Bureaucratic Management
Under industrialisation, bureaucracy was the dominant form of organisation and management. The factory was designed to produce standardised products; the bureaucracy was designed to produce standardised decisions. Many major corporations of today developed in an industrial society, based on a bureaucratic model of machine-like division of function, routine activity, regularity, seeming permanence, and a long vertical hierarchy. For a long time bureaucracy thrived in a world of mass markets, uniform goods and services, and long production lines.
During the 1990’s, however, the top-down bureaucratic and authoritarian style of management began yielding to a networking style of management. Horizontal communication in a networked environment is freer and more fluid, with few bureaucratic barriers. In the new style of management, people learn from one another, peer to peer; everyone is a resource for everyone else, and each person gets support and assistance from many different directions.
Interestingly, the corporations of today are only getting ever bigger, and yet in most of these organisations that demand more than simple mechanical work from the employees, alternatives to bureaucratic form of management are being actively explored and experimented with. Bureaucratic management is one of the three branches of the traditional approach to management. The other two are scientific management and administrative management.
All the three emerged around the turn of the 20th century as theorised models. The traditional styles of management aimed at getting the organisation run like a lubricated, smooth-running machine. It may also be noted that while the first systematic theory of bureaucratic management originated from Germany, scientific management or Taylorism emerged from the United States, and the theoretical system of administrative management had its roots in France.
These so-called traditional approaches to management as well as the other approaches such as behavioural approach, systems approach, contingency approach, and quality approach — all of them developed based on varying assumptions about the behaviour of people in organisations vis-a-vis the key goals of an organisation, the types of problems faced vis-a-vis the methods to reach to their solutions. All these various approaches to management have contributed in their own ways to development of modern management thought, and continue to influence managers’ thinking in the modern corporate context.
However, of all these traditional and non-traditional management approaches, the bureaucratic form can be considered the earliest and still the most commonly prevalent. In many ways, it is also the most outdated. Bureaucratic form of management is based on the use a set of rather rigid rules. There is a clear hierarchical order involved, an unambiguous division of labor, and a detailed system of procedures of transaction. Bureaucracy existed for centuries in different forms and in different contexts, but a word for it did not exist until the mid-18th century (Walker 2001).
Coined by a French Physiocrat, ‘bureaucracy’ literally meant “government by desk. ” Today, the name of Max Weber (1864 – 1920) is most closely associated with bureaucratic management. Weber did the foundational work on the development of the mechanistic industrial organisation form, the bureaucracy. He was a German social historian whose works began to be widely recognised only from the mid-twentieth century, when they were translated into English. Weber based his studies significantly on his observations of the governmental bureaucracy that existed in Germany during his time.
He is today considered as one of the pioneering sociologists, and his study of bureaucracy forms part of a much wider framework of social theory that concerns general social and economic issues facing society. Weber’s concept of bureaucratic management provides a functional model on how a large-scale organisation should operate efficiently. Weber observed parallels between the mechanisation of industry and the proliferation of machine-like bureaucratic form of organisation. He noted that the bureaucratic form routinises the process of administration exactly as the machine routinises production.
This was a logical outgrowth of the thinking of the time; an industrial revolution, with mechanised productive apparatus (one form), would naturally inspire a mechanised organisation (another form) to complement it. In Weber’s work we find the first comprehensive description of the bureaucratic form as one that emphasises speed, efficiency, clarity, regularity, reliability and precision. As the Industrial Revolution got underway in the United States this form was ideally suited to the situational constraints of the era (Banner 1995).
For a long time now, the very word bureaucracy has had many negative connotations, but as originally envisaged by Weber, it was a strong positive force for bringing order and coherency into the running of an organisation, based on the cornerstones of efficiency, stability, consistency and predictability. Weber’s model stipulates seven essential characteristics for a well-functioning bureaucracy. These characteristics join together to a form of management style that emphasises regulation and control, even at the cost of being rigid and non-conducive to individual initiative and innovation.
