Why bureaucracies fail

Pathologies inherent in democratic political systems have consequences for bureaucracy, and they need to be examined. Limited in time, resources, and expertise, elected officials turn to bureaucratic institutions to carry out policy goals but all too often give public agencies too little support or too few resources to implement them effectively.

In response to the challenges imposed by politics, public agencies have sought organizational solutions. Bureaucracies facing shortages of material resources, clear goals, representation of minority interests, or public trust have in recent decades adopted less hierarchical structures, exploited networks and privatization, and taken a representative role.

In other words, the evolution of postbureaucratic governance institutions is in part a consequence of political incentives. Efforts to diagnose and resolve many of the shortcomings attributed to bureaucracy therefore require an accounting of the political processes shaping the context in which public managers and bureaucrats operate. You do not currently have access to this article. Please login to access the full content. Access to the full content requires a subscription.

Under the terms of the licence agreement, an individual user may print out a single article for personal use for details see Privacy Policy and Legal Notice. Oxford Research Encyclopedias. Britain privatized housing, energy firms, seaports, airports, airlines, air traffic control, utilities, passenger rail, and many other activities.

Unfortunately, the privatization revolution has largely bypassed the U. Yet many federal activities could succeed in the private sector, such as air traffic control, passenger rail, postal services, and various infrastructure. These activities would generate more value for society if they were in the private sector. Academic studies across many countries have revealed that privatized activities generally perform better than similar government activities.

In sum, the federal bureaucracy has many features that contribute to poor performance and failure. Members of Congress may wish that the programs they dream up are delivered to their constituents in an efficient manner by expert civil servants, but that is not how the government actually works much of the time. Congress should try to improve government management, but it is more important for legislators to focus on ending or privatizing federal activities.

See Gallup, "Military and National Defense," www. This is the number of full-time positions. That may be more of a problem in the British and Canadian parliamentary systems, where there are fewer political appointees.

See David A. Another example is the way that recent administrations have repeatedly changed directions on alternative energy subsidies. George J. Stigler Chicago: University of Chicago Press, The agency was dismantled in the Airline Deregulation Act of and went out of existence in The informal title reflected the name of the commission's chairman, Charles Hallem Keep. See figure 1 in William L. Megginson and Jeffry M. The authors concluded that privatization "appears to improve performance measured in many different ways, in many different countries.

Mueller summarizes 71 academic studies comparing the public and private provision of particular goods and services. He reports that in only five of these studies were public firms found to be more efficient than comparable private firms.

Washington D. Skip to main content. September 1, Causes of Federal Bureaucratic Failure The key to understanding bureaucratic failure is to look at the incentives created by the structure of government.

The following are some of the failure-causing features of the federal bureaucracy: Absence of Profits. Unlike businesses, federal agencies do not have the straightforward and powerful goal of earning profits. That has a profound effect on efficiency and innovation. Without the profit goal, agencies have little reason to restrain costs and stem wasteful spending.

Nor do agencies have a strong incentive to improve the quality of their services or the effectiveness of their management. It is easier for agencies to live the quiet life than to take risks and try to enhance performance. Absence of Losses. Poorly performing agencies do not go bankrupt, so there is no built-in mechanism to end low-value activities. There is no automatic corrective to programs that have rising costs and falling quality.

In the private sector, businesses abandon activities that no longer make sense, but "the moment government undertakes anything, it becomes entrenched and permanent," noted management expert Peter Drucker. Drucker said that "the strongest argument for private enterprise" over government is not the role of profits, but the role of losses. Failing government programs do not send such a signal. Adding to the problem caused by the absence of profits and losses, many federal activities are monopolies.

That further reduces incentives to restrain costs and improve quality. It also means there are no alternative sources of information for people to gauge the efficiency of a government activity.

In competitive markets, people can compare the performance of different companies and products, but with monopolies, poor performance is harder to identify.

Output Measurement. Business output can be measured by profits, revenues, market share, and other metrics. But government output—the quantity and the quality—is more difficult to measure.

That makes it hard for Congress and the public to judge performance, or to set goals for agencies, managers, and employees. The missions of federal agencies are often multifaceted and vague.

Dealing with the phone company, your credit card issuer, a credit bureau, a billing error by a big chain store. Navigating airport security, health-care insurance, university and public school administrations. Hardly a day passes in the life of any American without his or her having to confront one or another bureaucracy, standing in line, dialing a telephone number, only to enter an automated labyrinth seemingly devoid of humans and humanity, being placed on indefinite hold, trying to access a bad government or business Web site, or being shuffled from one office to the next to find that one person, the anomaly, who can fix a problem.

Encounters with a bureaucracy almost always have stress and frustration as by-products. Despite political paralysis in Washington and elsewhere, bureaucracies inexorably—day by day, year by year—intrude ever more pervasively into our daily lives.

They influence our health, our safety, our economic well-being, our children, what we eat, what we drive, and every business, farm, and educational institution in the land. Yet even as bureaucratic tentacles extend their reach into every nook and cranny of America, the litany of their incompetence and arrogance grows exponentially.

The institutions—the bureaucracies—responsible for these disasters and embarrassments are crucial to us. Some of them have previously been among our most respected organizations. Now they are failing us. Few if any individuals choose public service as a career because they want to make life miserable for people or to work for some hapless bureaucracy.

Indeed, I can attest from decades of working with talented and dedicated public servants, the opposite is often true. I just watch the government and report the facts. The world of business—the private sector—as I have observed it both as a customer and from the corporate boardroom has its own issues with bureaucracy. While the obstacles to cutting costs and becoming more efficient are more onerous for the public sector—local, state, and federal—leaders in both the public and the private sectors face multiple barriers to innovation and reform to cope with new and changing circumstances.

