Bureaucracy in Decision Making, Approval and Authorization

Bureaucracy is the two headed dragon of organization.  On the one hand it creates order and trust.   On the other hand it engenders stagnation and distrust.  It is a necessary evil of organization.  It is the dissemination of power through rational, efficient organization.  In its absence is the arbitrary exercise of power by an authoritarian regime.  Although it once built the British empire, in modern times bureaucracy tends to be used to describe the evils of organization.

Levels of Responsibility and Authority in a Corporation

Ultimately the CEO and other heads of the corporation are responsible for the decisions and practices within a company.  But in larger corporations they cannot even be aware of all the decisions and practices within their company.  They must authorize – give the power of approval – to subordinates who will ensure that the decisions and practices within the company are conducted in a safe and ethical manner that promotes the goals of the company.  In principle, the levels of management should only be as deep as the need to subordinate decision making in the company.  In a small company the levels of management are sufficiently few that the CEO and his/her staff know everyone in the company.  In large companies the levels of management should increase accordingly.  Over time the promotion process may add to levels of management to the point of over-dilution of authority.  If managers are only capable of efficiently managing the daily interactions of about ten employees, the levels of management can be determined by the number of employees (10 managers per 1000 employees).  Most departments tend to have a handful senior staff that oversees the managers.  It is the organization of departments into directorates where the duplication of authority can be problematic.

GlaxoSmithKline is an interesting example of a company that has addressed the level of authority.  Prior to their merger in 2000, Glaxo Welcome and SmithKline Beecham had monolithic Discovery and Development organizations. With the formation of GlaxoSmithKline, six multi-therapy area groups called Centers of Excellence in Drug Discovery (CEDDs) were created, each with about 500 employees.  These groups managed the pipeline from Lead Optimization through Proof of Concept.  In 2008 the therapy areas within the CEDDs were realigned and each CEDD was divided into a set of smaller Discovery Performance Units (DPUs), each consisting of roughly 60 persons. 1, 2  By 2009 there were 35 DPUs.  Each DPU had full control over its own budget which could be spent internally or externally to deliver their best possible pipeline.  The goals in each of these moves was to drive accountability deeper into the organization, reduce central oversight as much as necessary and foster a “biotech-like” atmosphere in a very large bio/pharmaceutical company.  The jury is still out on the success of GSK’s DPU venture, but the company clearly proved that it was capable of reinventing itself “to be big and small at the same time” (a phrase often used by Tachi Yamada, first head of R&D at GSK).

The Decision Making Process Continuum of Practices

The decision making process is a continuum of practices, Table 1, from the simplest where the decision maker(s) simply giving Verbal Approval to those needing approval without supporting documentation or meeting, to the more formal Written Approval process which may include an approval meeting and a request document and documents that supporting the request, to a Standardized Approval process where the decision maker(s) sign their names next to an authorization statement in a standardized approval document, which occurs subsequent to a formal approval meeting, preceding authorization which may result in requested changes to the approval document.

Table 1, The Continuum of Approval Processes (click on table to enlarge)

Daily, weekly or even monthly decisions in any organization need to be managed by verbal approval. Written approval tends to encompass a body of work that encompasses a quarter of the year, a first-ever process, an important “one-off” process (e.g. major purchase) or the initiation of work in the next stage (see Stage-Gate Organization).   Some of these written approvals may need a standardized approval process, most certainly those that involve governmental regulatory approval.

Standard Operating Procedures (SOPs)

The Necessity of SOPs. A certain amount of bureaucracy is necessary in a bio/pharmaceutical company, especially if it intends to market a product in the Western world.  Governmental regulatory authorities approve and oversee the manufacture and marketing of bio/pharmaceuticals through a number of approval processes and standard operating procedures (SOPs).  A licensed company is expected to follow the SOPs agreed to at the time of approval.  The SOPs that regulate manufacturing are called Good Manufacturing Practices (GMPs).  The SOPs that regulate analytical procedures are called Good Laboratory Practices (GLPs) (these also refer to other standardized procedures in other industries).

