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					                          BUREAUCRACY:
     HOW IT KILLS YOUR STAKEHOLDERS AND ULTIMATELY YOUR
                         ORGANISATION

                                 by Marius Meyer

A bureaucracy is the system, processes, procedures, channels and culture
organisations create and maintain to justify and sustain inefficiencies to ensure
that product and service delivery is delayed or broken down with the ultimate
goal of frustrating customers, staff and suppliers and thereby creating a non-
responsive entity that will maintain strong power relationships but eventually
destroy any value created in the past. Bureaucracies are found at two levels,
internally within an organisation, but also enforced at industry or governmental
level by means of legislation and regulations. Over-regulation and over-control
occurs when there is no or little leeway to be flexible, entrepreneurial and
innovative. In essence, bureaucracy prevents you from executing your own
business strategy that was initially based on the principles of efficiency,
excellence and effectiveness. Jack Welch, the greatest CEO of the previous
century, aptly refers to these inefficiencies as the “evils of bureaucracy.”

The cost of bureaucracy is staggering. For instance, South Africa is losing
between R5 billion and R10 billion rand a year in mining investment because of
onerous government environmental regulations and delays in the issuing of
mining rights and water licenses. The Chamber of Mines is concerned about the
negative effects of regulatory constraints. There are confusion surrounding the
interpretation of new mining law and extra red tape brought about by the mining
charter. As a result, the South African mining industry lags behind Australia in
terms of profits and capital investment. Last year the Australian mining sector’s
pretax profits rocked 95%, while in South Africa profits increased only 12%.
Between 2004 and 2006 investment in the mining sector fell 33% (Brown, 2006).
Having said that, surely some regulations are required to ensure consistency,
transformation, order, discipline and compliance in a society that needs focus to
put certain realistic controls in place. And any good quality management system
has clear procedures and processes, but these provide solutions and not
obstacles.

Even at a regional or international level, some regions are suffering because of
too much red tape and bureaucracy. In sub-Saharan Africa an average of nine
documents must be completed before a product can be exported, compared to
seven in the East Asia-Pacific region. Likewise, in sub-Saharan Africa the
documents require an average of 19 signatures before they can be processed
compared to just seven in East-Asia-Pacific. The result is that it takes an
average of 49 days for a product to be exported from the African region
compared to just 26 days from the Eastern region. In China, significant

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   Bureaucracy                  1        Management Today (April 2007)
improvements have been affected where it takes just 20 days and seven
signatures for a product to be exported (Theunissen, 2006). Now if you are a
wealthy investor in Europe or America, where would you locate your business
and invest your money?

Similarly, in the age of speed, tight deadlines and responsiveness, would you
rather stand in a queue using the services of an unfriendly public postal provider,
or be treated in a quick, friendly and human way by an efficient private company
without any delays in service delivery? The same principle applies to all providers
of services. However, sometimes the public does not have a choice, especially in
the case of monopolies and public services. Who will forget the incident of a
member of the public who in a very threatening way refused to accept the non-
delivery of service by the Department of Home Affairs last year? Why do we have
so many different layers of directors in the public service and what impact do
they have regarding service delivery – chief directors, directors, assistant
directors, deputy directors …? Yet, bureaucracy is not limited to the public sector.
Even some private sector companies have created huge and powerful
bureaucracies.

World-class companies have created centres of excellence that know no rank or
position – it is all about sharing and utilising expertise, and transferring this focus
on pockets of excellence to the whole organisation with the speed of lightning.
On the other hand, average and under-performing companies have created
pockets of incompetence that are ruled by bureaucrats, micro-managers and task
masters. Typically, the finance, purchasing and human resource functions
seemed to be the main culprits. Finance makes it as difficult as possible for the
business to get a cent out of the system. Purchasing is hesitant to acquire the
supplies needed by the business, and when they eventually do so, the poor
supplier must wait a long time to get paid. HR seeks to take their time to deliver
inadequate people services, and often works directly against the needs of the
business.