For example, leaders in both sectors often encounter entrenched cultures that make real change difficult, as well as lower-level organizations resistant to guidance from the top, determined to preserve their piece of the cake and their status. Trimming organizational deadwood can be as challenging in the business world as in public institutions. It is a rare soul who has not been frustrated and maddened by multiple business bureaucracies—not to mention disastrous business decisions that cost jobs and create economic turmoil and heartache.

But for most businesses, success and self-preservation require that leaders and employees work hard every day to innovate and change with or before the times, to overcome sluggishness, poor customer service, and the stifling effect of layer upon layer of management that inevitably delays and complicates decision making. The everyday experiences of Americans make a compelling case that bureaucracies do not work and cannot be reformed, that we are stuck. The political Left is too often indifferent to obvious bureaucratic incompetence and failure because it believes that whatever the problem, government is the solution.

The political Right welcomes bureaucratic incompetence as proof that government rarely does anything well, and thus it reinforces its belief that whatever the problem, government involvement will probably only make things worse. Because we actually do need government, failure to fix it imposes huge financial costs in terms of incompetence, time wasted, and inefficiency, not to mention the cost in public cynicism and the loss of credibility of both government and those who lead it.

In truth, virtually every bureaucracy needs to reform: to modernize, get rid of paralyzing procedural and operational barnacles that have accumulated over decades, reduce waste, and become more efficient and effective.

Defense is far from alone in this regard. I believe bureaucracies can be fixed: changed, made more cost-effective, user-friendly, efficient and responsive, and shaped to meet new problems and challenges even in an age of austerity. I know because, with the help of some great colleagues, I did it at three very different institutions I led—the Central Intelligence Agency and the other dozen or so U. All three, and virtually all other public institutions, have similar challenges to change and reform.

And my colleagues and I at all three places showed that a dysfunctional political environment is not, in itself, an overriding impediment to bureaucratic reform. Let me suggest just a few examples. And between aggressive media and leaks, I had few secrets from the public either. I had to do much of my business at all three in the public eye. This feature is common to virtually all public-sector bureaucracies. However, while I could give orders at the CIA and the Pentagon, no successful leader of either ever did so; on the big issues, like the budget, the list is long of directors and secretaries whose ambitious plans crashed and burned because they failed to consult and persuade the intelligence professionals and the uniformed military to go along with their plans.

In sum, when it comes to the fundamentals, these three organizations have much in common. Similar traits can be found in most other institutions.

I entered government nearly fifty years ago and, working for eight presidents, had the opportunity to observe the federal government at close hand—including many departments and agencies not associated with national security. And over the last twenty years, I have served on the board of directors of ten companies, where I had ample opportunity to observe the challenges of bureaucratic bloat, turf protection, empire building, and resistance to change facing their CEOs.

And now I am national president of the Boy Scouts of America, which, like any big, century-old organization, has its own bureaucratic problems. Despite vastly different roles and missions, all these institutions have characteristics—and challenges—in common. Few leaders will ever run the CIA, the U. Even so, I will make clear in these pages how the lessons I learned in those institutions are broadly applicable for, and useful to, leaders in nearly all bureaucracies.

In external appearance, people are infinitely diverse, yet beneath the skin our anatomy and the way the body works are pretty much the same. So it is with bureaucracies.

Each shares a lot of DNA with its kin, even distant cousins. You will see that despite the vast variety of bureaucracies in both the public and the private sectors, their cultures, organizational structures, and both internal and outside influences on their operations and behavior are remarkably similar.

And thus the strategies and techniques for changing them—reforming them—are remarkably similar. In the pages to come, I will dwell often on my experiences in government.

Mainly, that is a manifestation of my belief that they offer considerable insight into what works well or badly. Partly, though, I hope that recounting those experiences will provide—as a bonus, if you will—information about our government that is worth the reader knowing as a citizen.

Despite the many frustrations and very real shortcomings associated with government, I believe Americans have, at every level, the most dedicated, capable, and honest public servants anywhere.

In my long career in government, I saw in U. They want to be proud of the organizations they work for; they want the admiration and esteem of the citizens they serve. They, too, are often frustrated by the shortcomings of their institutions. For openers, virtually all public bureaucracies report directly or indirectly to elected officials, whether Congress, state legislatures, presidents, governors, mayors, or city and county governing boards.

Their political interests getting reelected usually foremost among them are often in direct conflict with efforts to streamline or reform the institutions they oversee. Despite congressional demands for greater integration of American intelligence agencies, members deny intelligence executives and the president the authority to actually make that happen. At the same time state legislators rail against tuition increases at public universities, they slash state funding for those same institutions—and continue to impose inefficient state bureaucratic procedures that waste taxpayer and student dollars and inhibit cost cutting at those same universities.

In short, politics—both local and national—is a significant obstacle to reform and adaptive change. Elective bodies with oversight responsibilities also are unreliable, unpredictable, and even irresponsible when it comes to the lifeblood of public institutions—funding. How can any organization do long-range planning when it never knows from one year to the next how much money will be available or, in the case of federal agencies, when the money will actually be approved and can be spent?

Not once when I was secretary of defense did Congress approve our Defense appropriations before the beginning of the fiscal year in which the money was supposed to be spent. And when you toss in mindless acts of congressional misgovernance—such as shutdowns, furloughs, and sequestration—and micromanagement masquerading as oversight, just keeping the doors open is a challenge. Even on the state level, funding levels from one legislative session to the next are usually crapshoots.