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Executive Overview
Colloquially speaking. bureaucracy means red tape. over-controlling bosses. and apathetic employees. But large-scale organizations need appropriately designed formalized procedures and hierarchical structure to avoid chaos and assure efficiency, quality, and timeliness. We currently lack theoretical or practical guidelines for building better bureaucracies that can support high levels of both performance and employee involvement. This article combines insights from organization theory and cognitive psychology research on technology to propose a set of organization design guidelines.
The Problem with Bureaucracy
Many executives are struggling to redesign their organizations to deal more effectively with an increasingly complex and demanding business environment. A common objective in these redesign efforts is to set free the creative energy of employees by attacking the bureaucratic features of the organization. As Jack Welch said in General Electric's 1994 Annual Report:
We've been trumpeting the removal of bureaucracy and the layers at GE for several years now-and we did take out 'sectors,' Igroups,' and other superstructure-but much more remains. Unfortunately, it is still possible to find documents around GE businesses that look like something out of the National Archives, with five, 10, or even more signatures necessary before action can be taken. ... Layers insulate. They slow things down. They garble. Leaders in highly layered organizations are like people who wear several sweaters outside on a freezing winter day. They remain warm and comfortable but are blissfully ignorant of the realities of their environment.
GE is but one example of a broad bureaucracy busting movement in US corporations. Fortune magazine ran a cover story a few years ago under the title "Bureaucracy busters: how they're breaking the corporate chains."' The image on the cover shows CEO Paul Allaire "redesigning Xerox to beat the competition." He holds a big paint brush in hand and is painting a huge X through the image of a multilevel, multifunction organization chart.
Evidence is accumulating, however, that this movement is at least in part misguided. In many cases, bureaucracy busting has proven to be counterproductive. One frequently heard recommendation-exemplified by Welch's comments is to reduce the number of management layers and the number of people staffing these layers. That may be necessary in some cases, but many firms have discovered that these layers of middle management...