1 Teamwork and Formal Rules in Public and Private Organizations: Evidence that Formalization Enhances Teamwork Abstract Management experts and practitioners often promote teamwork as a way of improving performance by integrating knowledge dispersed in organizations. The complexity of public service delivery and the need for functional integration should create a particularly strong imperative for public sector workers to organize in teams. On the other hand, however, classical literature on organizations and management suggests that a bureaucratic structure impedes the development of teamwork, and public sector organizations tend to be more bureaucratic in ways that make teamwork more difficult to implement. Yet there is no empirical evidence on this important question of whether public sector workers are more or less likely to be involved in teamwork as compared to their private sector peers. Using variables in the NOS 2002 dataset, we found that teamwork among core workers is more prevalent in the public than in the private sector. In addition, results of our analysis are consistent with the conclusion that the public sector’s formal regulations in workplace safety, personnel protection, training, promotion channels, and employment records provide employees a sense of security so that public sector workers are more likely to be involved in teamwork. Hence, “bureaucracy” in the public sector does not impede teamwork. Rather, an element often associated with bureaucracy, formalization of personnel procedures, can facilitate teamwork.
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1
Teamwork and Formal Rules in Public and Private Organizations:
Evidence that Formalization Enhances Teamwork
Abstract
Management experts and practitioners often promote teamwork as a way of improving
performance by integrating knowledge dispersed in organizations. The complexity of public
service delivery and the need for functional integration should create a particularly strong
imperative for public sector workers to organize in teams. On the other hand, however, classical
literature on organizations and management suggests that a bureaucratic structure impedes the
development of teamwork, and public sector organizations tend to be more bureaucratic in ways
that make teamwork more difficult to implement. Yet there is no empirical evidence on this
important question of whether public sector workers are more or less likely to be involved in
teamwork as compared to their private sector peers. Using variables in the NOS 2002 dataset,
we found that teamwork among core workers is more prevalent in the public than in the private
sector. In addition, results of our analysis are consistent with the conclusion that the public
sector’s formal regulations in workplace safety, personnel protection, training, promotion
channels, and employment records provide employees a sense of security so that public sector
workers are more likely to be involved in teamwork. Hence, “bureaucracy” in the public sector
does not impede teamwork. Rather, an element often associated with bureaucracy, formalization
of personnel procedures, can facilitate teamwork.
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Introduction
Teamwork is generally important in organizations. The literature on “public bureaucracy”
implies that teamwork will be more difficult and unlikely in public organizations. For example,
some observers point out that public organizations tend to have higher levels of information
intensity and thus create an invisible barrier for communication (Tullock, 1965), which is
detrimental to teamwork. Scholars have often claimed that government organizations have more
rules and formalization than other types of organizations, such as business firms (Rainey, 2009).
The rules impose constraints that should impede teamwork. There is an alternative theoretical
perspective, however, that would predict higher levels of teamwork in public organizations for
various reasons. Formal rules of certain kinds, such as personnel rules, rather than imposing
constraints on teamwork, can afford protections that facilitate teamwork. This study uses data
from the 2002 National Organization Survey, the only nationally representative sample of
organizations, to provide evidence supporting this latter interpretation. The findings show
evidence of more teamwork in public organizations than private organizations. Higher
formalization of personnel rules and procedures in public organizations relates positively to the
incidence of teamwork in those organizations. These findings weigh against the oversimplified
view, in much popular and academic discourse, of government organizations as uniformly
dysfunctional “bureaucracies.” We will more clearly elaborate our research interests in the
following sections.
Confronting complicated problems, modern organizations often need organizational
learning (Argyris & Schon, 1978; Senge, 1990) to generate organizational knowledge and solve
problems. Teamwork as a way to integrate individual knowledge is an indispensable human
resource (HR) practice for organizations to facilitate organizational learning, generate relevant
The results also indicate that the levels of formalization are consistently higher in the public
sector than in the private sector, and this difference is statistically significant according to the phi
19
coefficients. That is, our Hypothesis 1a received solid support as well. Results in Table 2 show
that public organizations are generally older than larger than business enterprises.
