# What Is a Bureaucracy and How Does It Work?

![Bureaucracy](https://www.investopedia.com/thmb/IvIPiBIxpSkdC41VYW4_m3CL-tU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/terms-b-bureaucracy-asp-FINAL-4b2a07c088514c008a55d42d04935e4a.jpg)

*Government agencies at all levels, large corporations, and hospitals are examples of organizations with a strong bureaucracy. — Investopedia / Daniel Fishel*

> **Definition**
>
> A bureaucracy is a system of managing organizations characterized by a strong hierarchy and complex rules and procedures.

## What Is Bureaucracy?

A bureaucracy is a governmental or corporate system or department established to create processes and implement rules and procedures that are necessary to implement the organization's policies.

The term bureaucracy often carries a negative connotation. Bureaucracies are criticized as creating burdensome rules that slow down policy implementation or crush innovation. Bureaucracies are often described as "bloated" or even "Byzantine," suggesting that their employees create work to inflate their own roles in the process.

Some government agencies and large [corporations](https://www.investopedia.com/terms/c/corporation.asp) are described disparagingly as bureaucratic, suggesting that their functioning is crippled by cumbersome processes.

### Key Takeaways

*   A bureaucracy originates with the need for a rational process to implement policies effectively.
*   The bureaucracy may grow into a complex structure with multiple layers and cumbersome procedures.
*   Bureaucracies can render an organization rigid and rule-bound.

## How Bureaucracy Works

One of the key characteristics of a bureaucracy is the use of [hierarchical](https://www.investopedia.com/terms/c/corporate-hierarchy.asp) and centralized procedures to simplify or replace autonomous decision-making. Bureaucracy begins with the need to establish routine procedures and processes that turn decisions into working realities.

Inevitably, some of those who deal with bureaucracies find them guilty of redundancy, arbitrariness, and inefficiency. People often use terms like bureaucrat, bureaucratic, and bureaucracy in a negative context.

A bureaucrat makes implicit assumptions about an organization and how it operates. One assumption is that the entity cannot rely on an unsupervised system of operations. Instead, the thinking goes, a closed and rationally reviewed system is necessary to make the organization work.

> **Important**
>
> Procedural correctness is paramount within a bureaucracy.

## Bureaucracy vs. Governance vs. Administration

Bureaucracy is not the same as [governance](https://www.investopedia.com/terms/c/corporategovernance.asp) or administration. Some administrative structures are not bureaucratic, and many bureaucracies are not part of administrative structures.

So, what's the difference? The distinction lies in the objectives of each system.

Bureaucracies ensure procedural correctness irrespective of the circumstances or goals. Governance encompasses processes, procedures, and systems that are implemented by an organization to:

*   Make decisions
*   Assign individuals who make those decisions
*   Provide oversight
*   Collect data and report performance results

An administration directs organizational resources toward an objective goal such as launching a product or administering a service.

In modern industrial societies, dual bureaucracies often exist at private companies and government regulatory agencies. When a regulatory bureaucracy exists to impose rules on [business](https://www.investopedia.com/terms/b/business.asp), a company needs to create a bureaucracy to comply with the regulations.

> **Fast Fact**
>
> The effects of bureaucracies are all around us. An oil company may establish a bureaucracy to compel its employees to complete safety checks when operating on an oil rig. A company 401(k) plan is established and run according to regulations imposed by the federal government that are implemented by the company and its financial services provider.

## Criticisms of Bureaucracy

Bureaucratic structures are criticized for tending to be backward-looking, meaning that they are focused on identifying and implementing procedures that worked well in the past. This can provoke conflict with entrepreneurs and innovators who prefer [forward-looking](https://www.investopedia.com/terms/f/forward-looking.asp) processes and who might attempt to identify ways in which processes could be changed or improved.

Over time, a rigid bureaucracy can reduce [operational efficiency](https://www.investopedia.com/terms/o/operationalefficiency.asp), particularly compared to rival organizations without large bureaucracies. Losses in efficiency are most pronounced in circumstances in which bureaucracy is used to insulate established power structures from competitors.

## Examples of Bureaucracy

Virtually all modern organizations have a bureaucracy. Someone, or some department, is in charge of ensuring that the rules and procedures of the organization are followed, whether it's a university, the U.S. Army, or a corner coffee shop.

Some organizations require a large and elaborate bureaucracy. The U.S. General Services Administration, for example, manages government purchasing, oversees federal contracts, manages government property, and oversees its use of digital technologies. The agency had a budget of more than $203 million for the fiscal 2024/2025 year. As a result of pressure for spending cuts, it is requesting about 10% less for the following year.

Other organizations exist for bureaucratic purposes. The Occupational Safety and Health Administration (OSHA) sets and enforces standards for workplace safety in the public and private sectors.

## Origins of Bureaucracy

The concept of bureaucracy is fairly old, going back to China's Han dynasty, which existed from 206 BCE to 220 CE. But, the modern interpretation of bureaucracy dates to 18th century France.

The term bureaucracy is a hybrid word with roots in French and Greek. It's made up of the French word _bureau_, which means desk or office, and the Greek term _kratein_, which means to rule. The use of these two words combined loosely means ruling by or from a desk or office.

The word was first officially in France used after the French Revolution. From there, the word and concept spread throughout the rest of the world.

19th-century German sociologist Max Weber was one of the first scholars to study its influence. He described the concept of bureaucracy in a positive sense and considered the ideal bureaucracy to be both efficient and rational.

Weber believed that bureaucracy clearly defined the roles of the individuals involved and helped narrow the focus of administrative goals. For Weber, bureaucracy was key to capitalism, since it allowed organizations to persist even as individuals come and go.  

## What Is a Bureaucrat?

The term bureaucrat refers to a person who works within a bureaucracy. This can be a government official or a person in a position of authority, such as a chief executive officer or board member of an organization.

## What’s Good About a Bureaucracy?

Bureaucracies are needed to make an organization run. They make sure that employees get paid, applications get processed, and laws are followed.

At their best, bureaucracies help organizations run smoothly and efficiently. They can streamline processes and bring order to systems and procedures.

Bureaucracies ensure that everyone is treated equally and fairly, For instance, the government makes everyone fill out the same paperwork for student loans. The process may be cumbersome, but the result is equal access to this government benefit.

## What’s Bad About a Bureaucracy?

Bureaucracies can value following procedures over taking action. Rules and paperwork can pile up. Real goals like establishing a business can be delayed or crushed by burdensome procedures, sometimes called "red tape,"

Rules and regulations tend to be a greater burden for people who are less educated, less wealthy, or simply less tuned into the esoteric language that bureaucracy sometimes adopts.

## What Are the Most Common Characteristics of a Bureaucracy?

Some of the most common characteristics of a bureaucracy include a hierarchy, rules and regulations, and specialization. The hierarchy establishes scales of power—those with the most power are at the top while individuals who have the least fall at the bottom.

Rules and regulations are typically formal and indicate how processes and functions are to be conducted. Specialization entails the use of training to allow people to do their jobs properly under the structure.

## The Bottom Line

Bureaucracies are all around us, from the companies we work for to the governments that rule our nations. They are in place to ensure that things run efficiently and by the book—that is, that people follow the rules, whether that's to conduct health and safety checks while on the job, to get a permit for a building project, or to access government benefits.

As much as they're supposed to help keep everyone on track, bureaucracies are often criticized for growing cumbersome and emphasizing procedure and policy rather than efficiency.

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>
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>     
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>      
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