Revolution. Young workers were trained, and organizations were built for mass production, assembly line work, and factory jobs. In these scenarios, a clear chain of command was critical. Now, in the information age, this kind of rigid training and adherence to protocol can actually decrease both productivity and efficiency.

Today’s workplace requires a faster pace, more problem solving, and a flexible approach. Too much adherence to explicit rules and a division of labor can leave an organization behind. And unfortunately, once established, bureaucracies can take on a life of their own. Maybe you have heard the expression “trying to turn a tanker around mid-ocean,” which refers to the difficulties of changing direction with something large and set in its ways. State governments and current budget crises are examples of this challenge. It is almost impossible to make quick changes, leading states to continue, year after year, with increasingly unbalanced budgets. Finally, many bureaucracies, as mentioned, grew as institutions at a time when privileged white males held all the power. While ostensibly based on meritocracy, bureaucracies can perpetuate the existing balance of power by only recognizing the merit in traditionally male and privileged paths.

Sociologist Robert Michels (1911) suggested that all large organizations are characterized by the iron rule of oligarchy, wherein an entire organization is ruled by a few elites. Do you think this is true? Can a large organization be collaborative?

Watch It

Watch this Khan Academy video to learn more about types of organization.

Watch the CrashCourse video “Formal Organizations” for yet another explanation of these concepts.

The front of a McDonald’s restaurant featuring Arabic writing is shown.

Figure 2. This McDonald’s storefront in Egypt shows the McDonaldization of society. (Credit: s_w_ellis/flickr)

The McDonaldization of Society

The McDonaldization of Society (Ritzer 1993) refers to the increasing presence of the fast food business model in common social institutions, including government, education, and even relationships. The term itself isn’t widely used in publications, research, or common conversation, but its effects are very familiar, even commonplace. The McDonald’s model includes efficiency (the division of labor), predictability, calculability, and control (monitoring). For example, in your average chain grocery store, people at the register check out customers while stockers keep the shelves full of goods and deli workers slice meats and cheese to order (efficiency). Whenever you enter a store within that grocery chain, you receive the same type of goods, see the same store organization, and find the same brands at the same prices (predictability). You will find that goods are sold by the pound, so that you can weigh your fruit and vegetable purchase rather than simply guessing at the price for that bag of onions. The employees use a timecard to calculate their hours and receive overtime pay (calculability). Finally, you will notice that all store employees are wearing a uniform, and usually a name tag, so that they can be easily identified. There are security cameras to monitor the store, and some parts of the store, such as the stockroom, are generally considered off-limits to customers (control). This approach is so common in chain stores that you might not even notice it; in fact, if you went to a large-chain resturant or a store like Walmart, seeing a worker or a process that didn’t have these uniform characteristics would seem odd.

While McDonaldization has resulted in improved profits and an increased availability of various goods and services to more people worldwide, it has also reduced the variety of goods available in the marketplace while rendering available products uniform, generic, and bland. Think of the difference between a mass-produced shoe and one made by a local cobbler, between a chicken from a family-owned farm and a corporate grower, or between a cup of coffee from the local diner and one from Starbucks. Some more contemporary efforts can be referred to as “de-McDonaldization”: farmers markets, microbreweries, and various do-it-yourself trends. And with recent advertising and products emphasizing individuality, even McDonald’s seems to be de-McDonaldizing itself.

The corporate impact of this phenomenon is interesting on its own, but sociologists and ordinary citizens are often more concerned about its echoes in other areas of society. A primary example, discussed extensively later on in this text, is education. Curricula and teaching practices were long the domain of local districts under state guidance. Some experts felt that this led to both inefficiency and underperformance. Starting in the 1990s and especially in the early 2000s with the No Child Left Behind law, national standards began to override local approaches. But the desired outcome (improved education) is difficult to measure and far more difficult to achieve. Due to funding gaps, difficult standards, and intense public and local government opposition, the law was largely seen as having limited impact and was eventually phased out.

Healthcare has also gone to a mass production and efficiency model. As you will explore later in the text, U.S. healthcare providers and insurers faced overwhelming increases in demand, partly the result of America’s aging and less healthy population. In the 1990s, providers consolidated in what was called hospital “merger mania.” Local hospitals and even small doctors’ offices were merged or acquired by larger systems (Fuchs 1997). The trend continued with new growth in providers like urgent care offices. Other efficiency and standardization methods include telemedicine, new types of healthcare professionals, insurance mandates, and artificial intelligence.

Secrets of the McJob

We often talk about bureaucracies disparagingly, and few enterprises receive more criticism than fast food restaurants. Several books and movies, such as Fast Food Nation: The Dark Side of the All-American Meal by Eric Schossler (2001), paint an ugly picture of what goes into, what goes on at, and what comes out of fast food chains. From their environmental impact to their role in the U.S. obesity epidemic, fast food chains are connected to numerous societal ills. Furthermore, working at a fast food restaurant is often referred to dismissively as having a “McJob” rather than a real job.

But business school professor Jerry Newman went undercover and worked behind the counter at seven fast food restaurants to discover what really goes on there. His book, My Secret Life on the McJob (2006), documents his experience. Unlike Schossler, Newman found that these restaurants offer much good alongside the bad. Specifically, he asserted that the employees were honest and hardworking, that management was often impressive, and that the jobs required a lot more skill and effort than most people imagined. In the book, Newman cites a pharmaceutical executive who says a fast-food service job on an applicant’s résumé is a plus because it indicates the employee is reliable and can handle pressure.

Businesses like Chipotle, Panera, and Costco attempt to combat many of the effects of McDonaldization. In fact, Costco is known for paying its employees an average of $20 per hour, or slightly more than $40,000.00 per year. Nearly 90% of their employees receive company health insurance, a number that is unheard of in the retail sector.

While Chipotle is not known for high wages, it is known for attempting to sell higher-quality foods from responsibly sourced providers. This is a different approach from what Schossler describes among burger chains like McDonalds.

So what do you think? Are these McJobs and the organizations that offer them still serving a role in the economy and people’s careers? Or are they dead-end jobs that typify all that is negative about large bureaucracies? Have you ever worked in one? Would you?

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Think It Over

  • What do you think about the recent spotlight on fast food restaurants? Do you think they contribute to society’s ills? Do you believe they provide a needed service? Have you ever worked a job like this? What did you learn?

Glossary

bureaucracies:
formal organizations characterized by a hierarchy of authority, a clear division of labor, explicit rules, and impersonality.
division of labor:
the fact that each individual in a bureaucracy has a specialized task to perform
coercive organizations:
organizations that people do not voluntarily join, such as prison or a mental hospital
explicit rules:
the types of rules in a bureaucracy; rules that are outlined, recorded, and standardized
formal organizations:
large, impersonal organizations
ideal-type:
a model or a collection of characteristics that could describe most examples of the item under discussion
impersonality:
the removal of personal feelings from a professional situation
iron rule of oligarchy:
the theory that an organization is ruled by a few elites rather than through collaboration
meritocracy:
a bureaucracy where membership and advancement is based on merit—proven and documented skills
normative or voluntary organizations:
organizations that people join to pursue shared interests or because they provide some intangible rewards
utilitarian organizations:
organizations that are joined to fill a specific material need

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