Between demand and reality: Why reducing bureaucracy is so difficult
Companies have to comply with numerous regulations – including tax law, labour law, data protection (GDPR) and environmental regulations. The Institute for SME Research (IfM) estimates that bureaucracy costs small and medium-sized enterprises (SMEs) billions every year. According to the ifo Institute, Germany loses up to EUR 146 billion in economic output due to excessive bureaucracy. One particularly critical point is the length of approval procedures, which often significantly delay construction and investment projects. Many other burdensome factors have not even been taken into account here.
It is therefore no wonder that entrepreneurs are rightly complaining about the growing bureaucracy and demanding that politicians take swift action. The Family Business Foundation even sees the reduction of bureaucracy as the most important task of the next German government.
Despite these justified demands, however, I have a bad feeling. It is easy to call for more efficient management – but realising this requires far-reaching structural changes that are the responsibility of other institutions. However, every experienced business leader knows how time-consuming such transformation processes are. The required reduction in bureaucracy is comparable to a large internal project in companies, such as the replacement of an ERP system.
An outdated system is often used for far too long, even if employees increasingly work without it and build up a parallel world with Excel. The internal workload grows steadily until there is finally no way around a change. But then it becomes clear how difficult change is: employees react with uncertainty or even fear because they are worried about their way of working – or even their job. Well-established processes have to be changed, new systems have to be learnt and data has to be compiled and entered. This means a huge effort for the entire company. This is also the case for authorities, offices and institutions.
We should continue to call for a reduction in bureaucracy, but recognise that this process takes time and support. Each individual should consider how they can actively promote this change. At the same time, companies should question whether their own internal bureaucracy can also be optimised – because there is often much greater potential here!
