Professor Gary Hamel and Michelle Zanini recently published the findings of a study where they asked 7,000 HBR readers for their thoughts on organisation bureaucracy.
For simplicity, we class “bureaucracy” and “internal complexity” as the same thing in corporate organisations.
Hamel and Zanini are co-founders of the Management Innovation eXchange. They estimate bureaucracy costs OECD economies $9 trillion per year.
The Bureaucracy Mass Index (BMI) tool asks 26 questions pertaining to organisation bureaucracy. Examples include:
- How many organisational layers are there in your organisation?
- On average, how long does it take you to get a yes-or-no decision for an expenditure that isn’t part of a formal plan or budget?
- How much time do you spend on “bureaucratic chores” (for example, preparing reports, attending meetings, complying with requests, securing sign-offs, or interacting with staff functions such as HR)?
The BMI gives an overall score of between 20 – 100. A score of 60 represents a moderate degree of bureaucratic drag. Any score under 40 suggests a relative lack of bureaucracy.
Summary of findings
01 Bureaucracy lives and breathes.
- 64% of respondents reported a BMI score of more than 70 (“above a moderate level of bureaucracy”)
- Only 1% of respondents worked in organisations with a BMI of less than 40
02 Big = bureaucratic.
- The bigger the organisation, the more bureaucracy there is. For organisations with more than 5,000 people, the average BMI score is 75
- Where the BMI score was less than 40, three-quarters of respondents worked in organisations with fewer than 100 employees
03 Bureaucracy is increasing
- Only 13% felt that their organisation had become less bureaucratic over the last few years (“more centralised, more rule-bound and more conservative”)
04 Bureaucracy wastes time
- Respondents report bureaucracy accounts for 28% of their working week
05 Bureaucracy doesn’t create value
- Less than 40% of respondents found bureaucratic processes such as performance reviews, goal-setting and budgeting as ‘very helpful’
- Nearly 40% of respondents said that a 30% reduction in head office staff would not affect them or would actually improve their own performance
06 Bureaucracy kills speed
- Two-thirds of respondents felt bureaucracy significantly dragged decision-making. In organisations with more than 5,000 employees, this increased to 80%
- Respondents in large organisations estimated it takes an average 20 days to sign-off an unbudgeted item
07 Bureaucracy makes for internal focus
- Respondents reported spending 42% of their time on internal matters such as dispute resolution
- In large organisations, Executives reported spending half their time on internal issues
08 Bureaucracy blocks empowerment
- Only 10% of respondents said they could spend over $1,000 without sign-off from their boss
09 Bureaucracy perpetuates political behaviour
- 70% of respondents in organisations with over 5,000 people said behaviours such as “blame shifting” and “resource hoarding” were frequently visible
- 76% of respondents said these behaviours influence who has power
10 Bureaucracy is biased
- People in back office functions (e.g. HR, Planning, Purchasing, Admin) are less likely to feel bureaucracy is increasing, compared to colleagues working in Sales, Customer Service and R&D
- So, roles most directly involved in creating customer value are the ones most likely to feel hamstrung by organisation bureaucracy
- “Most likely to say their organisation has grown more bureaucratic over the last few years”:
- Customer service 74%
- Sales and Account Management 74%
- Project management 58%
- Strategy and planning 58%
11 Bureaucracy has a leadership bias
- When asking if “bureaucracy being familiar and deeply ingrained is a barrier for removing it”, 54% of non-Executives agreed, compared to 23% of CEOs
So, what’s the so what?
Everyone will likely resonate with frustrating elements of bureaucracy, whether that’s a process at work, or filling in a government tax form.
Let’s be crystal clear. Bureaucracy (or internal complexity) costs time, money and energy. It stops people and organisations doing things which create value.
When you’re a slave to bureaucracy, you’re not innovating or delighting customers at work. And time at home spent enjoying family life or perfecting a golf swing is taxed.
Leaders face a simple choice. Do you accept bureaucracy or do you choose to remove it? By choosing to remove it, you will release time, money and energy for your organisation to do great things.
Takeaway: The first step on that roadmap is to do what Hamel and Zanini have done. Ask your people how, where and why your organisation is bureaucratic. Turn the bureaucracy problem from ‘feels like’ to ‘fact-based’.
Dismiss the belief that bureaucracy is inevitable and unavoidable. It’s not (see Spotify and WhatsApp for proof).
But, it won’t remove itself. Someone needs to light a match to get the platform burning.