These characteristics are: a formal system of rules, impersonality, division of labour, hierarchical structure, an elaborate authority structure, lifelong career commitment, and rationality (Hellriegel et al, 2005). Rules: These are formal guidelines imposing order on the activity of the employees, providing a discipline that can help an organisation to run smoothly and reach its goals. Bureaucracy is rule-based governance. It can be viewed as an institutional method for applying general rules to specific cases, in order to make the actions of people working in an organisation fair, equitable and predictable (Wilson 1989) .
The rule of rules brings uniformity of procedures and operations, facilitating organisational stability and integrity, making the work of an organisation relatively immune to erraticness of individual behaviour of the employees or the management. Mises (1969) observes the following on the importance of rules and regulations in bureaucratic organisation: Bureaucratic management is management bound to comply with detailed rules and regulations fixed by the authority of a superior body. The task of the bureaucrat is to perform what these rules and regulations order him to do.
His discretion to act according to his own best conviction is seriously restricted by them. Impersonality: This means objectivity. Employee performance is evaluated and issues are resolved in as objective manner as possible. Although this term may sound intimidating, Weber viewed the objectiveness ensuing from adherence to rules and impersonality as essential to guarantee fairness for all employees — eliminating personal bias and favouritism from the system. Division of Labour: The overwhelming importance of this concept of course originated in economics, with Adam Smith and others, in the early nineteenth century.
Division of labour promotes efficiency. A high degree of compartmentalisation of work in a precise manner enables a medium to large-scale organisation to use its workforce efficiently. Everyone is circumscribed to perform duties on the basis of his or her own field of expertise. Further, by splitting a large task into much smaller and more easily manageable parts, and assigning each part to an individual, the ease of learning and carrying out that each divided segment of the task is enhanced. At the expense of possible monotony and tedium, the principle of division emphasises efficiency and output.
Narrow division of labor also makes it easier to replace the employees, especially in factories that involve routine, mechanical tasks. Hierarchy: The traditional pyramid-shaped hierarchical structure positions each employee at a level commensurate with the amount of authority he or she exerts in the job. This authority can be equated to the scope of decision-making power of the employees, and increases at each higher level of the pyramid. People in the higher levels direct the work of people at lower level positions.
A well-defined hierarchy can bring clarity in an employee’s relationship and responsibility towards his or her work as well as well as towards other employees in the organisation. Hierarchy establishes a chain of command through superior and subordinate levels, helping ensure a smooth flow of work. Hierarchy is also based on a sharp distinction between the management and the workers. Bureaucracy’s fundamental tenet has been that the job of the management is to design and coordinate workers’ jobs (Pinchot, Pinchot, 1993).
Hierarchy, like rule-orientation, division and a number of other characteristics of bureaucracy, is a common feature of any social organisation and has been so throughout human history, but all these characteristics are particularly stressed upon in a bureaucratic setting within an organisation. The intensity with which these features are emphasised differentiates an organisation with a high bureaucratic structure from another with a low bureaucratic structure, which together form the two ends of a continuum.
Authority Structure: This is merely another way of looking at the hierarchical nature of bureaucracy. Authority structure refers to a clear association of people and their scope of decision-making power at various levels within the organisation. The authority-structure can be based on different criteria. Weber identified three types of authority structures (Hellriegel et al, 2005): a) Traditional authority structure: This is based on custom, gender, seniority, birth order, ancestry, and so on.
The succession of kings, and the authority of the king, in various cultures throughout the history of humanity, for example, was primarily based on such criteria. A king inherited and wielded power simply because it was his birthright. b) Charismatic structure: Within any group or organisation, some people can exert a predominant influence by virtue of their charisma or special talents, although technically speaking they are not superior to their co-workers. Charisma can come into play inside a bureaucratic organisation also, although mostly not as a primary determinant of leadership but a complementary one.
c) Rational-legal authority: Bureaucratic organisations for the most part tend to rely on this form of authority where leadership is defined in a framework of rules and regulations. A superior’s orders are complied with because of his or her position in the formal hierarchical structure of an organisation, and not because of some special abilities or privileges he or she may possess. Though authority may be based on a rational basis, bureaucratic management is fairly authoritarian, and many people would resent this.
