In economics, rationalization is an attempt to change a pre-existing ad hoc workflow into one that is based on a set of published rules. There is a tendency in modern times to quantify experience, knowledge, and work. Means–end (goal-oriented) rationality is used to precisely calculate that which is necessary to attain a goal. Its effectiveness varies with the enthusiasm of the workers for the changes being made, the skill with which management applies the rules, and the degree to which the rules fit the job.
Rationalization aims at an efficiency increase by better use of existing possibilities: A same effect can with fewer means, or with same means to be obtained. In the industry thereby frequently the replacement of manpower is designated by machines (rationalization investment). It is the reasonable, appropriate organization of operational conditions under changing conditions to increase with the goal, productivity and economy.
Julien Freund defines rationalization as "the organization of life through a division and coordination of activities on the basis of exact study of men's relations with each other, with their tools and their environment, for the purpose of achieving greater efficiency and productivity".[1] According to Ulbo de Sitter, the act of organizing work tasks into work flows and processes involves the splitting of tasks into two sub-categories: parts, representing proceeding work tasks in time, and aspects, referring to work tasks that are different in nature rather than in time. This type of rationalization can be applied to physical as well as administrative work tasks.[2]
The rationalization process is the practical application of knowledge to achieve a desired end. Its purpose is to bring about efficiency, coordination, and control of the natural and social environment. It is a product of "scientific specialization and technical differentiation" that seems to be a characteristic of Western culture.[1] Rationalization is the guiding principle behind bureaucracy and the increasing division of labor, and has led to an increase in both the production and distribution of goods and services. It is also associated with secularization without its more positive component of humanism, with depersonalization and with oppressive routine.
Increasingly, human behavior is to be guided by observation, experiment, and reason (zweckrational).[3] Change in human character is expected to be part of the process; rationalization and bureaucratization promote efficiency, and materialism, both of which are subsumed under Weber's concept of zweckrational.
In recent years, “rationalization” has become jargon for, or euphemism of, budget cuts or layoffs.