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Discussion Board 3: Chapter 9 Question

Liberty University - BUSI 610

Discussion Board 3: Chapter 9 Question

Chapter 9: Look through several recent issues of a business magazine (Fortune, BusinessWeek, Fast Company, etc.) and find examples of 2 companies that are using approaches to busting bureaucracy. Explain the techniques that these companies are applying.

Daft (2016) describes bureaucracy as “a logical form of organizing that lets firms use resources efficiently” (p. 373). Bureaucracy provides structure and organization to companies. “Standardization, formalization and routinization allow organizations to achieve unprecedented levels of efficiency” (Hamel & Zanini, 2017, p. 6). Born out of the industrial revolution, bureaucracy is still the standard operating system for practically every large organization in this day and age (Hamel & Zanini, 2017).

Bureaucracy was recognized as the most efficient method of organizing (Daft, 2016). Max Weber identified organizational characteristics that were found in successful bureaucratic corporations and developed the Weber’s Dimensions of Bureaucracy. The six dimensions are: (1) Rules and procedures, (2) Specialization and division of labor, (3) Hierarchy of authority, (4) Technically qualified personnel, (5) Separate position from position holder, and (6) Written communications and records (Daft, 2016). Rules and procedures provide standardized rules and step-by-step procedures to enable efficiency and consistency in meeting organizational goal and objectives. Specialization and division of labor allows tasks to be broken into smaller tasks and performed by separate employees. Hierarchy of authority provided a chain of command that clarified who supervisory roles. Technically qualified personnel were hired instead of hiring based on nepotism or favoritism. Separating the position from the position holder meant that “individuals did not own or have an inherent right to the job, which promoted efficiency” (Daft, 2016, p. 356). Written communications and records enabled historical records and continuity over time.

Corporations that adopted and employed bureaucratic structures, have experienced numerous benefits. Bureaucracy assists in effective organization and provides specific roles and tasks for employees to increase efficiency. Identifying a chain of command establishes clear lines of communication, authority, responsibility, and accountability. Bureaucratic practices appoint officials and employees who are well qualified to effectively carry out tasks. Bureaucracy ensures potential hires are treated fairly and undergo the same hiring procedure. Bureaucracy applies standard operating procedures to ensure predictable results and streamline procedures. Policies are detailed and set-forth in bureaucratic organizations.

Although over the past four decades, studies show Weber’s model of bureaucracy validates positive outcomes and relationships between specialization, formalization, and standardization in large bureaucratic corporations, there have been many critics of bureaucracy (Daft, 2016). With the rapid change of society, new technologies, and environment, corporations must change, be flexible, and meet the demands of the customer. Bureaucracy can hinder progress and change. Bureaucracy fails to consider social context and human needs; therefore, it has taken on negative connotations in the business world today (Daft, 2016). When Weber assessed the bureaucracy traits of successful organizations, he also noted that “bureaucracy’s potential to undermine the freedom, creativity, and distinctive personalities of individuals, and he likened the effect of life in bureaucracy to existence in a purely rational “iron cage” that values predictability and control over all else” (Gunderman & Lynch, 2018, p. 1).

Critics of bureaucracy highlight several disadvantaged of implementing bureaucratic practices in organizations. Some critics argue that bureaucracy is process driven and not people driven; therefore, lots of time is lost when each step must be performed or the need to follow the chain of command must be adhered to before actions can be carried out. This makes processes less efficient. According to Mori (2017), because bureaucratic organizations tend to be rigid, bureaucracy puts limits individual creativity and innovation, damages organizational effectiveness, limits management capabilities, and limits the focus on organizational goals.

After researching several business magazines, two companies stand out as using techniques to bust bureaucracy. Funding Circle, a young technology company based in London, appears at first to be a traditional organization; however, at closer examination there are many things in place to set this company apart from bureaucratic organizations. The company boasts café, a pool table that matches the company’s color scheme, a pitch-and-putt set and several unique breakout areas for spontaneous meetings (Hill, 2016).

The sheer nature of Funding Circle’s business is busting bureaucracy. Utilizing technology, Funding Circle was the first peer-to-peer online marketplace where investors can directly lend small amounts to small business owners (Funding Circle, 2018). “By investing in successful and growing businesses through Funding Circle, investors can diversify their fixed-income portfolios and access attractive returns. Businesses get fast, easy access to financing to grow, create jobs, support local communities and drive the economy forward” (Funding Circle, 2018, para. 2). As a rapidly growing, innovative organization, the co-founder keeps an eye out for bureaucracy creeping in. The company believes bureaucracy has the potential to suppress innovation and hinder initiative.

Another company using techniques to bust bureaucracy is Zappos. Zappos is an online shoe and clothing retail company headquartered in Las Vegas, Nevada (zappos.com, 2018). From the company’s start in 1999, they determined to run their company differently. The first area where they are busting bureaucracy is the company’s culture and purpose. The company has ten core values that are the foundation for their business. The core values are centered on delivering first class customer service, while encouraging innovation, growth and creativity, and creating a family atmosphere at the organization. Zappos has a reputation for conducting business differently. “The customer-service obsessed company calls its executives “monkeys,” has staffers ring cowbells to greet guests, and offers new employees cash to quit as a way to test their loyalty” (McGregor, 2014, para. 1).

In 2014, the company announced a new approach to the organizational structure by removing the removing managers, hierarchy of authority, and duty titles. This move is to prevent the company from becoming rigid and bureaucratic. They call this concept the holacracy concept. This concept replaced the traditional chain of command with a series of overlapping, self-governing circle to give employees a voice in running of the company (McGregor, 2014).

Conclusion

Bureaucracy has its advantages and disadvantages. Bureaucracy provides many corporations with structure, organization, and standardization. However, several organizations such as Funding Circle and Zappos, disagree with bureaucracy and feel it stifles innovation, creativity, and efficiency. Funding Circle and Zappos and adopted many bureaucracy busting techniques, such as employing technology, removing chain of command, and creating free-flowing work environments.

References Daft, R.L. (2016). Organization theory & design (12th ed.) Boston, MA: Cengage Learning. Funding Circle. (2018). About. Retrieved from https://www.fundingcircle.com/us/about/ Gunderman, R. B., & Lynch, J. W. (2018). How bureaucracy can foster burnout. Journal of the American College of Radiology: JACR, 1-3. doi: https://doi.org/10.1016/j.jacr.2018.06.015 Hamel, G. & Zanini, M. (2017). Busting bureaucracy. London Business School Review, 28(1), 6-9. doi:10.1111/2057-1615.12147 Hill, A. (2016). Business: How to topple bureaucracy. Financial Times. Retrieved from https://www.ft.com/content/aa284852-0096-11e6-99cb-83242733f755 McGregor, J. (2014). Zappos says goodbye to bosses. The Washington Post. Retrieved from https://www.washingtonpost.com/news/on-leadership/wp/2014/01/03/zappos-gets-rid-of-all-managers/?noredirect=on&utm_term=.d5b8af98b273 Mori, G. T. (2017). Examining hindrance of bureaucracy on management innovation for organizations. International Journal of Academic Research in Business and Social Sciences, 7(4) doi:10.6007/IJARBSS/v7-i4/2835 Zappos.com. (2018). About. Retrieved from https://www.zappos.com/about/purpose.