Bureaucracy, characterized by authoritarian power structures, suffocating rules, and toxic politicking is in rude health, especially in large companies. Alas, the attributes that define bureaucracy — discipline, reliability, conformity, and efficiency — are hardly what’s required to create more purpose-driven organizations. (1)
In 1988, Peter Drucker predicted that, within twenty years, companies in the US would have slashed the number of management layers by half and shrunk management roles by two-thirds. (2)
He was wrong.
Since 1988, the number of managers in US companies has doubled – while the number of other employees has increased by 44%. (3)
This wasn’t supposed to happen. What are all the managers doing?
A 2014 report by Deloitte found:
“Australia’s productivity is being choked by red tape, with the combined cost of administering and complying with public and private sector bureaucracy costing $250 billion each year.”
‘Strikingly, the cost of complying with self – imposed rules created by the private sector is double that associated with government regulations. The self-imposed rules in the private sector cost $155 billion each year: the time required for employees to comply with self-imposed rules has become a crippling burden. Middle and senior managers spend 8.9 hours each week complying with rules they set for themselves and other staff spend 6.4 hours.’ (4)
Companies - predicated on the assumption that bureaucracy is inevitable. Deep change seems impossible. Built for control, micro management, and a lack of trust; not on adaptability, innovation and flexibility.
People buy houses, cars and major items in their private lives. Suggest that an employee order their own chair, approve their own expenses, self-certify their timesheet, design their own job or choose their colleagues - you’ll be seen as ‘odd.’
Senior leaders talk a good game (people first, autonomous teams, agile working) – but most follow the same blueprint:
Hierarchical structure – power vested in positions
Authority trickling down
Strategies and budgets set at the top
Central staff groups making policy for everyone to follow
Job roles tightly defined - control achieved through rules, sanctions, putting people into boxes and frameworks to make them act the same way.
The average company wastes more human capacity then it uses. (5)
Imagine running our relationships, the way we run our companies.
There would be a note on the fridge door (held up by the Bart Simpson fridge magnet):
Never look to the ceiling when my Mother calls
Never come home later than 2-hours after the end of the rugby match
Never tell my friends ‘you were quite a catch’
Never leave the toilet seat in the wrong position
Never tell me to ‘calm down’
Never leave your clothes on the floor
Never comment on the price of my new hair do
Never hide your pay slip
Never criticize my colleague Dave - who is better looking than you and earns more
Never leave the washing up till later
Never leave the car short of petrol.
In a great new book, Hamel and Zamini tackle the problem head on – showing the costs of bureaucracy and how to implement alternatives. The authors surveyed 10000 workers. (6)
How does your company compare?
BMI (Bureaucracy Mass Index)
1. How many management layers does your company have (from frontline staff to CEO)?
A: Companies have, on average, 6 management layers. In companies with over 5000 employees, the average is 8.
2. How much time is spent on bureaucratic internally focused tasks such as attending meetings, documenting compliance, preparing internal reports or dealing with internal requests?
A: An average 27% of work time is spent on internal tasks of this nature. A significant amount of this time is wasted (for example, only 33% said that budgeting, goal setting and performance reviews are ‘valuable’ or ‘very valuable’).
3. How much do bureaucratic processes slow decision making and action in your company?
A: 79% of respondents say bureaucracy ‘significantly or substantially’ frustrate decision making. Speed is not a hallmark of bureaucracy.
4. To what extent are interactions with your line manager focused on internal issues; for example allocating resources or getting approvals?
A: 42% of time with the line manager is spent on internal issues – the figure is 50% in large companies.
5. How much autonomy do you have in designing your work, setting targets and priorities?
A: More than two thirds of non-managerial respondents say they have ‘little or moderate’ control over their work methods or job priorities.
6. How often are frontline employees actively involved in designing change initiatives that impact them?
A: 25% are ‘always’ or frequently’ involved in designing change initiatives. This results in reduced creativity and motivation.
7. How are unconventional ideas met in your company?
A: 75% of respondents say they are met with ‘indifference, skepticism or outright resistance.’ Deeply worrying given that new ideas are the lifeblood of every company.
8. How easy is it for frontline staff to launch a new project and get a budget?
A: 95% of respondents say it’s ‘very difficult’ for frontline employees to launch a new initiative. (Amazon actively promote bottom up projects).
9. How prevalent is political behaviour in your company?
A: 68% say political behaviour is ‘often’ observed.
10. How often do political skills count more than competency in how people get on in your company?
A:62% say that political skills ‘often or always’ determine who gets ahead. In a bureaucracy it’s the best infighters who end up on top rather than those who are most competent.
The authors rated answers on a 1 (good)-10 (bad) scale. They found that the average company BMI is 65.
Final Thoughts:
Remove someone’s authority and you shrink their productivity and engagement. They eventually switch off. It’s a case of putting humans over structures, rules and processes.
So, why can’t we have a bureaucracy detox?
Leaders - give power away, slim down management layers, give people more information, start experiments to test new ideas and nurture those who inspire and deliver change.
But beware.
There are reasons why senior management will defend bureaucracy – not least to protect their own self-interests.
The Empire Will Strike Back.
May the force be with you.
(1)Hamel and Zanini: ‘Humanocracy’
(2) Harvard Business Review: January 1988
(3) Hamel and Zanini: ‘Humanocracy’
(4) Deloitte: ‘Australia: Rules eat up $250 billion in profit and productivity.’
(5) Gary Hamel – Jacob Morgan.com podcast
(6) Hamel and Zanini: ‘Humanocracy’