Bureaucracy busting – keep it simple

April 30, 2022

Professor Julian Birkinshaw of the London Business School argues that business executives have a responsibility to prevent bureaucratic creep in their organisations, and that flattening their structures is the perfect way to do just that.

Every year Google shares the results of its employee survey with the world. This year there was increasing grumpiness about salary levels, with only 53 per cent expressing satisfaction compared to 63 per cent the year before. Less headline-grabbing but perhaps more revealing was the statistic that more than half employees say Google’s bureaucracy/hierarchy is slowing them down.

We tend to accept that large traditional firms have excessive bureaucracy. But when Google – a company built on entrepreneurial freedom, big bets, and challenging the rules – finds itself succumbing, you start to wonder if there is something inevitable happening.

It’s no secret that as firms get bigger they become more bureaucratic – rules multiply, reporting layers are added, new supervisory roles are created. My colleague Gary Hamel estimates that since 1983 the number of managers and administrators in the US workforce has more than doubled, when growth in all other job categories has expanded by less than 40 per cent. These extra jobs don’t just add cost, they also slow decision making and make things less fulfilling for those doing the work.

But I would argue that bureaucratic creep is not inevitable. There are some impressive companies who have fought back, flattening hierarchies, and empowering those on the front lines. And I believe it’s the responsibility of senior executives everywhere to do the same.

Here are a couple of examples. Bill Anderson is CEO of Roche Pharmaceuticals, and since taking that role his number one mission has been to empower the 50,000 or so people in his organisation, to help them thrive.  He has got rid of the traditional budgeting system, he has taken out layers of managers, and he has pushed a culture of ownership and accountability at lower levels.

Or consider the Brazilian-American consultancy, CI&T, with more than 5,000 employees. Four years ago, it threw out the old hierarchical structure, replacing it with a set of agile squads, each serving their clients in an end-to-end way. Squads have a maximum size of 200 people – once they grow beyond that, and hierarchy starts creeping in, they are split in half. Their structure helps keep everyone focused on client needs, and support activities are kept to an absolute minimum.

Haier, the Chinese appliance manufacturer has gone through an even more radical delayering process, creating thousands of customer-focused business teams. And many companies are using variants of agile– a team-based way of working that puts responsibility for scheduling and target-setting in the hands of team members, rather than their bosses.

Looking at these and other examples, two key points stand out. First, the thing that is holding companies back is not a lack of motivation or ability among front-line employees. Rather, it is a reluctance among senior leaders to take a chance on doing things differently, or indeed to give up their traditional sources of power.

Second, making the necessary changes takes both belief in the opportunity to change and huge amounts of work. Bureaucratic structures are self-reinforcing and cannot be dismantled overnight. Bill Anderson of Roche reckons he and his team spent 15 hours a week to implement the shift to a more empowered way of working, and of course the job never ends – it’s a continuous battle.

The bottom line – its every executive’s job to stay on top of bureaucratic creep. Keep the hierarchy as flat as possible, keep the processes simple, and make sure those closest to the action take ownership of their decisions. That’s what a high-performance organisation looks like.