By its very nature, bureaucracy is a structure defined by chains of dominance and submission (Pinchot, Pinchot, 1993). Lifelong Career Commitment: Traditionally, typical large-scale bureaucratic organisations emphasised stability, order and steady progress. They did not attract potential employees by offering a promise of adventure, excitement and rapid rise as many modern-day software companies are prone to do, for instance. Instead, their allure was job security together with slow and steady salary increases for deserving candidates.
The opportunity for promotion is used as the main incentive to ensure that the employees perform satisfactorily. Though the notion of lifelong commitment looks completely outmoded and out of place in most modern business organisations surviving in turbulent ever-changing market conditions, it still prevails in many Japanese or South Korean organisations such as Toyota or Samsung, and can be seen in many governmental bureaucracies in the West, such as the postal service or the civil service. When an employee joins these services, virtually a permanent employee contract is being made.
Rationality: It is the orderly and efficient allocation of financial and human resources to achieve the desired ends. In principle, managers operating in a bureaucratic environment are supposed to take decisions logically and scientifically. All the other characteristics of bureaucracy, such as division of labour and hierarchy, are meant to promote the element of rationality within the mechanisms and dynamics of the organisation. Rationality also implies assigning specific goals to each division of the organisation in such a manner that, working together, all these various divisions accomplish the larger goal of the organisation.
Rationality, based on goal-directed activity, gives more chance for an organisation to be successful. The bureaucratic form of management is best suitable when routine or repetitive tasks need to be done in an efficient and consistent manner. Adhering to rules and regulation by the employees in performing tasks ensures quality and quantity of output. In fact, phenomenal amounts of work can be accomplished when the bureaucratic structure is effectively deployed and the management is run in a streamlined manner.
But these very same aspects of bureaucratic management that can foster efficiency in one setting can lead to ponderousness and inefficiency in another. Though vertical and rigid bureaucratic structure is dismissed as a viable basis for an increasing number of vast thriving multinationals of today which put a special premium on innovation and change or adapting to change, it had indeed been adopted widely in the commercial and industrial sector until the recent decades. Max Weber viewed bureaucracy as a ‘rational’ instrument for collective achievement.
And even Joseph Schumpeter (1883-1950) who was a pioneering researcher in the field of entrepreneurship, and who extensively studied the role of the entrepreneur as an innovator, defended Weber’s position on bureaucracy (Wood 1991). Though Schumpeter believed that bureaucracy can lead to efficient allocation of resources, other major thinkers in this field such as Hayek and Mises rejected such a possibility. Mises (1969) held the position that bureaucratic management is “management of affairs which cannot be checked by economic calculation.
” Therefore, he argued that it is only suitable for and not private enterprises driven by the overriding profit motive. However, even in the conduct of public affairs, down the decades, bureaucratic style of management has become associated with maladministration, corruption, irresponsibility, wastefulness, inefficiency, slackness, tardiness, and red tape across the majority of the countries of the world. Schumpeter lauded many features of bureaucracy, but also recognized its limitations. He also commended Hayek for his presentation of dangers in bureaucratic planning and management (Wood, 1991).
. Though bureaucratic management has been much maligned, and for good reasons, the fact is that many successful organisations have been successful over generations very much under tight bureaucratic patterns of organisation and control (Pinchot, Pinchot, 1993). The bureaucratic management structure emerged in the most distant past of human history, from the time a higher social order emerged among clusters of people, and is still the most widely prevalent form of management, though there is a pronounced tendency to loosen its seemingly rigid grip.
Karl Marx traced the origin of bureaucracy to four sources: religion, the formation of the state, commerce and technology (Wikipedia 2006). Bureaucratic structures existed in religious institutions, as those in Egypt and Greece, thousands of years ago. But bureaucracy primarily evolved as the state apparatus evolved with the growing complexity of the civil society. Over a thousand years ago, the Chinese had in place an elaborate centralised bureaucratic structure to manage the affairs of the state.
In the medieval times, new administrative structures were needed to meet the growing demands made upon central government in Europe (Argyle 1994). In fact, bureaucracy was the default style of administration and management until the modern times. It was so easy and common for bureaucratic structures to prevail and proliferate because, ultimately, the top-down hierarchical pattern of management was rooted in the human psychology. But human psychology is changing. For example, for centuries, people desired to have a father-figure in the form of a king to rule and protect them.
