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Is (Internal) Bureaucracy Slowing your Business Down?

The Harvard Business Review conducted a massive survey of 7,000 readers on bureaucracy in 2017, and their findings were sobering:

“‘Bureaucratic drag’ slows work down, wastes time, stifles innovation, and causes employees to focus too much on internal matters rather than their customers. Not surprisingly, the problem is much worse in larger companies. And it seems to be increasing over time.”

One of the biggest impacts, they found, was slowdown in work activities and decision-making.

Respondents reported spending an average of 28% of their time on bureaucratic chores like paperwork and meetings. At the same time, two-thirds of respondents believe that bureaucracy slows the pace of decision-making. The survey found that “the average time for getting approval for an unbudgeted expenditure was 20 days or more in large organizations, versus 13 days in companies with fewer than 100 employees.”

Small businesses should still pay attention, though. The results imply that bureaucracy increases as organizations grow, creating unnecessary barriers to innovation and perhaps dragging growth down from where it otherwise could be.

What can you do to prevent or mitigate encroaching bureaucracy?

Last year we described the growth stages of a small business. We explain that at a certain point, organizations will see their “one-unit management” proliferate into multiple units. That is, as operations become more complex, functional units – like marketing, IT, accounting, etc. – begin to form. At that point, office politics, territorialism, resource hoarding, turf battles, blame shifting, etc. can start leading departments to use protectionist policies and procedures that create organizational roadblocks.

For example, think about the process for getting approvals for business expenses. It may be easy to think about approvals as protecting the bottom-line, but they could just as easily be about protecting the financial resources or interests of a particular department or unit. That unit can impose paperwork and procedures that slow and stymie the ability of staff to get approvals. Bureaucracy.

One simple (although not necessarily easy) tactic might be to flatten hierarchies to decrease the number of “pass-through” hands on major requests, approvals, or decisions.

Another major source of bureaucracy is policy and procedure creep. Internal rules can simply grow like weeds over time, as new ones are added to deal with new circumstances or needs. An organization might consider regularly pruning rules, particularly older ones. However, people tend to resist any major changes, so organizations might also want to keep in mind that reducing bureaucracy is going to run into change management issues.


CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.