Unfortunately, most of us are powerless to influence bureaucracy at national or
governmental levels. Where we can indeed make a difference, is at the level of
our own organisations. For example, global powerhouse General Electric (GE)
instituted a culture to break bureaucracy down. They believe that success
“requires a hatred for bureaucracy and all that goes with it.” Royal Bank of
Canada believes that an organisation should centralise paper but decentralise
people. Staff should extricate out silly forms and policies that gridlock and
strangle learning. Fewer boundaries and fewer bureaucracies allow the lifeblood
of knowledge to flow quickly and freely throughout the organisation. If you have
a form that must be completed to make a manager feel powerful to approve or
reject something, an illusion is created that the manager is “in control”. You know
what? The manager is not the boss, bureaucracy is the boss! You don’t even
have to think, the system thinks for you. In fact, bureaucrats have not only



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   Bureaucracy                  2        Management Today (April 2007)
created their own culture, but also their own language. Some well-known phrases
of bureaucrats are as follows:

   •   “No, I am sorry, we don’t do that here.”
   •   “OK, but you first have to complete this form.”
   •   “You first need to get official permission.”
   •   “That is not part of our products or services.”
   •   “No, sorry, we can’t help you today, Jenny is on leave and she is the only
       one working with that.”
   •   “According to the policy, …”
   •   “Don’t rock the boat.”
   •   “The procedure says that we must follow these seven steps.”
   •   “Sorry, I can’t help you, I don’t have the authorisation to do it.”
   •   “Let us first get a committee to discuss it.”
   •   “I first have to ask my manager to approve it.”
   •   “Sorry, the system can not accommodate such a request.”
   •   “It must go through the right channels.”
   •   “Let us first wait till my manager comes back from overseas.”
   •   “Our culture is not ready for it.”
   •   “Sorry, we are closing.”
   •   “We are busy changing, but change takes time, we can not rush through it,
       we need some order and stability.”
   •   “That is against the procedure, you first have to write a memo for us to
       consider it.”
   •   “No, that is not part of my job.”

The reality about bureaucracy is that it was not always there. No company is
started as a bureaucracy. Companies are born through the innovative spirits of
entrepreneurs, yet, as companies grow and expand through the life cycle of
business, bureaucracy becomes part of the fabric and culture of the organisation.
The moment it is part of the culture, it stays there. It is like cancer that simply
grows bigger and bigger, and the only possible cure is to cut it out, but it may be
too late. Companies fail to recognise that any request to satisfy a customer who
has a need that can not be accommodated by the current system, presents a
huge opportunity for innovation and growth. If the system can’t do it, the system
must change. We need more entrepreneurs and leaders, and less managers and
bureaucrats.

The new world of work can no longer sustain bureaucrats, micromanagers and
the ridiculous layers, hierarchies and empires they have created. They operate
in a world that no longer exists. These people have been effective in the stable
industrial economy of the previous century. There is no place for bureaucrats in
the new dynamic business world – a world that is driven by knowledge, speed,
action, flexibility and responsiveness. Today’s managers are people who can
think out of the box, beyond channels and rules, and are often required to make

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a decision on the spur of the moment. Your policy and rule book will not help you
if your customer has a new need for which you have not yet created a procedure.

Moreover, the customer is not going to wait for you to get your house in order,
and will simply knock on the door of your competitors, who are likely to be more
responsive. Today with the power of computers, the Internet and email, the
customer is even more powerful. He can simply send an email to ten or more
companies at once, blind copying all the others, and see which one will answer
first and display the required willingness and capacity to meet his needs. Then
he can sit back and smile, and just delete the answers he does not like, or
respond by confirming receipt and acknowledging that he has already been
helped by a competitor! To add salt to your wounds, he will even give you the
name of the competitor he selected, knowing full well that it is one of your biggest
rivals. With the business clock ticking 24 hours a day throughout the world across
all time zones, the “sorry we are closed” mentality will simply not work.

Let us turn to staff. Jack Welch says that “hierarchies tend to make little generals
of perfectly normal people who find themselves in organisations that respond
only to rank.” In the knowledge economy, most staff members realise that their
knowledge is the real asset of the company. Knowledge is power, not rank.
Knowledge workers know that if the company does not want to use their
knowledge, other innovative companies will gladly welcome them to come and
rather work for them. People want to add value and use their knowledge and
skills to innovate, improve and create a better workplace and better products and
services for customers.

