Dynamic Behavioral Model Uncovers Conditions for Administrative Bloat

Administrative costs have been a growing concern in both private and public sectors, impacting organizational efficiency, employee motivation, and health. Notably, administrative costs in US universities have risen much faster than that of instruction and research. While explanations have attributed the growth of administrative costs to external regulatory requirements and bureaucrats' will to power, we propose a differential equation model to show that administrative bloat can arise as the result of an organization's endogenous dynamics under well-meaning management heuristics. At the core of the model is the consideration that codified processes tend to be useful when instituted but become obsolete as conditions change. These obsolete processes still taking up resources until efforts are made to remove them. The model studies how this obsolescence process interacts with managers' well-meaning decisions to give rise to administrative cost and waste in the organization. The model identifies conditions for a runaway bloat cycle, where administrative costs grow to the resource cap. The model reflects a best-case scenario, revealing that administrative bloat can occur even with well-intentioned management and without external regulatory pressures. The findings suggest that a balance between structured process management and flexible problem resolution is crucial to prevent administrative bloat.