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Corporate Culture or Bureaucracy?

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Corporate Culture or Bureaucracy?

First let's give definitions of concepts as they will be discussed in this article.

Corporate culture — is the assembly of behaviour models (criteria, styles) of employees they acquire while adapting the organization to its external environment, which have proved their effectiveness and are shared by the majority of the organization’s members. Typically, the corporate culture existing in an organization is a set of assumptions, accepted by all team members without proof and defining the general framework for their behaviour.

Bureaucracy - (from French bureau — office and Greek κράτος — domination) - is the primacy of clerical (approval-based, formal) procedures. As a result of bureaucracy, employees spend time going up the chain (managers, responsible persons from adjacent functional units) in order to get an approval (including electronic) and waiting their turn for a decision.

These times can be beneficial and satisfying, but they can also be excessive, resulting in increased costs. Let us divide bureaucracy into “sound” and “unsound”.

By sound we mean the bureaucracy that is objectively necessary for keeping documentation of records under requirements of the external environment (fulfilling the provisions of contracts with counter parties, following the standards of labor and tax legislation). Bureaucracy may also be considered sound that is in the least amount necessary to support the process at the necessary professional level in any given organization (in particular, harmonization within the QMS).

Unsound bureaucracies are those we considered excessive and that result in increased time costs for employees while changing neither the quality level of the process, nor the extent of risks for the company and its shareholders.

The main causes of unsound bureaucracy may include:

A low degree of self-awareness and personal responsibility among management. The desire to be on the safe side, to spin out time “What if I will not end up having to make decisions!” Compliance of leaders with their positions highly questionable in such case.

“Managers, who try to change the behaviour of subordinates in any way, often are faced with extremely stubborn resistance to changes, which is impossible to explain by rational reasons. They see that the different departments within the organization prefer warring against each other to working. They face such communication problems and misunderstanding of representatives of various groups that «rational” people, seemingly, should not have.”

Edgar Shein, 1992

The duties of the managers and departmental functions are not clearly delegated. For example, a scene happened in one of the companies when a female boss from the purchasing department went to the head of logistics to get him to sign a letter in accordance with which he “did not object” to acting under a power of attorney when receiving materials brought to the office by the delivery service. The question “Why does she do it if the company has no such procedure?” was met with the answer “Just to be safe, so later the head of logistics does not say he opposed this delivery in case the CEO asks.” Besides the fact that she spent about an hour total on this letter, the courier had to wait for the same amount of time.

Superior managers changing criteria for evaluating decisions over the course of activities; inconsistency of the Chief Executive. Perhaps this is the worst thing that can happen and it can generate more than just unsound bureaucracy in the company. The historical reassessment of decisions of subordinates according to “new” emergent criteria and the sheer fact of the unilateral change of these criteria (process guidelines) multiply a mutual lack of responsibility and demotivate against decision making.

A low degree of mutual trust among colleagues. There may have been instances when a wrong person is questioned, and another employee doesn´t vouch for the fairness of the decision taken by his colleague. Such shared employee behavior, as well as the selection of people, are oversights not only in the work of the CEO, but also, in many respects, of the HR department.

The procedures are overcomplicated in their original design. Common for companies, where solution coordinating processes are built iteratively, often with differing people responsible for the regulation of the processes themselves. Thus, the analyst that lays out the procedure from head office to remote departments might simply be unable to understand the essence of the process that takes place onsite. And when the procedures for a particular approval process are proposed, onsite it is considered some kind of revelation, handed down by the “smart people” up above. The outside point of view at such situation causes sad feelings as smart people here and there together waste company time because of a simple miscommunication (lack of time, or a reluctance to get involved or escalate the situation for subjective reasons).

“Organizations focused on control in some stable environments can survive and even thrive, but they are definitely doomed when conditions become turbulent and where technology and globalization trends significantly complicate addressing problems.”

Edgar Shein, 1992

As a result of unsound bureaucracy, costs increase (and often beyond measure). Someone said that it is possible to ruin company even through its toilet paper, referring to petty theft. The danger of unsound bureaucracy in this example is much higher because of the suffering not only of the productivity of company employees, but also of its business reputation, self-sufficiency and response speed in the eyes of suppliers and customers.

This discussion surrounding bureaucracy has acquired an obviously negative shade, but the initially desire was to not be prejudiced. After all, there are a number of advantages (guarantees) that cannot be disregarded. First, bureaucracy is already a sign of the process. Whether this process is effective or not is not important in this conversation. What matters most is that its presence can be attested in principle, which is not obvious to many Russian companies. Second, the bureaucracy secures against outright theft and explicit sabotage by employees to a large extent. Third, it somehow ensures a decision is made, no matter how long and drawn out. Fourth, it frees the time of top management, eliminating the need for “manual control”. To sum it up, the bureaucracy, even if it is not sound, is much better than chaos.

All the reasons for unsound bureaucracy outlined above are antithetically related how well the corporate culture is developed. Let’s follow the points.

Mutual responsibility of managers, so-called sense of “90% personal responsibility” for “shared” problems, and manager self-consciousness. It is both a consequence and indication of the company having a corporate culture.

“If the manager does not know the culture in which he is rooted, then it won’t be him managing the culture, but the culture will manage him. Understanding culture is desirable for all, primarily for managers, if they really want to be such.”

Edgar Shein, 1992

Unclear delegation of functions among departments can become a bad habit, and in the context of a rapidly changing environment may very well lag behind its needs. Noting the relative normality of fuzzy division of responsibilities at the time, we can see that mature corporate culture is, to a large degree, a guarantee from this defect. The procedure to receive materials at the office (in the example given) changes from permissive and agreement seeking to a notifying. More specifically, it is “cultural” and “normal”, when one leader who even in the absence of formalized procedure has taken the responsibility (for the nomenclature, cost, need for materials delivered) will inform the second on taken decision to register proposed delivery. At the same time, without fear of further sanctions and relying on team, but not on irresponsible behavior of his colleague.

Inconsistencies by managers in evaluation criteria are largely excluded by the presence of well-established and mutually accepted rules of behavior. The head is also a human who has his own responsibilities, personality and standards of conduct (which we do not discuss in this article). And being a human, he is subservient to the opinion (view, evaluation) of his colleagues in the organizational system, or social group, which is the company.

The degree of mutual trust between colleagues in local groups (within departments, between adjacent departments) is a consequence of selection of like-minded people, and a single set of criteria for evaluating of personal qualities of candidates at upon employment. Of course, this is directly related to the degree of to which the corporate culture has been developed.

Finally, the complexity of the procedures as initially defined eventually is overcome under conditions of a well-developed corporate culture. This is aided by the ongoing, rather dynamic improvement of processes in sound communication between analytical and production units, as well as the permanence of key personnel.

Both corporate culture and bureaucracy develop in the course of the centralization and expansion of power, as well as in connection with the emergence of new problems in management. One way or another, both of these phenomena ensure the manageability of the process in the absence of the Chief Executive.

There is no perfect environment, and people with their uniqueness will make adjustments to any process. Both bureaucracy and corporate culture are present in any company to varying degrees. In the course of exploring in practice and trying to simplify these concepts into the model, I have come to the conclusion that they cover the same space, being mutually exclusive, opposite in the composition and not subject to diffusion. Simply put, any company can be characterized by the ratio of “corporate culture to unsound bureaucracy”. For example: “10 to 90” or “60 to 40”? What ratio do you have?


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