What’s it: Bureaucracy is an organizational arrangement based on a legal and formal authority system, run by following strict and impersonal rules. Companies typically have multiple layers with a clearly defined chain of command.
Management establishes solid rules and policies and oversees how decisions are followed at lower levels. They also establish standard procedures and rules for each activity.
Bureaucracy is important for more orderly business operations. The organization is more stable because everyone carries out their role according to the established guidelines and standard procedures, which they must adhere to strictly.
Why is bureaucracy important?
Bureaucracy often has a bad connotation. We might identify it with a convoluted process and involve unnecessary procedures.
But, despite the bad perception, it is necessary to organize a large organization. Big companies need a bureaucracy to manage the organization. Complex operations with diverse tasks and jobs require regularity through setting rules, standardizing processes and procedures, and closely monitoring.
Another reason why bureaucracy is important is ensuring effectiveness. Each person specializes in a specific job. They focus on working on assigned tasks minimizing distractions. Finally, the organization operates effectively.
In addition, authorities and responsibilities are clearly defined. Thus, decisions can be more coordinated and with a clear direction. Finally, it creates uniformity and control within the organization. And the company can run its activities smoothly without much disruption.
How does the bureaucracy work? What are the characteristics?
Bureaucracy is common in companies with complex operations, which require order. There are many jobs within the company. And employees do it regularly.
For the process to run smoothly, the company emphasizes rules and procedures. It sets the routine in detail. In addition, the company also establishes guidelines for carrying out activities within the company.
The company has many regulations, rules, and established ways of working or making decisions. They divide roles clearly in the form of a hierarchical system.
Bureaucratic companies rely on the division of labor. First, they break down complex operations into smaller, specific units. Then, they allocate employees to each and perform specific, routine tasks.
The division of labor is important for the standardized process, performance and output. The company knows what each employee is supposed to produce. And on the other hand, employees understand what they have to do and what the company expects them to do.
Bureaucratic companies organize organizations into hierarchies with multiple layers. In addition, the company regulates how command and communication flow within the organization. It is tiered, where each position has a different authority. A higher level has higher power.
Decision-making must follow the chain of command. And, ultimate authority rests with upper management, often leaving little – no – delegation to lower levels. In addition, companies are highly dependent on systems, including rules and policies, to oversee and control every activity.
Organized in complexity
Companies use a formal system to govern the organization. They rely on rules and policies for every activity. They also use hierarchical procedures to replace autonomous decisions. As a result, they do not tolerate deviance.
We may see bureaucratic companies tend to be rigid and inflexible. However, what they implement is important to maintain order and regularity in their operations.
On the other hand, it can be disastrous when they implement more openness. Complex operations become chaotic and disorganized.
Bureaucratic companies rely on procedural correctness. They establish clear processes, procedures, and systems for various activities within the organization. How employees carry out their duties and make decisions must follow applicable processes and procedures.
For example, the company determines who has the authority to make decisions. Thus, it has to be reported to those in authority when a problem arises, which may take longer as it involves more layers. Finally, the company may tolerate slower decisions if it meets established procedures and rules.
The company establishes a job description for each position and regulates what competencies are required. And training and development are geared towards it.
It all leads to specialization. For employees, it gives them a focus to develop their skills and abilities. They follow company-approved training programs.
In addition, a clearly defined level hierarchy encourages employees to be career-oriented. They understand what position they can reach with their current job and career. Finally, they try to do their best according to their field and expertise to get a promotion.
How the company fills each position is usually formal. As a result, they rely more on experience and years of work than their competence.
Relationships within the company are formal. Higher respect for those in higher positions is common. In addition, the decisions made must be rational and free – or at least minimize – emotional factors.
For example, the manager appoints an employee to fill a higher position. The decision is based on their performance, not their feelings or preferences.
Those are ideal conditions for an effective bureaucracy. However, because managers are normal human beings, emotional factors may play a big role. Ultimately, the closest and most agreeable to the manager determines who fills the position. And if it does, it can lead to a problem.
What are the advantages of bureaucracy?
Effectiveness is the main advantage of bureaucracy. Complex organizations require standardization and clear definition for various aspects. And to manage operations, companies rely on strictly enforced rules and procedures. They govern how decisions are to be made and who has the most authority. In addition, they need a system to closely monitor and control operations.
Other advantages of bureaucracy are:
Regularity. Bureaucratic structures are important for managing large organizations. It enables companies to coordinate and systematically control large-scale activities. Thus, everyone is moving in the same direction towards the company’s goals by minimizing deviations.
High discipline. Companies must strictly comply with regulations and carry out their activities according to procedures. In other words, they must be highly disciplined in their role.
No favoritism. Bureaucratic companies define the jobs and required competencies clearly. Likewise, standardization also applies to other aspects. For example, what services are provided and how to deliver them to customers are strictly regulated. Ultimately, the rules and policies within the company ensure equal and fair treatment – according to standards – to all parties.
More accountability. Everyone is held accountable for the role. Companies evaluate how they carry out their roles against established standards. When they make mistakes, they must be willing to take responsibility. Usually, companies will rely on rewards and punishments for this reason.
Coordinated decision-making. Clearly defined lines of command minimize confusion in decision-making. The company has determined who is in charge and has the power to make decisions.
Greater control. Higher discipline with strict rules minimizes deviation. Thus, top management can maintain control over the organization. Sometimes, they may adjust and introduce a new set of rules to adapt to changes over time.
What are the disadvantages of bureaucracy?
Low creativity and lagging adaptation are the disadvantages of bureaucracy. Employees may find it difficult to actualize personal initiative. That’s because the company didn’t allow them to do so.
In addition, they also do not have the autonomy to organize their work. Instead, everything is regulated by the company.
Finally, employees only see the procedures and rules for carrying out their activities. As the impact, they are more likely to think inside the box and less likely to identify new ways or ideas for improvement. So, finally, it is bad for innovation within the company.
Due to low innovation and creativity, companies find it more difficult to better adapt to changes in the business environment.
Furthermore, when there is a new initiative from upper management, change will take longer. For example, upper management should develop related procedures and rules before implementing them at lower levels. It is made worse by slow decision-making and implementation.
For this reason, bureaucratic structures are usually better suited for mature companies operating in stable business environments. Conversely, when the environment is dynamic, such as in the technology industry, it is difficult to be competitive.
Other disadvantages of bureaucracy are:
One-way communication. The bureaucracy promotes one-way communication and command. Thus, those in lower positions find it difficult to express their ideas and perspectives.
Rigid interpersonal relationships. Strict rules may limit employees’ social sense. And their relationships with other coworkers tend to be formal.
Slow decision. Decisions are concentrated on top management. So, for example, when problems arise at lower levels, decisions and solutions do not come immediately. Communication has to go through several layers. And once the decision is made, it has to go through the same layers.
As a result, decisions are not executed immediately. And the problem may become even more acute.
Programmed decisions. Decision-making is based on certain rules and procedures. As a result, it often leads to programmed decisions without identifying new solutions.
Low job satisfaction. Rigid work environments and low flexibility in work make employees bored and unmotivated. In addition, they are regulated and closely monitored without having a greater influence on their work area. In other cases, superiors may treat them as they please and assign them more tasks for authority reasons.
More documents. Companies may need more paperwork for each activity, even for simple jobs. For example, upper management needs it for evaluation, supervision, and control.
Nepotism. Upper managers are more likely to use their authority for personal gain. For example, they want to maintain control or occupy a strategic position quickly. Finally, they are likely to place their trusted people in strategic positions rather than established performance and criteria. By doing so, they expect to achieve their goal.
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