Advantages & Disadvantages of Bureaucratic Organizational Structure

Management layers characterize bureaucratic organizations. The layers give bureaucracies a vertical thrust when laid out in an organizational chart. These "tall" organizations are the most traditional organizational structure. The functional structure is oldest, organizing around similar work activities such as sales or payroll. The divisional structure is similar. Complex companies use it to create autonomous divisions devoted to a type of customer, product or location before departmentalizing the divisions, usually into functional departments. The advisability of using a bureaucratic structure depends on the situation.

With so much management, bureaucratic structures have strong boundaries. Chains of command are clear, as are expectations and decision-making power. Authority is centralized instead of spread out among employees. Job descriptions are detailed and specialized. Over time, bureaucracies develop many rules to maintain the structure. Management can monitor outcomes, which lends itself to standard products or services and quality control.

Exerting tight control, a bureaucracy tends to function like a machine of many cogs and gears, each part serving the whole. While that may sound dystopian, viewing an organization as a machine allows management to concentrate on coordinating resources and effort. This mechanized business approach functions well in predictable environments. Mechanically humming along, the bureaucratic organization’s order meshes well with stability, allowing a company to move inexorably toward its strategic goals.

Grouping jobs by function breeds certain economies. Departments efficiently share resources. Meanwhile, the bureaucratic structure’s required job specialization leads to economies of scale as employees work repetitively and with increasing proficiency, efficiency and productivity.

The very bureaucracy of tall structures prevents companies from maneuvering quickly. Changes in procedure must move through the chain of command for approval -- perhaps being Ok'd by several bosses -- then travel back down the chain for adoption. In a stable environment, such rigidity is not an issue. In volatile situations, though, this inability to quickly change directions can present real problems. A lumbering company cannot dodge sudden competitive threats.

The more specialized a job, the more repetitive it is likely to be. Repetitive jobs bore employees, breeding dissatisfaction. Meanwhile, as mere cogs, employees aren’t judged for what they can uniquely bring to a job, but by how well they fulfill their functions. Employee disempowerment stems from the centralized power structure. With the bureaucracy holding authority, employees may feel helpless, passive and even indifferent to company goals.

A company bringing up the rear in adjusting to market forces cannot be an industry leader. Meanwhile, the disempowered employees are not free to innovate to better position the company, especially in the face of sudden market shifts. Between the difficulty innovating and the lack of maneuverability, companies employing the bureaucratic structure run the risk of being irrelevant within their own industry.