[Insert Table 1 and Table 2 Here]
The second step of our analyses was to explore whether formalization positively predicts
the occurrence of teamwork (i.e. Hypothesis 1b). The dichotomous nature of the DVs (i.e.
general teamwork and self-directed teamwork) required us to test our hypothesis 1b with logit
regression. Due to the concern of regression parsimony, we combined the items falling into the
same formalization category. For example, we summed up four items used to measure work
safety. The internal reliability of each construct reaches an acceptable level.7 The results of
bivariate (i.e. one IV plus one DV) logit regression Table 3 show that almost each formalization
variable (with the exception of departmentalization of personnel protection in predicting self-
directed teamwork), is positively associated with both general teamwork, decision-oriented
teamwork, and self-directed teamwork, thus providing support for Hypothesis 1b. In addition,
both organizational age and size are also positively related to different types of teamwork,
evidence suggesting that age and size are essential MVs.
[Insert Table 3 Here]
The last step of out analyses was to examine whether different levels of formalization
between public and private organizations are main reasons leading to their different use of
teamwork (i.e. Hypothesis 1c). To conduct the analysis, we entered both the main IV (i.e. GOV)
and CVs in the logit regression model with and without mediators then examined the change of
the coefficient of GOV. Table 4 shows that results when we used general teamwork as the DV.
The coefficient of GOV is statistically significant at the 99% confidence level with a marginal
effect of .244 (B = 1.53, z = 4.43) after controlling for several teamwork-related variables, as
20
Model 1 shows. It means that the probability for public sector core workers to work in teams is
24.4% higher than the probability for private sector core workers to be involved in teamwork
(holding other variables at their means). This percentage is slightly higher than the result
obtained in Table 1 (21.5%). After entering eight formalization variables in Model 2, we found
that (1) the statistical significance disappeared (B = 0.60, z = 1.48), (2) the marginal effect
dropped from .244 to .103 (approximately 58% decrease). This test indicates that different levels
of formalization between public and private organizations account for 58% different use of
general teamwork between these two respective sectors. By using size and age as mediators as
Model 3 show, we found that 43% of the different use of general teamwork results from the gaps
of size and age between public and private organizations. After we entered all MVs into the
model, as Model 4 shows, the marginal effect dropped from .244 to .021 (approximately 91%
decrease), a very sharp change. This finding informs us that formalization, age, and size all
together explain 91% of the different use of general teamwork between governmental
organizations and business enterprises.
[Insert Table 4 Here]
We repeated the same procedures to test how much formalization, age, and size can
explain the different use of decision-oriented teamwork and self-directed teamwork between
public and private organizations. We reported the results in Table 5 and Table 6. Statistical
findings show that 54% different use of decision-oriented teamwork between public and private
organizations can be explained by their different levels of formalization, but only 39% is a result
of the size gap and age gap. However, the mediation effect of formalization is almost as strong
as the effect of size and age when self-directed teamwork was used as the DV (approximately
61% ~ 62%), as Table 6 shows. These two sets of MVs jointly explain 80% different use of
21
decision-oriented teamwork and 98% different use of self-directed teamwork between public and
private organizations. Findings in Table 4, Table 5, and Table 6 also imply that the mediation
effect led by formalization is independent from the effect originating from age and size.
[Insert Table 5 and Table 6 Here]
As to control variables, profit-sharing and job rotation were more influential variables as
compared to group incentives and home worker percentage. We also hypothesized that
supervision is an important predictor for general teamwork and decision-oriented teamwork
whereas autonomy is more critical in predicting self-directed teamwork. This also received
considerable support.
We encourage readers to use caution in interpreting statistical significance of mediators
including formalization, age, and size in Table 4, Table 5, and Table 6. Statistically insignificant
coefficients may be a consequence of multicollinearity. In the last model (Model 4) of these
tables, we found one uncentered variance inflation factor (uncentered VIF) over 10, several over
6, and the average equals 4.4 in Table 7. That is, the regression results do not justify an
interpretation of statistically insignificant coefficients of formalization as “zero impact” in a
model with multiple formalization variables. The true impacts of formalization on teamwork
appear in Table 3.8
[Insert Table 7 Here]
Conclusion
The present research attends to an important issue in the field of management that does
not receive a lot of attention specific to public sector settings: teamwork. Given the prevalence
of information intensity and the necessity of tacit knowledge exchange, teamwork may well play
a more critical role in the public than in the private sector. The theory of bureaucratization, on
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the other hand, may suggest that public sector workers are less likely than private sector workers
to work in teams. There was little or no empirical evidence prior to this study.
