The Costs of Bureaucracy

This week, I am continuing my ongoing series of missives on bureaucracy with a discussion of its impact on organizations. The last two weeks have been about the causes; this week, we are looking at its cost.

Bureaucracy is characterized by non-value-added busy work, red tape, micro-management, and ballooning structures, which are its symptoms.

The first impact is it creates inefficiency—in other words, resources are wasted to little, if no, value for the organization. Inefficiency occurs when work is duplicated, double-checked, or held up for scrutiny. The scrutiny, while safeguarding against mistakes, reflects a risk aversion. It reflects a desire to reduce risk to near zero rather than manage it. Attempting to control risk costs energy and stalls initiatives. In doing so, it wastes the energy and efforts of employees. Time gets wasted checking and rechecking the decisions.

Seeking zero risk eliminates the use of judgement and discretion. Effective risk management, however, relies on these very qualities. By stifling judgement and discretion, we disengage employees from their work.

Wasted time and effort are unproductive. We live in an age where “productivity” is a watchword. It is essential for long-term growth and competitiveness. It measures how efficiently an organization produces an output. Governments wring their hands based on the latest productivity statistics. Bureaucracy is the root of productivity issues; it gets in the way of our workforce utilizing time well.

Organizations and nations that struggle with productivity need to look further than the bloating, indecisiveness thrust on their employees. Sometimes, this is a result of internal issues, and in the case of nations, it can be a result of extensive government oversight and regulation, which grinds down employees' efforts.

The corollary to inefficiency is ineffectiveness. If resources are being wasted, it often follows that organizations can't reach their goals. Red tape, designed to control people, gets in the way of delivery. Organizations, as a result, miss their milestones and objectives as time and energy are misused.

Extensive rules and procedures also damage organizational adaptability and resilience – the organization struggles to adapt but is caught up in red tape and rules, which sap its flexibility and energy.

But these examples of inefficiency, ineffectiveness, lack of productivity, and inability to adapt are through the eyes of the organization. The real damage of bureaucracy is its impact on the individual, who then also shows the signs of all of the above.

Fundamentally, bureaucracy stifles engagement. Employees don't value lifeless work where their creativity is on hold. As a result, they find no joy in expending extra effort on the work. They disengage from the work and don't look for ways of continuous improvement if all that will happen is they are kept boxed into process and ritual. Scenes reminiscent of the book 1984 are all that employees have to look forward to. Without efforts of continuous improvement, innovation also stalls.

When work balloons, as I discussed last week, employees don't have real work. They either have portions of real work for their skill and level, or they end up with "busy work." In time, this, too, disengages them. When this happens, you find they have quit the business but don't actually leave for years… or decades. Or, in other circumstances, those ideal employees leave fast for greener pastures.

Again, this is problematic for the organization, but, when you turn this work environment to the individual level, you will find that that individual employee is unable to flourish. Work becomes a chore, and their lives feel wasted. In these cases, we have created the modern “dark satanic mills”.

There are financial measures for lack of flourishing, but is it all about money? If our employees don't flourish, is that really for the greater good of our communities and our society? When they are not thriving, is your organization really a great place to work? On an ethical level, is it what we want to be remembered for? Yes, it is true – it is the choice of the employee to stay, but, if they are disengaged, is that ideal for your organization?

The age of robber barons should be over. Management needs to look at the workplace they have set up and ask themselves, "Is this really what we want?" Far too often, management?swallows hard and acknowledges they are bureaucratic but doesn't do anything to arrest the bureaucracy. Time is nigh to deal with it for all the reasons above, but, I would add, most importantly, from an ethical standpoint.