So, the question arises: Why are bureaucracies inefficient? The answer rests with the nature of complex organizations.
- Responsibility: At the top of the list is the assignment of responsibility to those working in a bureaucracy. In a complex organization, whether public or private, individuals can avoid personal responsibility for their actions. They can blame the rules. They can blame others.
- Management: As the size and complexity of an organization increases, the ability to exert control decreases. The "head" of a one-person organization has complete control over that "one person." The "one person" carries out the dictates of the "head" without error. However, the head of a one-thousand person organization cannot exert the same degree of control over all members.
- Information: Part of the management problems arise due to imperfect information. As the dictates of the head are passed down through the organizational structure, the information is bound to be misunderstood. The head might want 5 copies of a 100 page report and end up with 500 boxes of paper clips.
Once again, these problems are most pronounced with public sector bureaucracies, but also arise in private sector bureaucracies. While inefficiency is less pronounced in the private sector to the degree that individual responsibility can be assigned and enforced, it does not disappear entirely.