Fortunately, variables indicating formalized protection in the NOS 2002 dataset provide a
means for us to look more deeply into this problem. After reviewing relevant literature
concerning organizational structure and human resource management, we anticipated that
formalization in several personnel dimensions enhances organization members’ sense of security
so that they may demonstrate stronger willingness to work in teams. Given that public
organizations are more formally structured especially in personnel rules and procedures,
governmental employees tend to work under stronger protections so that they would be more
willing to organize in teams than do their peers in business enterprises. This hypothesis received
strong support from our statistical analyses. Our mediation-embedded models showed that
approximately 55% ~ 60% of the different presence of teamwork between governments and
business enterprises can be explained by formalization. The rest 40% ~ 45% differences,
however, can be mostly explained by organizational age and size. In addition, we also found that
public sector employees are more likely to be engaged in decision-oriented than self-directed
teamwork. This preference may be associated with the need for empowerment in self-directed
teams, a need in conflict with bureaucratic control.
In sum, we contend that our findings have provided strong evidence on an old-fashioned,
but still intriguing question: does sector matter? After controlling for various teamwork-related
variables, we found that sector affiliation still significantly predicts the occurrence of teamwork,
especially decision-oriented teamwork. A strong teamwork propensity for individuals in the
public sector stems from a solid foundation of formalized personnel protection, work safety,
procedures for dispute resolution, procedures for sexual harassment complaints, job documents,
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employment contracts, formal training, and promotion channels. The findings also suggest that
public management scholars should conceptually differentiate “good” and “bad” formalized rules
given that they have quite different implications to organizational behavior such as teamwork.
Finally, we urge scholars to keep exploring relevant topics of public sector teamwork. As an
effective practice that facilitates organizational learning and problem solving, teamwork has
received relatively little attention in the field of public management. More research effort is
required to help us understand teamwork dynamics in public organizations.
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Tables and Figures
Table 1 Public-Private Comparison on Teamwork and Formalization
Full Public Private Phi N % N % N % Teamwork (DVs) General teamwork 504 67.7% 109 84.4% 394 62.9% .19*** Decision-oriented teamwork 502 55.4% 109 76.1% 392 49.5% .22*** Self-directed teamwork 492 22.6% 105 36.2% 386 18.9% .17***
Formalization (Mediators or MVs) 1. Work safety Work safety department 501 39.9% 108 62.0% 392 33.7% .24*** Safety & hygiene documents 505 70.7% 109 85.3% 395 66.6% .17*** Workplace violence documents 505 60.4% 108 88.9% 396 52.5% .31*** Weapon rules and policies 505 62.0% 107 85.0% 397 55.7% .25***
Phi coefficient shows whether the distribution of DVs and MVs is different between public and private samples *p < .10; **p < .05; ***p < .01
Table 2 T-tests: Public-Private Comparison on Size and Age Full sample Public sample Private sample Difference Sig Organization size 427.3 1104.3 240.1 864.2 ***
Size and age Organization age/100 -- -- 0.46 0.37 Organization size (log) -- -- 0.11* 0.01
Constant -3.66*** -4.38*** -4.45*** -4.58*** N 449 421 406 382 Pseudo R square 0.09 0.13 0.10 0.14
Calculation of mediation effects Marginal effects of GOV 0.194 0.075 0.074 0.004 Decreased marginal effect (%) -- 61% 62% 98%
*p < .10; **p < .05; ***p < .01
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Table 7 Uncentered VIFs Variable VIF Formalized work safety 10.38 Written job documents 8.72 Organization size 7.76 Supervision 7.36 Sex harassment compliant procedures 7.08 Dispute resolution procedures 7.02 Autonomy 6.61 Formal training 4.20 Cross trained (in skills for more than one job)
3.41
Formalized promotion channels 3.25 Organization age 3.11 Formalized personnel protection 2.85 Documented contracts 1.95 Profit sharing 1.90 Job rotation 1.84 Pay for learning new skills 1.84 GOV (main IV) 1.77 Group incentives 1.35 Core workers at home 1.26 Mean VIF 4.40
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Appendix A: Variable Measurement
Dependent variables Teamwork: All variables are measured by a dummy scale question; 1 = yes, 0 = no. General teamwork: When Cores do their job, are they involved in teams? Decision-oriented teamwork: Do these teams make decisions about task assignments or work
methods? Self-directed teamwork: Do these teams choose their own leaders?
Control variables (1) Organization Age (in years) (2) Organization Size (log): Number of full time employees (3) Autonomy: One variable measured by a 1-5 ordinal scale question; 5 denotes the highest. How much choice do your Cores have concerning the best way to accomplish their
assignments…no choice, a small choice, a moderate amount, a large amount, or complete choice?
