What Is a Bureaucracy and How It Works, With Examples

What Is a Bureaucracy?

The term bureaucracy refers to a complex organization that has multilayered systems and processes. The systems and processes that are put in place effectively make decision-making slow. They are designed to maintain uniformity and control within the organization.

A bureaucracy describes the methods that are commonly established in governments and large organizations, such as corporations. A bureaucracy is pivotal in the administration of the entity's rules and regulations.

How a Bureaucracy Works

The bureaucratic process lends itself to criticism and is synonymous with redundancy, arbitrariness, and inefficiency. People often use terms like bureaucrat, bureaucratic, and bureaucracy in a negative context. For instance, calling someone a bureaucrat implies they're a government official while the term bureaucratic implies that procedures are more important than efficiency. One common use of the word bureaucracy is the ability to make impossibilities a reality.

But there is a more balanced way to look at a bureaucracy. From a structural standpoint, it stems from the effort to lead organizations through closed systems. These systems are meant to be formal and rigid in order to maintain order. Perhaps the single most identifiable characteristic of a bureaucracy is the use of hierarchical procedures to simplify or replace autonomous decisions.

A bureaucrat makes implicit assumptions about an organization and how it operates. One assumption is that the entity cannot rely on an open system of operations, which is either too complex or too uncertain to survive. Instead, a closed and rationally reviewed system should be implemented and followed.

Bureaucracy vs. Governance vs. Administration

Bureaucracy is not the same as governance or administration. Some administrative structures are not bureaucratic, and many bureaucracies are not part of administrative structures. So what's the difference? The distinction lies in the objectives of each system.

Bureaucracies ensure procedural correctness irrespective of the circumstances or goals. Governance includes processes, procedures, and systems that are implemented by an organization to:

• Make decisions
• Assign individuals who make those decisions
• Provide oversight
• Collect data and report performance results

An administration, on the other hand, directs organizational resources toward an objective goal such as generating profits or administering a service.

In modern industrial societies, dual bureaucracies often exist between private companies and government regulatory agencies. Whenever a regulatory bureaucracy exists to impose rules on business activity, the private company may create a bureaucracy to avoid violating such regulations.

Criticisms of a Bureaucracy

Bureaucratic structures tend to be backward-looking, identifying procedures that worked well in the past. This backward perspective creates a conflict with entrepreneurs and innovators who prefer forward-looking concepts and attempt to identify ways in which processes could be improved.

For example, agile processes that make improvements through an iterative process characterized by self-organization and accountability. Over time, a rigid bureaucracy reduces operational efficiency, particularly compared to rival organizations without large bureaucracies. Losses in efficiency are most pronounced in circumstances where bureaucracy is also used to insulate established power structures from the competition.

Classic bureaucratic rigidity and protectionism are prevalent in the U.S. government. For example, firing poor performers is difficult because there is an arduous termination process that has been put in place.

Examples of Bureaucracy

Examples of bureaucracy are all around us. Workplaces, schools, governments, all typically have hierarchical structures with individuals filling positions based on skill or merit (real or perceived).

In a Harvard Business Review article, James L. Heskett questioned whether bureaucracy is a good thing in government or private businesses. The article describes bureaucracies as entities that focus on decision rights rather than decision making and states that "they are not created to deliberate or think.” According to comments from contributors to the article, "Bureaucracies are far too often about themselves and expanding the power and influence of the people who head them.”

Some of the article's contributors who served in government agencies defend the role of bureaucracy while recognizing that reforming bureaucracies could provide greater autonomy to decision-makers. Another comment noted that the bureaucracy of the U.S. government was effective in its creation of the Glass-Steagall Act of 1933, which established the provisions for separating commercial and investment banking, and the social programs created through the New Deal. The New Deal was an initiative of President Franklin D. Roosevelt, also in 1933, whereby many social programs helped the United States to recover from the Great Depression.

Origins of Bureaucracy

The concept of bureaucracy is fairly old, going back to the Han dynasty in China. But the modern interpretation of the idea dates back to 18th century France.

The term bureaucracy is a hybrid word whose roots go back to French and Greek. It's made up of the French word bureau, which means desk or office, and the Greek term kratein, which means to rule. The use of these two words together combine to loosely mean ruling by or from a desk or office. The word was first officially in France used after the French Revolution. From there, the word and concept spread throughout the rest of the world.

19th-century German sociologist Max Weber was one of the first scholars to use the term and expand its influence. He described the concept of bureaucracy in a positive (idealized) sense and considered the ideal bureaucracy to be both efficient and rational. He believed that bureaucracy clearly defined the roles of the individuals involved and helped narrow the focus of administrative goals. For Weber, bureaucracy was key to capitalism, since it allowed organizations to persist even as individuals come and go.

The Bottom Line

Bureaucracies are all around us from the companies for which we work to the governments that rule our world's countries. They are in place to ensure that things run efficiently and by the book—that is, that people follow the rules, whether that's to conduct health and safety checks while on the job, to get a permit for a building project, or to access government benefits.

As much as they're supposed to help keep everyone on track, bureaucracies are often criticized for being cumbersome and for putting the emphasis on procedure and policy rather than efficiency. Regardless of how you feel about them—whether it's positive or negative—bureaucracies aren't going away. They are, in fact, a part of the structure of many organizations.