Structure vs. Process: Examining the Interaction between Bureaucratic Organization and Analytical Requirements

U.S. Capitol
by Stuart Shapiro, Visiting Scholar
July 25, 2016

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Abstract

Attempts by politicians to control bureaucratic decisions include both structural (how is the agency making the decision organized) and procedural (what rules must they follow when making the decision). But how do these procedures interact? This article examines the interaction between bureaucratic structure and one procedural control, the requirement that agencies conduct an analysis of their decisions prior to their issuance. I look at this interaction in the context of two types of analysis, cost-benefit analysis and environmental impact assessment. I interview 16 individuals in each field and draw from their experiences. The conduct of analysis is affected by where analysts are placed in agencies. In particular independence of analysts has a tradeoff. The more independent analysts are, the more likely they can challenge preferred decisions in their agency. But independent analysts are brought into decisions later and may have limited long term impacts on agency culture. Despite this tradeoff, analysts expressed a clear preference for independence. The interaction between different controls of bureaucratic behavior is a potentially fruitful line for further research.

Introduction

Political attempts to control the decisions of agency officials take many forms. Some of these forms have been termed “procedural;” by forcing agencies to follow certain procedures when making decisions politicians hope to increase their ability to oversee those decisions. Other ones can be termed “structural;” by organizing the bureaucracy in a particular way, important decisions will be more or less likely to rise to the level of political decision-makers.  All of these controls can be (and have been) described as attempts by political leaders to solve the principal-agent problem presented by the policy-making authority of bureaucratic agencies. Often many of these controls on bureaucratic actions are placed on agencies simultaneously. This study is an attempt to look at the interaction between these controls.

In particular, I look at the effect of structure on one particular procedural control: the requirement that agencies analyze the impact of their decisions prior to enacting them. The National Environmental Policy Act[3] of 1970 required agencies to conduct environmental impact assessments prior to proceeding with decisions affecting the environment. In 1981, President Reagan required agencies promulgating regulations to conduct Regulatory Impact Assessments (RIAs) that included measurements of regulations’ anticipated costs and benefits.[4] This trend toward greater use of analysis continued and grew stronger under Presidents Clinton, Bush, and Obama. And outside the federal arena, many states have implemented both environmental-impact-assessment and cost-benefit-analysis requirements (Shapiro and Borie-Holtz 2014).

As long as there have been requirements for analysis, there have been efforts to understand how (if at all) those requirements influence government decisions. The conclusions of many of these assessments have reflected frustration by advocates of analysis. Scholars have criticized environmental-impact statements since they generate “little useful information and produce a work product too late in the decision-making cycle to influence the agency’s course of action” (Karkkanien 2002, p. 906). Cost-benefit analysis similarly has been criticized as having a limited impact (see e.g. Hahn and Tetlock 2008).

But sometimes analysis does influence policy decisions (Shapiro 2016). I argue that one of the factors that plays a role in the extent to which analysts exercise influence is the structure of the organization in which they work. But the effect of this structure is not completely straight forward. I spoke with more than 30 analysts with experience conducting or reviewing thousands of analyses. The analysts were roughly evenly divided between economists who conduct cost-benefit analyses and environmental analysts who undertake environmental impact assessments. As one might expect, I find that the more independence that analysts are given, the more they are free to present analyses that challenge the preferred policy choices of their agencies. Although this is a positive impact of independence—from the perspective of advocates of analysis—structural separation does come with a cost. Analysts in free-standing organizational units have to fight more to be brought into decisions while the decisions are still ripe to be changed. There are also other complicating factors such as the use of contractors to conduct analysis which may muddy the effects of independence and effects of organizational structure on agency culture (independent analysts may be less able to make analysis a part of how the agency systematically thinks about policy problems).

The structure of an organization determines what information possessed by that organization is brought to bear on key decisions (Daft and Lengel 1986). As one critical intent of analysis is to ensure that certain information is presented to decision-makers, it is not surprising that the structure of an organization can assist or impede this role. This relationship between bureaucratic structure and the role of analysis also raises the question of whether organizational design of government agencies also affects the effectiveness of other procedural attempts by elected officials to control their bureaucratic agents.

This article proceeds as follows. In the next section I review the political science literature on the role of bureaucratic structure and process and discuss how it pertains to analytical requirements. Then, I describe my methodology for the interviews. I move on to summarizing the results of the interviews I conducted and then, finally, offer concluding thoughts.

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[1]    This working paper reflects the views of the author, and does not represent an official position of the GW Regulatory Studies Center or the George Washington University. The Center’s policy on research integrity is available at http://regulatorystudies.columbian.gwu.edu/policy-research-integrity.

[2]    Stuart Shapiro is a Visiting Scholar at the George Washington University Regulatory Studies Center and Professor and Director of Public Policy Program at Rutgers University’s Bloustein School of Planning and Public Policy.

[3]    42 U.S.C. §§4321-4370h

[4]    Executive Order 12291. See Federal Register 1981 58 FR 51735.