They did not consider it dehumanizing to be subjected to an arbitrary ruler. However, to the enlightened sensibilities of people during the modern epoch which can be said to have gradually emerged from the times of Renaissance and Reformation and fully flowered in the twentieth century, the notion of being ruled by a king who possessed some divine right would seem abhorrent. Similarly, being dominated by the superiors from all quarters may have been quite acceptable to the majority of employees until very recently.
But workers of the “knowledge era” prefer to be individualistic, independent or working in a team of peers as far as possible. Bureaucracy flourished in an age of mechanisation, but today ideas and creativity are in high demand, and corporations find it making more economical sense than ever to nurture a work culture that is anti-bureaucratic. Bureaucracy is past-oriented in many ways, and innovation is thoroughly future-oriented. At its very root, the entrepreneurial process of innovation and change is at odds with the administrative process of ensuring repetitions of the past.
Structures and practices that may work well for the perpetuation of the known are not generally conducive to the process of innovation. In their book, The End of Bureaucracy & the Rise of the Intelligent Organization, Pinchot and Pinchot (1993) note that bureaucracy is no more appropriate to the sophisticated work culture of today than serfdom was to the factory work of the early Industrial Revolution. New forms of organisation are emerging, but to sustain them in the long run is a different proposition.
The mega corporations of today are intrinsically geared towards efficiency, but increasingly they will now need to also master creativity in order to survive. There is a dilemma here. Firms will not survive in the long run unless they are proficient at exploring new technologies, and they will not survive in the short run unless they are proficient at exploiting existing technologies. Herein lies a great dichotomy at the heart of modern business organisation. A dynamic balance has to be struck between a host of conflicting factors.
In their constant quest for managing the balance between centralisation and decentralisation, between interdependence and diversity, between integration and flexibility, and between control and creativity, large organisations still manifest a strong tendency to favor efficiency and productivity gains over and above creativity and innovation (Johansen 2003). The rational-bureaucratic model of organisation still remains dominant, although there is a clear paradigm-shift in management practices.
In many large organisations, which happen to be inherently bureaucratic, one would find a plethora of ideas and potential ideas that go unnoticed because there are some structural impediments to their realisation, or little or no incentive for employees to bring such ideas forth. For instance, incentive structures in large firms are designed to minimise surprises, yet innovation is inherently full of the unexpected. From a managerial point of view too, the reward system for general managers is typically based upon annual profits or ROI of corporate resources managed.
They are therefore rewarded for achieving short- rather than long-term profit. Moreover, apart from the greater inherent risks involved, the rewards associated with the profits from any longer-term, more radical innovations are unlikely to accrue to the manager originally involved in initiating a novel project, since he or she is likely to have moved on to other responsibilities before they are achieved. As such, innovative efforts often fall through the cracks inherent in most large organisations.
In fact, in these organisations there could usually be strong “disincentives” for innovative activities (Martin 1997). If hierarchy was central to traditional organisation, the lack of hierarchy is central to innovative organisation. As for division of labour, Jaffee (2001) observes that, In the postbureaucratic organization, social and functional integration takes precedence over differentiation and specialization. The postbureaucratic organisation is much flatter , with fewer levels of managers.
Most work will be horizontal knowledge work performed by multidisciplinary teams. Rather than satisfying their immediate supervisor (vertical relationship), team members concentrate on satisfying he needs of the next person in the process (horizontal relationship). Teams will be given considerable autonomy and will be expected to carry out the intent of the company’s mission and vision. Project managers and network managers will replace most of the middle managers and functional staff in the traditional bureaucratic-style organisation.
Companies can only succeed by tapping the talent and dedication of their people and by combining that talent and dedication in a team effort. The building of trust is emphasised in innovative enterprises. Politics, infighting, and departmental jealousies that are common features of bureaucracies are to be minimised. Leaders work hard to earn their team mates’ trust and vice versa, thus creating conditions in which trust can flourish. In such dynamic companies, there is widespread enthusiasm, a spirit of doing whatever it takes to achieve organisational success (Martin 1997).
