The simple answer is that we can't.
When there has been bureaucratic bloat and managerial takeover, there can only be destruction and replacement, because reform is (in practise) impossible.
Once an organisation has crossed the 'event horizon' at which management is dominant (e.g. many universities and colleges now employ more people with higher salaries in managerial and administrative roles than in teaching and research/ scholarship roles) - the organisations can only be (coercively) closed down, and new organisations started-up to replace them.
In theory, a corrupt organisation, bloated with bureaucracy and bureaucrats, can reform itself by eliminating non-essential administration while retaining productive capacity; in practise it cannot reform itself; since the whole set-up, the power structure, the rules and regulations, are all designed to sustain management.
(The people who are supposed to devise and implement reforms, are the exact people who need reforming.)
And the non-productive institutional elements have 100 percent of their time and effort to expend on concealment, blocking, propaganda, lying, lobbying, shroud-waving and all the other defensive measures.
So we must assume that corrupt organisations cannot be reformed, and must not waste energy, time and resources on attempting the impossible.
An apparent exception is when a 'Fuhrer' is appointed with near-absolute power to sack, employ and restructure; without regard for the rules and regulations.
If that Fuhrer is ruthless yet benign and altruistic and dedicated to the functionality of the organisation (not a common combination) - then in principle he could strip-out the deadwood of persons and procedures, with an immediate increase in efficiency and effectiveness, and beginning the process of improvement in a manner which would be self-sustaining.
But that amounts to pretty much the same as replacement. It amounts to starting a new institution while closing the corrupt one; but leaving the name unchanged.
And the replacement process must, in practise, be quick and dirty; crude and complete.
If the process is strung out, powerful bureaucrats (and by definition these bureaucrats are powerful, or there would not be a problem) will entrench, will mobilise mass media opinion, will employ legal and procedural delays, will recruit the support of political parties (who will always welcome any powerful interest group).
And the replacement process must err on the side of overkill, in order that the job be done at all and not undone almost immediately.
These are both reasons why slash-and-burn with replacement is likely to be more effective than even the most rapid and radical renovation.
The easiest and most effective is when the system has a mix of good and bad institutions - then you simply close the bad and expand the good.
Much harder is when - as with civil administration, education, health care - the whole system is corrupt, and every single institution is fatally infected with metastatic management, every organisation is in a terminal phase of bureaucratic cancer.
It is very difficult to close down the whole system - not least because there will be a gap before a new system can be constructed. Meanwhile no government agencies, health care system, schools or colleges... impossible to contemplate. But something that will happen anyway, as management takeover continues.
At present we already have vast institutions with vast management structures on top of a diminishingly-tiny, increasingly-victimised and ever-more persecuted set of people who do the productive work. Hospitals with hardly any doctors or nurses but armies of bureaucrats; massive university bureaucracies with a handful of part-time, underpaid, temporary teachers.
What is to stop this trend going through to completion - and having only managers and bureaucrats? Why not a doctor-free hospital, a teacher-free college?
Imagine (it isn't hard): students come to a college and experience a long induction phase explaining the commitment to to equality, fairness, diversity; go through procedures for grievances; parties and socials; tours of the library, cafes, bars and campus; practise role playing and training in proper behaviour; go through student evaluations and registering choices of majors, courses etc.
Eventually students are allocated to a course. They are given a wad of course documentation - aims and objectives, lists of material online, procedures and processes of evaluation; then - seamlessly - the students evaluate the course material and reflect on how they have benefited from it, its good and bad factors, how it might be improved; they then rate how this process has improved their knowledge, skills of research, analytic abilities - these evaluations are accumulated and stored as a measure of their achievements; they meet in facilitated groups to reflect on their college experience so far and how it has affected them, how it has impacted on their attitudes to diversity, how much they have been enhanced...
- and at some point in this whirlwind of evaluations and focus groups and gathering and analysis of feedback; the students are declared to have passed the course; and awarded a mark of A, A-plus or A-double-plus.
There never has been any teaching, only facilitated discussions; no exams, only feedback and evaluations; the focus being on how the students feel about things, how they are being improved, and how the institution may 'continue to' improve in response to student advice.
The college is grateful for the money, the students are grateful for the self-enhancing experience, a degree parchment changes hands...
Voila! The teacher free college. The education-free university. Management triumphant, pure bureaucracy; the cancer has replaced the organism.
How many people would notice the difference?