However, today’s knowledge workers, especially the younger generation who will
very soon run the economy, get easily frustrated with bureaucracy. They
understand the power of knowledge and the speed and flexibility of
communication, because they have send emails throughout the world before they
could drive a car. Furthermore, they do not want to be told what to do by a micro
manager who lives in the past and generates unnecessary non-value added work
just to keep staff busy. At the coal-face, staff members themselves know of
better, quicker and more effective ways of getting things done. If a company or
manager tries to use the bureaucracy to control them, employee frustration levels
will simply go up and they will eventually leave. They can no longer tolerate a
situation in which it is expected of them to lie to customers or show loyalty to a
company when they know very well that inefficiencies cause customer
dissatisfaction. The performance improvement consultant Geary Rummler puts it
succinctly when he said: “If you put a good person against a bad system, the
system wins every time.” That is the reason why talented people who are natural
innovators, are either directly or indirectly forced to leave their companies for
greener less bureaucratic pastures.

The management guru Tony Manning recently added his voice to those who
criticise inefficiency in the public service. He says that “delivery is held hostage

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   Bureaucracy                  4        Management Today (April 2007)
by ignorance, and most leaders don’t realise this.” He goes on to say that the
worst leaders are the least accessible because they insist that the only way to
reach them is “through the right channels.” “These leaders are oblivious to the
fact that few messages get where they are intended through these channels, and
those that make it are sure to be distorted. The result is that neither bosses nor
their people know what is going on.”

Many suppliers can tell you long stories about how the bureaucracy of their
clients affects their business. For example, in the consulting industry, you are
expected to submit business proposals, and then have to wait between six and
18 months to get an answer, if you are lucky to receive a response. If you are
fortunate enough to be awarded the tender or contract, you enter the
organisation, and in dealing with the company you realise that you are now part
of a bureaucracy. Very often, because of tedious processes, incompetence and
red tape, you will wait months before you are paid, a situation that most small
businesses, in particular, can not afford.

If bureaucracy is the problem, what is the solution? Here are some practical
guidelines to transform your bureaucracy to a modern flexible and dynamic
company:

   •   Request all managers and staff to display their commitment to breaking
       bureaucracy down in order to promote efficiency in the company.
   •   Quantify the cost of inefficiencies caused by bureaucracy and inform the
       company in a tangible and visible way that you can no longer afford to
       lose business because of bureaucracy.
   •   Get rid of titles, status symbols and other preferential treatment that does
       not make sense in the knowledge economy. It is not who you are or what
       position you occupy that is important, but what you know, and how you
       add value.
   •   Your leaders should be the visible champions of all efforts to break
       bureaucracy down.
   •   If innovation and creativity are part of your values, explain to staff how
       these principles can be applied in practice.
   •   Fire the bureaucrats and micro managers, they are killing your staff,
       customers and suppliers.
   •   When recruiting and selecting new staff, ensure that bureaucrats are not
       appointed.
   •   Reward efforts to break bureaucracy down.
   •   Streamline your processes and procedures for optimum efficiency.
   •   Eliminate barriers between departments, that is the most severe cancer in
       bureaucracies.
   •   Get rid of all policies and procedures that do not add value to the
       business.
   •   Track the speed of doing things in your company and actively pursue
       ways of doing it better and faster.

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   Bureaucracy                  5        Management Today (April 2007)
   •   Create virtual networks and learning communities where people can
       actively drive innovation and change.
   •   If you are concerned about your processes and systems but do not know
       where to start, get a good consulting firm to help you. And don’t give them
       a 50 page tender document, they only need 7 words: “We need
       innovation. Break our bureaucracy down”.
   •   Another option is to listen to the “trouble-makers” or innovators in your
       company, in fact, they can save you millions of rands that you would have
       paid to consultants (or unnecessary legal costs, fines and penalties).
   •   Throw away all unnecessary forms and streamline documents if they are
       really necessary.
   •   Get rid of manual systems, they are part of history. Computerise all your
       systems.
   •   Replace traditional hierarchies with centres of excellence in which quality
       and excellence are the driving forces for everything happening in the
       company.
   •   Do active benchmarking with other companies to identify opportunities for
       process improvement. If your competitor can do a process in one day,
       while you take two days, the fault is with you, fix it.
   •   Do regular assessments to evaluate the extent to which you can eliminate
       bureaucracy.
   •   Celebrate any significant improvements in productivity caused by the
       elimination of bureaucracy.
   •   Transform traditional meetings that waste time into active process
       improvement action teams where real decisions are taken and
       immediately implemented.
   •   Create effective supply chain management systems (including for the
       payment of suppliers) so that suppliers do not become victims of
       inefficiency.
   •   Employ managers for their knowledge and ability to lead, and not to
       display “signing power.”
   •   Rotate the chairpersonship of committees to create a sense of shared
       responsibility and balanced power in your company.
   •   Empower employees to make decisions in serving customers better.
   •   Involve your staff, customers and suppliers in process improvement
       teams, they know exactly what is wrong and how it could be resolved.