(4) Supervision: One variable measured by a 1-5 ordinal scale question; 5 denotes the highest. Which best describe how closely Cores are supervised as they do their work…no supervision,
a small amount, a moderate amount, a large mount, a large amount, or complete supervision? (5) Group-based monetary rewards: All variables are measured by a dummy scale question; 1 =
yes, 0 = no. Are any COREs paid using group incentives, such as gain sharing? Do any COREs receive pay for learning new skills? Do any COREs participate in a profit-sharing or bonus program? (6) Percentage of workers working at home (7) Cross-unit work experience: Both variables are measured by a dummy scale question; 1 =
yes, 0 = no. Are any COREs cross-trained? Are COREs involved in job rotation?
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Formalization variables (mediators)
(1) Formalization of work safety: All variables are measured by a dummy scale question; 1 =
yes, 0 = no. We sum up the four variables. (KR-20 = .81) Is a separate department, section, or officer responsible for worker safety at the establishment? Does each of the following documents exist in your organization?
1. Documents describing safety and hygiene practices 2. Documents describing policy about workplace violence 3. Documents addressing rules and policy about weapons on the premises
(2) Formalization/departmentalization of personnel protection: All variables are measured by a
dummy scale question; 1 = yes, 0 = no. We sum up the three variables. (KR-20 = .72) Is there a separate department or section for personnel or labor relations? Is there a separate department or section responsible for Equal Employment Opportunity or
Affirmative Action matters? (3) Formalization of a dispute resolution procedure: A single variable measured by a dummy
scale question; 1 = yes, 0 = no. Are there formal procedures for resolving disputes between employees and their supervisors
or coworkers? (4) Formalized procedures for sexual harassment complaints: A single variable measured by a
dummy scale question; 1 = yes, 0 = no. Is there a formal procedure by which employees may make complaints about sexual
harassment by co-workers or supervisors? (5) Formalization of job training: A single variable measured by a dummy scale question; 1 =
yes, 0 = no. In the past two years, did your establishment provide any COREs with formal job training? (6) Formalization of written documents: All variables are measured by a dummy scale question:
Do each of the following documents exist in your organization? 1 = yes, 0 = no. We sum up the three variables. (KR-20 = .78)
Written job description Written record of nearly everyone’s job performance
(7) Formalization of employment contracts: A single variable measured by a dummy scale
question; 1 = yes, 0 = no.
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Does (documented) employment contract exist in your organization? (8) Formalization of promotion channels: Both variables are measured by a dummy scale
question; 1 = yes, 0 = no. We sum up the two variables. (KR-20 = .70) Are the procedures for promoting COREs to a higher level formal or informal? Are the procedures for a CORE to be promoted to a job above CORE formal or informal?
Endnotes
1 A factor contributing to reduced role ambiguity notwithstanding, formalization may increase one’s role stress (Agarwal, 1993) and role conflict (Organ & Greene, 1981). 2 The unit of analysis in the NOS 2002 dataset is the organization. The NOS 2002 study took elaborate measures to identify establishments and respondents. According to the codebook for the study, the intended respondent is “the Human Resource manager or the person who does the hiring for the establishment.” 3 Nonprofits are included in the category of private organizations. 4 Indeed, virtual teams are available for people working at home. Considering that internet connection was less popular and the speed was slower in 2002, we believe that the percentage of home workers is an influential element in predicting teamwork. 5 The phi correlation coefficient is used when both variables are dichotomies. The phi coefficient is equal to SQRT (chi-square/N). The command of “phi” in the State packet allows us to obtain phi coefficients. 6 We also conducted bivariate logit regression by using three types of teamwork as DVs and public-private distinction as the main IV. The marginal effects obtained from these two regression models resemble the results of public-private differences in Table 1. 7 Variables in each category of formalization have a high level of internal reliability. Because variables used to measure formalization in NOS 2002 are dichotomous, we measure the internal reliability by employing the Kuder-Richardson Formula 20 (KR-20) instead of Cronbach's α. KR-20 is analogous to Cronbach's α, except Cronbach's α is used for continuous measures. The command of “KR20” in the State packet allows us to obtain KR-20 values. 8 We also found that correlations between any two formalization variables are statistically significant at the 95% confidence level. Many of them are approaching .70 and some are higher than .70. Correlation matrix is available upon request.