Organization is a complex mechanism and the larger the scope and scale of its operations the more hierarchical should be its structure to meet the needs and objectives. Business distinguishes flat and bureaucratic organizational structures. This division, however, does not mean that flat organizational structure operate without a single hierarchical level. The backbone of every company is a set of operational policies and regulatory requirements that determine the way communication and relations are built within its core. This specific set of policies and managerial reporting is what we call bureaucracy of the company (Jones, 2010).
With the above in mind, bureaucracy is a necessary element of organizational structure. The advantages of certain level of bureaucracy include the control that functional and divisional management has over the decision-making process in a company. Bureaucracy in this sense becomes a natural quality filter. At the same time, bureaucratic organization has fewer stakeholders on a very top level that generally contributes to faster decisions taken on strategic level (Ingram, 2013). It can, however, become a problem, when this bureaucracy reaches the level when it limits flexibility and responsiveness of a given organization to react on change and make effective decision-making. This downside is expressed in suppression of creativity and innovation. Such bureaucratic organizations never accept transformational leadership and will always become a subject to traditional autocratic or paternalistic leadership styles.
Many bureaucratic organizations, however, managed to find a healthy balance between the focus on creativity and innovation and benefits of bureaucratic structure. In order to achieve this balance and avoid classic issues with bureaucracy it is necessary that the organization has a parallel focus on strategy human resource management initiatives that will encourage transformational approach on certain organizational levels. This strategy should target higher motivation and retention rate through empowerment of employees on lower hierarchical levels. The benefits and drawbacks of bureaucratic organizational structures depend very much on the type of a given organization (Hales, 2001, pp.74-77). Asset-light companies, such as players in tourism industry, for example will benefit more from flat organizational design, while fast food industry can see a lot of advantages in strong focus and control that bureaucratic organization can offer.
References
Jones, G. (2010). Organizational theory, design, and change. 6th Edition. Upper Saddle River, NJ: Prentice Hall.
Ingram D. (2013). ‘What Are the Advantages and Disadvantages of a Bureaucratic Organization Structure?’ Demand Media. Retrieved from: http://smallbusiness.chron.com/advantages-disadvantages-bureaucratic-organization-structure-2761.html
Hales, C. (2001). ‘Managing Through Organizations..’ London: Thomson Learning.
