Top executives of most smaller organizations want their companies to be different from the larger corporations. They want their organizations smaller in size; but bigger in productivity by eliminating red tapes and corporate bureaucracy. When the company is smaller, people often work like firefighters – taking on new business and technology challenges without thinking about any procedures and guidelines. People also tend to wear many hats to accomplish tasks quickly in order to integrate new businesses. For example, software developers in smaller organizations may take on responsibilities of client interactions, requirements gathering, design and development, code deployment, production support, network infrastructure support, database design and maintenance along with countless other duties. In addition, systems in smaller organizations tend to be loosely guarded. So, people often don't follow many procedures in order to setup environments and implement technical projects. It's not uncommon to change code and deploy without anyone realizing. Similarly, business requirements may also get defined in an informal manner without any type of documentation.
As the company grows, everything starts to change significantly impacting people and the overall business process. Suddenly, following procedures become extremely important. Consequently, new roles, guidelines and procedures start to emerge. Everything from business process to technology implementation start to become more and more process oriented. Organizations start to define and document steps, invent procedure to track process and systems level changes, and start restricting access to various systems for security reasons. At the same time, as a growing company start doing businesses with larger clienteles, they are automatically forced to abide by all sorts of industry compliance laws. Moreover, growing companies tend to recruit experienced individuals to fill new roles who usually bring their expertise from larger and more bureaucratic organizations.
Despite the best efforts from the top executives, it seems increased number of procedures and guidelines as well as new recruits automatically contribute to the evolution of corporate bureaucracy. Maybe, corporate bureaucracy is an inevitable side effect of a growing organization.