Quarterly Journal on Management
From the publishers of THE HINDU BUSINESS LINE
Vol. 2 :: No. 1 :: March 1998
Isn't it a Wonder?
S. Ramachander
Bureaucracy is probably one of the unique gifts of the 20th century to human history. When the history of the century comes to be written, it will probably come to known first as a century of technology, the natural extension of which is the evolution of large-scale organisation and bureaucracy as both a structure and a method of governance. The word "Bureaucracy" is derived from a French word, which means "office". The word has traditionally come to refer to a structure more common in the civil service and other state owned and managed activities such as the armed forces or public sector corporations.
The classic study of bureaucracy most often referred to was by Max Weber (1864-1920). Born in Germany, Weber was a student of the historical development of civilizations through studies of the sociology of religion and the sociology of economic life. His classic works explore the impact of the Protestant ethic on the capitalist organisation in the West. He was concerned with the fascinating question of what made people obey commands and do as they were told. He defined power as the ability to force people to obey; while authority meant orders being obeyed willingly by those receiving them. He also delved into types of leadership and used the Greek term charisma to mean any quality by which a leader is set apart from his fellowmen. Prophets and national leaders as well as revolutionaries from Henry Ford, to Adolph Hitler and Mahatma Gandhi fall into this category. Weber saw traditional organisations as being driven by precedent and usage.
Feudalism, for example, seen in India in the landlord and farmer relationships, is a good case of such a structure that has survived centuries of invasions and the rise and fall of empires. Dynastic succession is taken for granted. Position of power and management in any institution is expected to stay within families and clans. No one is surprised when father is succeeded by the son or daughter and sometimes even a daughter-in-law. (Can one honestly say that we are in the 20th century yet in India?).
The third type of authority system formulated by Weber is one that many countries have adopted as an organisational consequence of the industrial society. Such societies are governed or at least sought to be by a system of rules and procedures, strict precedence or formulated laws, executed and implemented through a hierarchy. Weber called this as the rational/legal form of authority, or more familiarly, bureaucracy.
It is extremely important to note, before we join the chorus of criticism, much of which is very valid, of bureaucracy, that Weber considered it to be technically the most efficient form of human organisation possible. To quote: "Precision, speed, unambiguity, knowledge of files, continuity, discretion, unity, strict subordination, reduction of friction and of material and personal costs these are raised to the optimum point in the strictly bureaucratic administration." Weber uses the machine analogy, while other forms are like non-mechanical methods of production.
Bureaucratic organisations have some well-known characteristics, which have been well documented and observed by writers over the years. Rosabeth Moss Kanter, the famous Harvard Professor, mentions the following as the striking features.
Bureaucracies :
- Tend to be position-centred, authority derives from position and status.
- Repetition oriented, seeking efficiency
- Rules oriented
- Tend to pay for status
- Operate through formal structures, restrict the flow of
information
Assign specific mandates and territories, to circumscribe the action arena - Seek ownership and control.
She contrasts this with the post entrepreneurial organisation which encourages networks, expertise, and learning. They are more common in the service and technology driven industries of the West, where relationships, innovation, and result orientation are valued. Paying for contribution and value rather than position, linking across organisation and creation of extended enterprise are the outstanding features of this new organisation that has yet to be widely acknowledged in India.
The post-industrial society in the West has clearly gone past the stage of exclusively depending upon the virtues of bureaucracy for success. As any observer of the management scene will acknowledge, recent writing in the fields of organisational structures as well as strategy covers a wide range of experimental possibilities. Peter Senge has introduced and elaborated on the notion of the learning organisation. Peter Drucker has for years maintained that in a knowledge based society, knowledge alone will be the ultimate competitive advantage. Authors like Chris Argyris have emphasised "double loop learning" which requires an organisation not to merely learn from experience but experiment in order to learn more pro-actively.
The emergence of new competition, particularly in the less developed countries is yet another strong force that is likely to work against bureaucracy. A market driven organisation puts the consumer first. It recognises the need to compete for the customers voice. Bureaucracies on the other hand are generally more internally focused.
This leads to a the familiar and more traditional cost-plus thinking so typical of the monopolies and the public sector, which takes the consumer for granted. The successful privatisation of public sector enterprises around the world is therefore impelled as much as by the need to liberate the management as to generate resources or introduce a new ideology. The managerial culture of corporate organisation in a competitive market is fundamentally different of that of a government office. This is the hard core and the truth of the matter.
In a recent study of the privatisation experience in the UK, Matthew Bishop and John Kay of the London Business School point out "Perhaps the most significant aspect of the programme has been the change in the culture of public sector and privatized companies".
This new management culture is clearly one which puts the customer first. Privatisation symbolises the determination to instill a commercial spirit in the public sector that is "unlikely to tolerate for long the kind of relationships between industry and Whitehall that had been established" earlier. They go on to add that one of the significant changes in the UK was external recruitment of top managers, such as Lord King who steered British Airways through one of the most celebrated turn-arounds. It is clear from this that while the defendants of state ownership invariably point to the need to prop up the weaker sections, what inevitably happens is that these very weaker sections are hurt by the elaborate procedures and delays as well as inefficiency which seems to be endemic in the public sector.
