No theory forbids me to say "Ah!" or "Ugh!", but it forbids me the bogus theorization of my "Ah!" and "Ugh!" - the value judgments. - Theodor Julius Geiger (1960)

Functions and Consequences of Formal Organization

What impact do formal organizational structures have on the behavior of their members? Niklas Luhmann in his classic book from 1964 described the complexities of actual behaviors within organizations and the significance of deviations from formal norms. Luhmann reframed norms as dual-functioning elements dictating correct behavior while serving as the structural backbone of social systems. His critical evaluation emphasizes the functionality of norm-setting rather than assumed correctness, offering insights into how formalization shapes behavior and brings forth subsequent challenges.


Chapter 1 lays the foundation by dissecting social systems, highlighting the role of formal organization within the larger context of diverse expectations guiding actions.  While formal expectations are crucial, a multitude of diverse expectations cannot be entirely formalized within a system. So there is a difference between the concrete action system - a set of actions bound by meaning or implied sense - and its formal organization. Luhmann introduces the idea that systems must maintain their boundaries against an environment; this makes clear the importance of internal order for system maintenance. Luhmann considers individuals as part of the environment of social systems; he distinguishes social and personal systems.  A comprehensive sociological analysis also looks at latent roles, functions and unspoken relationships, Luhmann writes.


Chapter 2 distinguishes action systems and formal organizations, showing inherent tensions between expected behavior and actual action, and the emergence of informal organizations within formal structures. A distinct order of behavior emerges, marked by its unique norms, communication channels, logic, and leadership structures, alongside official regulations. This informal order significantly impacts the execution of formal plans, as work is transformed from a formal tasks into a communal activity. Stable mutual behavioral expectations are needed for sustained social interaction. The formation of norms, conformity, and the tensions arising from conflicting membership criteria influence group dynamics and individual behavior within social systems. Member rights and responsibilities can be granted, revoked or relinquished based on shared expectations. Membership is deliberately constructed, expressed through visible acts or symbols of belonging. When joining an organization, visible commitment is important. Maintaining alignment between an individual's beliefs and the organization's purpose is crucial for legitimizing membership.


Chapter 3 explores the role of membership within systems; it shows the complexities and tensions arising from formalized membership expectations and their relationship with broader behavioral expectations. Formalized membership expectations only encapsulate a fraction of the system's overall expectations, so tensions emerge among various behavioral expectations and roles within the system.


Chapter 4 shifts towards a functional analysis of actual behavior within systems; Luhmann challenges normativist traditions and focuses on the transformation of norms into variables, thereby offering a new perspective on conflicts within systemic relations. Behavior expectations contribute to sustaining a relatively stable behavioral system amid environmental changes. Conflicting demands might hinder generalization. Broad-ranging roles may require flexible normative expectations to accommodate exceptions. Social generalization may clash with temporal or substantive generalization, so compromises in norm stringency are needed to achieve consensus.


Chapter 5 delves deeper into the structuring of expectations within social systems, thereby exploring the formation of systems through expectations, boundaries, and the challenges posed by role separation and the connection between organizations and society. Behavioral expectations are the cornerstone of actions within systems. System boundaries arise by distinguishing relevance from irrelevance, ourlining the expectability of actions. Actions can belong to multiple systems simultaneously without being restricted by system boundaries. Unpredictable environments necessitate stable yet flexible generalized expectations. Unified roles provide security and a framework for complex resposibilities. Formalized expectations attain temporal durability; they persist despite factual violations. This stability might pose adaptation challenges when the system confronts environmental changes or conflicting roles. Formalized expectations establish a consistent framework for roles within a system, with each membership expectation integral to the role. Rebellion against any expectation is perceived as a challenge to the entire system. In complex systems, roles become more flexible, not tethered to individuals, and rely on specific interaction rules which offers a more adaptable basis for organizing roles. Consensus and trust are significant in ensuring smooth interactions and bridging gaps in performance relationships.


Chapter 6 describes how differentiated systems optimize performance through internal organization. Luhmann emphasizes the multifunctional effects of actions within a system beyond their intended purposes. The formal structure has a role in establishing common understanding, delineating responsibilities, and streamlining decision-making. Instead of rigidly dictating behavior, usable guidelines for orientation across diverse situations can be offered. Formal structures allocate tasks to subsystems, which gives challenges in exclusive function allocation and in isolating causal chains within differentiated systems.


Chapter 7 stressed that motivation transcends mere norm compliance. It contrasts motivational dynamics in less and more complex systems, introducing the concept of generalized membership motivation and its evolution. While conventional theories lean on rewards and punishments to align individual interests with societal norms, formal norms actually serve only a fractional role in social systems. Social systems necessitate more than mere norm compliance for their sustenance. Influences for motivation within these sytems extend beyond sanctions or rewards, and include social status, emotional-social dynamics, system prestige, and member self-control. These are all entrenched within the system's structure. In complex systems, gratitude diminishes in relevance due to increased specialization and interpersonal distance. Individuals find motivation within membership itself, supported by generalized authority and monetary rewards. This allows systems to adapt to uncertainty without constant negotions or specific rewrads. Leaders can presume adherence to formal expectations unless members risk their membership status. Separating motivation from leadership and organizational purposes allows flexibility and adaptibility within a system. There can be a calculated willingness among employees to meet minimum requirements without standing out. Efforts to motivate increased performance have potentially negative consequences like high turnover rates.