A good local example of how bureaucracy was reduced, is the South African
Revenue Service (SARS). With the right leadership focusing on the right things, a
huge government bureaucracy was transformed into a service orientated
dynamic institution. If you apply for a tax extension online, you get an answer
within seconds. Also, the border post between Zimbabwe and South Africa was
well known for being one of the slowest in the world, but with dramatic
reorganisation, resource allocation, leadership and staff commitment it is now
one of the fastest – taking an individual on average only three minutes to pass
through. What makes this achievement remarkable, is that the long queues of
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   Bureaucracy                  6        Management Today (April 2007)
previous years have been completely eliminated. These two examples clearly
show that radical performance improvements can be attained if you develop a
new mindset and a commitment to break bureaucracy down. If some public
service organisations can perform like this, what about the others? Surely the
private sector can then also break bureaucracy down. Dynamic companies like
Discovery and Bidvest have created flat structures with minimal bureaucracy.
The Bidvest philosophy is that there is no corporate bureaucracy, no elaborate
structure or hierarchy. Every area is a performance area. In this way,
accountability and responsibility are firmly entrenched in the way of doing
business, because you can not pass the buck on.

Bureaucracy kills your customers, staff, suppliers, and ultimately your business. If
it takes five seconds to get a message from Johannesburg to London, why does
it take more than five days to get a message from the third to fourth floor of the
same building? Working towards 2010 and the challenges posed by the World
Cup, we need to raise our business performance to world-class standards, not
only to ensure an effective tournament, but also to enhance the sustainability of
our companies.         Bureaucracies sustain only four things: inefficiency,
incompetence, bureaucrats and a sick culture. The first sign of hope is when
there is an active acknowledgement by management that bureaucracy is bad for
business.

Once you know you have a problem, the next challenge is to energise people to
start changing the culture of the bureaucracy. Over time, and this may take
months or even years in firmly entrenched bureaucracies, the bureaucracy will be
incrementally broken down. Alternatively, if you have great leaders with insight
and a passion for excellence and the realities of the modern business world, a
bureaucracy can be eliminated much quicker.         It will take some effort, but
eventually the improvements in efficiency and outputs will justify this investment
to transform your company to a high performing world-class organisation. The
end-result is a win-win situation for all parties – your staff, management,
shareholders, suppliers and ultimately the business as a whole.




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   Bureaucracy                  7        Management Today (April 2007)
REFERENCES

Brown, J. 2006. Red tape costs SA mining sector billions. The Star Business Report, 8 November, p.4
                                                                                       th
Corporate Reseach Foundation. 2006. Best Companies to work for in South Africa. 7           ed. Cape Town:
Corporate Research Foundation

Theunissen, G. 2006. Costs for Africa: Costs and bureaucracy stifle Africa’s exports. Finweek, 7 December,
p. 50

Manning, T. 2006. Strategy must make sense to make a difference: In the Public eye. Sunday Times, 10
December, p. 14

Welch, J. & Byrne, J.A. 2001. Jack: What I’ve learned leading a great company and great people. London:
Headline

Welch, J. & Welch, S. 2005. Winning. London: Harper Collins

Marius Meyer lectures in people development at the University of Johannesburg.
Comments about this article can be emailed to him on mmeyer@uj.ac.za. For more
information about Management Today, go to www.management-today.co.za




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   Bureaucracy                  8        Management Today (April 2007)

				
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