When people hear the word "bureaucracy," they think of government agencies, long lines and red tape. Although bureaucracy is often associated with government offices, some businesses also use a bureaucratic structure. A bureaucratic structure can offer a business several advantages, such as clear delineation of job roles and strong internal hierarchy. However, a bureaucratic structure can also impose severe limitations on a business, especially one in an industry that requires flexibility and rapid response.
Advantage: Strong Chain of Command
Bureaucratic structures have strong chains of command, which make them very stable as business entities. A centralized authority, such as a president, chairman or department chief, gives out the orders to managers. Those managers in the middle levels of the structure carry out their tasks and parcel out other jobs to those lower in the chain. Each employee has a clear role, carries out specific tasks and understands the company's expectations, leading to a stable and predictable working environment.
Bureaucratic structures also encourage specialization of tasks. While the hierarchical structure of each department delivers the orders for the employees in that department, each department retains its own separate identity while working within similar sets of rules. The upper managers in each department establish the processes needed for that employee's specific tasks. This specialization of tasks can be highly useful when the company expands and new employees come on board.
Disadvantage: Lack of Responsiveness
The specialized and repetitive processes inherent in the bureaucratic structure do not respond well to changes in laws, technologies or customer tastes. When confronted with these changes, bureaucratic businesses may choose either to ignore them -- and get left behind their more responsive competitors -- or to change their processes, which can involve expensive and time-consuming overhauls and retraining. In either case, the bureaucratic business's lack of responsiveness can be a costly and devastating drawback.
Disadvantage: Lack of Innovation
The rigid structure and tight specialization found in bureaucratic structures can also serve to discourage innovation and outside-the-box thinking. Bureaucratic companies may fail to anticipate consumer trends, explore new markets and create ground-breaking products. When managers in bureaucratic structures view employees as cogs in a functional machine, rather than as individuals with ideas to contribute to the company's efforts, the company misses out on opportunities for growth. The bureaucratic companies that enforce their rules for the sake of the rules themselves sacrifice the possibilities that they can find in breaking those rules.