It is interesting that even the World Bank has highlighted the fundamental difference between old style business-as-usual routine and the more recent changes in Asian countries, as a change in government ideology. The decisive role played by the technocrats, as distinct form bureaucrats, is mentioned as a significant highlight of successful economic reform. As an article in the Economic Development Institute seminar series has pointed out, a major source of policy change is "anticipatory analysis by influential technocrats" of impending crisis or those concerned with long term issues.
"No other variable plays a more decisive role in determining the quality of public sector management or, more broadly, the operational capacity of the state in economic and social affairs, than the standards of its civil service........ Simplification of content and necessary procedures is usually high on the list of priorities if the administrative burden is associated with a policy is to be lightened." (Managing Policy Reform in the Real World -- Asian Experiences, World Banks EDI Seminar Series 1992).
Before we go any further, however, one must clarify and make distinctions between bureaucracy as culture and bureaucracy as structure. Its most familiar manifestation is as a style of decision making, generally known to be impersonal, slow, insensitive to the individual and often out of date or unresponsive. As a result, bureaucracy has received a bad name in the hands of all organisational reformers. Before we take sides on this issue, it is important to point out that at its best bureaucracy ensures equity and even handed treatment of all. As a social system, it was a successor, in most cases, certainly in Europe, to the autocratic and imperial methods of government. When Europe made a gradual but substantial change from being ruled by kings to be governed by elected representatives, the change needed a suitable structure of civil service and administration.
This meant clarifying responsibilities and decision making at all levels. People had to know whom they should approach for what decision, and soon the method of decision making itself became standardised, with the introduction of forms, rules and procedures.
We all know to our cost the consequences of this today. India unfortunately has become a somewhat extreme example of bureaucracy in this particular sense. So much so that all its good qualities have been over shadowed by the defects.
On the industrial front, bureaucracy owed its origin to the Taylor model of command and control, division of labour and hierarchy. It found its full expression in the large, American corporation between the Wars. Alfred.P.Sloan has been credited with creating the first multi divisional decentralised corporation in General Motors.
Divisionalisation was balanced at GM by centralising the planning, monitoring and evaluation functions in the Headquarters staff and service departments. It is Alfred D Chandler Jr. who first analysed such large corporations as GM, Du Pont and Standard Oil, in a seminal work called Strategy and Structure, which was first published in 1962. Almost all organisational theories since then have relied upon Chandlers monumental work as a point of departure, if not a foundation.
There are numerous indications that very significant departures have been made from the classical bureaucratic form. New organisational structures have been the clearest manifest sign of radical change in human resource and business strategies.
We live today in a world of economic reform and political readjustments. Old orders have been rapidly torn down ever since the break up of the erstwhile Soviet Union and the fall of apartheid in South Africa. Whether any of these cataclysmic events, such as the recent happenings in the Asian region, eventually lead to the greatest good of the greatest number, is of course a matter of debate. Equally while the development of information gathering and dissemination thanks to the Internet and the Web, is growing astronomically, it is possible to argue that the ability to wisely use the data has hardly kept pace, where public administration is concerned.
Despite the proliferation of labels such cluster organisations, network organisations, knowledge centred organisations, and the like, the underlying ideas and principles which have been most frequently cataloged as expressive of the New Organisation include: the stress on responsiveness, speed and flexibility; the primacy of knowledge, intellectual capital and hence learning; and the boundary-breaking character of these new forms including vertical barriers, internal horizontal barriers between functions, and external horizontal barriers between the organisation and suppliers and customers.
While developments of these kinds are invariably described in highly positive terms by the consultants and gurus, not all instances of the new flexible organisations can be quite so easily judged as good. In the real world, the challenges of the new century continue to be the ones that occupied the minds of statesmen like Jawaharlal Nehru how to create a just society by fair means. In the years ahead therefore, the need to balance flexibility with protection from arbitrariness will remain a significant challenge to all managers, of whatever hue. The massive job cuts that have become so common in the more prosperous economies can not easily be adopted in Asia. Internal labour markets being dismantled and replaced with part-time, casual and other contingent workers, and outsourcing of entire factories, would all have serious consequences if applied to countries such as India.
The future of organisational structures is certainly likely to be characterised by multiple forms. It seems unlikely that bureaucracies will entirely disappear indeed there may even be some reversal of the craze for trimming down the organisation to its bare bones and outsourcing almost everything, as Nike seems to have successfully done world-wide.
Equally, the new network forms will vary between those trading on specialised knowledge and those trading on least cost deriving merely from virtually no commitment to a long term relationship on the part of the employee or the employer. The long-term sustainability of many of the enterprises in the latter category is still open to question.