Chapter 8 describes the complexities of organizational behavior and communication within ("integration") and outside an institution ("adaptation"). There is a delicate balance between public representations and the hidden preparations within an organization, which shows the importance of crafting an idealized external image. Each social system is consciously presented to non-members, in order to project trustworthiness and credibility. While doing so, an idealized identity is communicated, while inconsitencies and imperfections are concealed. The overt reality presented to the public often conceals a web of covert preparations and decisions. In order to maintain consistency in the public portrayal of the organization, dissenting opinions or inconsistencies are strategically concealed. It's often challenging to present a unified frontstage while acknowledging the underlying complexities and differences within an institution. The informal organizational structure plays an important part in achieving the nuanced and credible representation needed in various organizational contexts.

Chapter 9 describes the formalization of influence within systems, exploring the relationship between authority, personal influence, and system-endowed influence. It emphasizes the need for formalized influence and delineates its implications on systems' interactions with their environments. Systems adapt to their environment by (1) changing themselves or by (2) modifying the environment. Communication has an important function in the external maintenance of a system in its environment. Influence becomes power when repeated acceptance is expected, authority when other communicatons are also expected to be accepted, and leadership when others acknowledge the influence.

Chapter 10 investigates the system's capacity for change, showing the elasticity of behavioral expectations and the interdependence of generalization and differentiation. It explores positions within social systems, crucial for understanding adaptability while maintaining system functionality.


Chapter 11 highlights the significance of rank in structuring interactions, from initial encounters to its manifestation in formalized systems. It looks at the interdependence of formal status, personal achievement, and the emergence of informal hierarchies within organizations.


Chapter 12 delves into the complexities of responsibility and accountability within hierarchical structures. It probes into discrepancies between responsibility and accountability, the distribution of uncertainties within systems, and the transformation of trust from personal relationships to systemic functionality.


Chapter 13: Formalized Communication Networks

Communication, the lifeblood of social systems, influences roles and pathways within formalized networks. Luhmann describes the crucial role of communication forwarding, bridging formalization and adaptability, while also exploring the dichotomy between structured formal systems and the fertile grounds of informal networks.


Chapter 14: Leadership in Formalized Hierarchies

Leadership within structured systems challenges the traditional perceptions, emphasizing functions over personal traits. The chapter probes the complexities faced by superiors balancing formal and informal powers and expectations.


Chapter 15: Boundary Roles and Conflict Management

Boundary roles navigate the balance between representing a system and interpreting its external interactions. These roles, while central, confront challenges in managing divergent consciousness and mitigating tensions between formal expectations and the realities of the external environment.


Chapter 16: Formalization of Conflicts

Conflict, a natural aspect of social systems, confronts formalization's boundaries. The chapter illuminates how regulated conflicts are essential for a shared order within systems, yet remain elusive in their resolution within formal channels.


Chapter 17 shines a light on the limitations and complexities of both formal and informal sanctions in ensuring compliance within organized systems. It shows the interrelation of collegial controls and formal expectations.


Chapter 18 challenges presumptions of rational harmony within social systems, emphasizing the need for strategies in managing dissent, contradictions, and cooperative conflict resolution.


Chapter 19 navigates the structure of expectations and contacts between individuals in social systems, highlighting how social institutions regulate relationships between formalized expectations and actual interactions.


Chapter 20 uncovers the distinction between formal and informal roles within organizations, addressing the dynamics between these roles and the nuanced navigation individuals undertake in formal settings.


Chapter 21 brings attention to the autonomy of social situations within formal systems, emphasizing the importance of diverse strategies and expressive behavior in managing contradictions and conflicts.


Chapter 22 delves into the nuances of usable illegality within social systems, exploring the necessity for a certain level of deviation from formal norms for effective functioning.


Chapter 23 emphasizes the significance of collegiality within formal settings, navigating the fine line between formal mandates and candid discussions among peers. It sheds light on gender dynamics, power nuances, and the delicate dance between formal obligations and informal cooperation.


Chapter 24 delves deeper into the realm of formalized behavior, revealing the complexities that arise when personal interactions meet structured systems. It unravels the significance of elemental behaviors—like gratitude, indirect communication, and tact—in the formal landscape, emphasizing their transformation and limitations within structured settings. What's fascinating is the emergence of specialized languages for indirect communication, the conscious evolution of social skills, and the role of cliques in complementing or contrasting formal structures.


Chapter 25 rounds off a thought-provoking journey through the intricacies of formalized social systems. It unravels the dichotomy between emotional and functional stabilization within these systems, emphasizing how personal emotions clash with functional expectations as systems grow complex. Luhmann critiques attempts like the "human relations" movement to emotionally bind individuals to organizations, highlighting the challenges of balancing emotional attachment with adaptability and rationality for effective structural decisions. As systems grow, they institutionalize emotionally neutral behavior, shifting away from emotional acceptance to viewing expectations as duties. This functional stabilization values individuals for replaceable aspects, diminishing emotional harmony within the system. The narrative navigates the repercussions—how emotional character diminishes, replaced by rules of functional substitution, creating systems valuing functional equivalencies over emotional needs. It dives into the balance and challenges this dichotomy poses within structured systems.

The conclusion challenges the conventional belief that organizations merely comprise people. It dissects the dilemma of individual humanity within formal systems and spotlights evolving paradigms in organizational theory to address these challenges.


Luhmann, N. (1964), Funktionen und Folgen Formaler Organisation, Berlin: Duncker & Humblot.