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Title : Delegation and Decentralisation

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Delegation and Decentralisation

Delegation and Decentralisation

Authority

Definition

Simon, “authority be defined as the power to make decisions which guide the actions of others.”

Henri Fayol, “Authority is the right to give orders and the power to extract obedience.”

Characteristics of authority

1.      Existence of right

2.      Authority not unlimited

3.      Authority influence behaviour

4.      Key managerial job

5.      Objectivity of authority

6.      Authority can be delegated

Sources of authority

1.      Legal or formal authority

2.      Traditional authority

3.      Acceptance theory

4.      Competence theory

5.      Charismatic authority

Responsibility

Responsibility is the obligation to do something. It is the duty that has to perform in the organisational tasks.Authority and responsibility are interrelated.

One can delegate authority but not responsibility.

According to Koontz & O'Donnell, “responsibility may be defined as the obligation of a subordinate to whom a duty has been assigned to perform a duty.”

George Terry defines responsibility as, “responsibility is the obligation to carry out assigned activities to the best of his abilities.”

Features of responsibility

1.      Can be assigned in humans only

2.      It arises from superior - subordinate relationship

3.      It arises from the duty assigned

4.      It may be defined in terms of functions, targets or goals

5.      It is an obligation to perform the assigned task

6.      Responsibility cannot be delegated

7.      Responsibility always flows upwards

Delegation of authority

Delegation is an administrative process of getting things done by others. Every superior delegates the authority to subordinates for getting a particular task done.

Definition-

According to Allen, ”the entrustment of a part of the work or responsibility and authority to another, and the creation of accountability for performance.”

According to O.S. Hiner, “delegation takes place when one person gives another the right to perform work on his behalf and in his name and the second person accepts corresponding duty or obligation to do what is required of him.”

Characteristics of delegation

1.      Delegation of power

2.      Authority is delegated

3.      Delegator can change authority

4.      Responsibility not delegated

5.      Entire authority cannot be delegated

6.      Delegation does not reduce authority

Elements of delegation

1.      Assignment of responsibility

2.      Grant of authority

3.      Creation of accountability

Principles of Delegation

1.      Principle of functional definition

2.      Principle of unity of command

3.      Principle of delegation by results expected

4.      Principle of absoluteness of responsibility

5.      Principle of parity of authority and responsibility

6.      Authority level principle

7.      The scalar principle

Types of delegation

1.      General or specific delegation

2.      Formal or informal delegation

3.      Lateral delegation

4.      Reserved authority and delegated authority.

Importance of delegation

1.      Relieving top executives

2.      Improved functioning

3.      Use of specialists

4.      Helps in employee development

5.      Helps in expansion and diversification.

Factors influencing degree of delegation

1.      Companies history

2.      Availability of capable person

3.      Importance and costliness of decisions

4.      Size of the enterprise

5.      Available controls

6.      Types of enterprise

7.      Environmental factors

Barriers in delegation of authority

1.      Over confidence of superiors

2.      Lack of confidence in subordinates

3.      Lack of ability in superiors

4.      Lack of proper controls

5.      Lack of proper temperament of superior

6.      Inability of subordinates

Guidelines for making delegation effective

1.      Defining of assignments

2.      Proper selection of persons

3.      Proper communication

4.      Establishing proper controls

5.      Rewards for proper implementation

Centralisation

Centralisation may be understood as a situation in which the ultimate authority to command and ultimate responsibility for results is located in the hands of the top management only. In centralisation the authority to take decisions is not delegated to lower levels of management as it is believed that the top management or the owner of the business is in the best position to take the correct decisions.

Centralisation is a common practice in small businesses because the success of small business depends on on the dynamic manager or the owner who single handedly commands He takes all the decisions himself and entrusts only implementation to the subordinates. Centralisation is possible in small businesses because the operations are limited and the owner or manager is able to devote personal attention to every activity of the business and take the relevant decisions.

Factors determining centralisation of authority

1.       Achieving uniformity of action

2.       Facilitating integration

3.       Promoting personal leadership

4.       Handling emergencies

Advantages of centralisation

1.       Standardization of procedures and systems

2.       Facilitates evaluation

3.       Economics

4.       Coordination of activities

Disadvantages of centralisation

1.       Destroys individual initiative

2.       Overburden to few

3.       Slows down the operations

4.       Distance from customers
5.       No scope for specialisation

Decentralization

Decentralization refers to the dispersal of decision making power at lower levels of management. In the power to take decisions and make policies does not lie with one person at the top what is past on to different persons at various levels, it is called decentralization.

Definition of decentralization

Allen, “decentralization refers to the systematic effort to delegate to the lowest levels all authority except that which can only be exercised at the Central points.”

McFarland, “decentralization is a situation in which ultimate authority to command and ultimate responsibility for results is localised as far down in the organisation as efficient management of the organisation permits.”

Characteristics of decentralization

1.       Extension of delegation

2.       Role of subordinates increases

3.       Reduces work at top level

4.       Authority goes to implementation level.

5.       Decentralization is a process

Factors influencing decentralization

1.       Need to take quick decisions

2.       Reduce work of top management

3.       Importance to product or market

4.       Growth and diversification

Advantages of decentralization

1.       Reduces burden of top management

2.       Quick decisions

3.       Facilitates diversification

4.       Motivation of subordinates

5.       Provides product or market emphasis

6.       Division of risk

7.       Effective control and supervision

Disadvantages of decentralization

1.       Lack of coordination

2.       Difficulty in control

3.       Costly

4.       Lack of able managers.

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