With the structure of SOPs necessarily embedded in a bio/pharmaceutical company, there is the tendency to develop SOPs for non-regulatory procedures that enhance efficiency of corporate approval processes.  The need for SOPs tends to be proportional to size of corporate structure and size of business units within the corporate structure.

SOPs are intended to streamline standardized approval processes with the assumption that if the SOP is followed the regulatory or authorizing body does not need to be informed.  The SOP presumably provides a safe, low risk,  reproducible procedure that if followed exactly will ensure successful completion of the task (e.g. certain chemical or biological processes).  Under SOP regulated processes the regulatory or authorizing body needs only to be informed if conditions prevent the SOP from being followed.  Under those circumstances the SOP may be revised or approval for a temporary variance from the SOP may be sought.

An important aspect of the approval process is the element of presumed risk inherent in the process being approved.  If the risk is low, verbal approval is sufficient.  If the risk is high a standardized approval process with subsequent SOPs may help to mitigate risk.  Most daily tasks are low risk.  Some daily tasks that are high risk may need SOPs to ensure safe and successful completion.

Needless to say, but importantly, there is also a factor of decision making speed that is important in this continuum of approval processes.  Little to no progress would be made if all decisions required Standardized Approval.  The word bureaucracy tends to be applied to systems that are inordinately slowed by the decision making process.

Discovery vs. Development. Since the SOPs required for regulatory approval impact all stages of Development most departments that work in the Development stages are quite accustomed to SOPs, GMPs and GLPs.  The staff in such departments are keenly aware of processes that need GMP or GLP standardization and must segregate non-standard processes from standard processes.  The non-standard processes tend to occur in the Discovery and Preclinical Stages.  Even then, such work is likely performed with the awareness of a need for creating a GMP or GLP standard process in the clinical stages and is therefore likely to be well documented.

The departments that tend to work only in the Discovery stages tend to be agnostic or even critical of SOPs, except for procedures (e.g. certain chemical or biological processes) that need SOPs to minimize risk and ensure safe completion of the process.  Larger discovery organizations may find that SOPs for bioassays help insure that anyone in any department can perform the bioassay in the same manner, ensuring that data from the bioassay can be compared regardless of who performed the assay.

Minimizing Bureaucracy. The need to improve or reduce standardization of approval processes tends to follow the pendulum swing.   Those impacted by the standardized processes are most likely to have a vested interest in getting the process right.  Such individuals should be included in the committee that creates or revises SOPs.  Spilker recommends that an SOP for SOP creation and revision be drafted to ensure harmonization among SOPs, and provides an example. 3  In some situations an SOP may consist of a set of sub-process SOPs designed to minimize the approval of the overarching SOP.  The need for sub-process SOPs needs to be scrutinized, as sub-process SOPs tend to be where the process gets too restrictive.

Bureaucracy minimization is enhanced if those whose job is to maintain and oversee departmental or corporate SOPs resist defending current SOP processes and embrace a lean practice of simplifying and reducing SOPs.

Project and Portfolio Managers and Bureaucracy

As important players in the execution of corporate strategy, project and portfolio managers have nothing to do with bureaucracy, in principle.  They have to deal directly with corporate approval structures and may thus be mistaken as bureaucrats.  Project and portfolio managers can minimize that risk by actively encouraging the enhancement of approval process efficiency.

  1. Yvonne Greenstreet, “Change Broker”, The Scientist, 2009, 23, p. 28.
  2. Patrick Vallance, Nature Rev. Drug Disc. 2010, 9, p. 834.
  3. “Developing Standard Operating Procedures”, Chapter 58 in Bert Spilker, “Guide to Drug Development, A Comprehensive Review and Assessment”, Wolters Kluwer, Lippincott Williams & Wilkins, New York, 2009, p. 578-586.