This study takes a first step in exploring the impact of decision process formalization (hereafter
referred to only as formalization) on the development of an organization’s human resources by
examining the relationship between the degree of firm-wide formalization and the individuals’
performance on tasks of varying complexity. Since auditors perform different tasks as they gain
experience, one might think that the managers’ performance on tasks would not be affected by the
formalization of tasks they performed as staff; however, we argue that since knowledge can be
transferred across tasks (Thibodeau 2003), the effect of task formalization on knowledge
acquisition has broad implications on the performance of auditors throughout the firm. Auditors
who begin their careers in a formalized setting may lose opportunities to learn, which will hinder
their future performance when they perform different tasks that may not be as formalized.