Bureaucratic discretion can be both good and bad from the standpoint of public sector management.
A bureaucracy is an organization that is supposed to function on the basis of rules. The rules are to be set at higher levels of the bureaucracy and are then supposed to be carried out by the people at the lower levels. In the ideal form of a bureaucracy, the people on the lower levels do not have discretion. They simply carry out policies set by those above them.
From a management perspective, it could be a bad thing if the lower-level bureaucrats had discretion. If they have discretion, they can use it in ways that management does not like. This can reduce the ability of management to implement the policies that it wants. In that way, then, bureaucratic discretion is a bad thing with respect to management.
However, it is also possible that bureaucratic discretion will be a good thing. This will likely be true if the goal of the management is to satisfy its “customers.” When lower-level bureaucrats have discretion, they often use it to bend rules to help customers. Rather than sticking rigidly to the exact rules, they can be lenient when it is warranted. This will typically result in greater customer satisfaction, which should be something that management desires.
Thus, bureaucratic discretion can lead to less control for the upper levels of the bureaucracy, but it can increase customer satisfaction.