Chapter_8.pptx

Copyright © 2017 by McGraw Hill Education (India) Private Limited
Principles of Management, 6e
P C Tripathi & P N Reddy
Chapter 8
Authority Delegation and
Decentralization
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Learning Objectives
 Define formal authority
 Examine the source of authority
 Identify the meaning and types of power
 Explain the difference between authority and power
 Discuss the types of power of the rank and file/group or department
 Provide within the discussion of power the concept of influence

Formal Authority
 Organizational authority is the formal right of the superior to
command and compel his subordinates to perform a certain act.
 Henri Fayol defines authority as “the right to give orders and
power to exact obedience.”
 According to Herbert A. Simon, authority:
 enforces obedience to norms
 secures expertise in the making of decisions
 permits centralization of decision-making and coordination of
activity
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Source of Formal Authority
 Classical View: authority originates at the top in the formal
structure of an organization and then flows downward to
subordinates. Managers at each level of the organization derive
their authority from the managers at the higher level.
 Human Relations View: authority of a superior originates in the
willingness of his subordinates to accept it. The authority becomes
somewhat meaningless unless those affected accept it and
respond to it.
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Power
 Power is the ability or the available potential of a person to
influence or to cause another person to perform an act or to
change his behavior or attitude.
 French and Raven have suggested that there are five types of
power an individual may possess:
 Reward
 Coercion
 Referent
 Expert
 Legitimate
 Three additional types of power:
 Charismatic power
 Reflected power
 Emotional power
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Difference between Authority and Power
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Authority Power
It is narrower in scope It is wider in scope
It is the legitimate rise of superior to
command and compel his
subordinates to perform a certain act
It is the ability of one person to
influence another person to perform an
act
It rests in the chair (or the position).
With the change in position. The
authority of the person also changes.
A traffic Policemen on duty has the
authority to control and direct the
traffic. But after retirement, he can no
longer do it since he has no authority
now.
It rests in the individual. Hence even
when his position has changed his
power remains with him.
Continued…

Difference Between Authority and Power
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Authority Power
It can be delegated to a subordinate
by his superior. A manager who has
the power to purchase machine
worth INR 10 lakh on his own can
delegate his authority to his assistant.
It cannot be delegated. A manager who is
a very able decision-maker cannot hand
over his ability to his assistant.
It is mostly well defined conspicuous
(shown in the organization chart.) and
finite (i.e., commensurate with
responsibility).
It is undefined, inconspicuous and
infinite. Its location cannot be known
from the formal organization chart. As a
matter of fact, one may find it in
unspecified places.
Continued…

Difference Between Authority and Power
8
Authority Power
It is what exists in the eye of the
law. It is a de jure concept. It is
mostly nominal. We find many
organisational figure heads who are
administrators in name only. They
may be regarded as “reigning
without ruling.”
It is what exists in the fact. It is the de
facto concept. Some people in
organisation exercise significant power
far beyond the accepted borders of their
authority. They are the real wire pullers
behind the figure heads.
It serves as a basis of formal
organization.
It serves as a basis of informal
organization.

Types of Power
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 Rank and File
 Central position
 Dependence
 Specialization
 United front
 Group or Department
 Substitutability
 Dependence
 Centrality
 Ability to cope with
uncertainty
 Control over strategic
resources

Influence
 Influence has no element of fear. Employees accept influence
voluntarily or perhaps unconsciously out of respect for the
manager.
 The following are some other ways in which an organization can
develop the influence of an executive by:
 Giving him an impressive title, salary, office and privileges
 Channeling all important information through him
 Backing-up his decisions
 Regularly paying attention to his advice
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Responsibility
 Responsibility is the obligation of a subordinate to obey commands.
When a superior assigns some work to a subordinate, it becomes his
responsibility to perform it.
 Responsibility has two dimensions:
i. Responsibility for
ii. Responsibility to
 Responsibility cannot be delegated or transferred.
 Responsibility is divided into two parts at the time of delegation:
i. Operating responsibility
ii. Ultimate responsibility
 Responsibility may be specific or continuing.
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Responsibility
Authority should be responsibility
 It means that the subordinate must have been delegated enough
authority to undertake all the duties which have been assigned to
him and for which he has accepted responsibility.
 The advocates of this parity principle say that authority and
responsibility should be exactly equal.
 Inequality between the two produces undesirable results.
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Line, Staff and Functional Authority
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LINE AUTHORITY
In this, a superior exercises direct command over a subordinate.
It is represented by the standard chain of command that starts with
the board of directors and extends down through the various levels
in the hierarchy to the point where the basic activities of the
organization are carried out.

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.
STAFF AUTHORITY
Its nature is advisory. In this, a staff officer has the ‘authority of ideas’ only.
There are four levels of authority of a staff man:
 Voluntary consultation
 Compulsory consultation
 Concurring authority
 Functional authority
HIGHEST
LOWEST

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FUNCTIONAL AUTHORITY
 In this, a staff officer can give direct orders to people in other
departments outside his formal chain of command instead of
making recommendations to them.
 Whenever functional authority is given to a line officer, it is
known as functional line authority, and whenever it is
conferred upon a staff man, it is known as functional staff
authority.

Line and Staff Conflict
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 Complaints of Line Departments
 The staff people encroach upon their authority and prerogatives.
 The advice given by staff people is mostly academic and unhelpful in
achieving production goals.
 When a project is unsuccessful, it is the line people who are blamed
and held responsible for its failure but when it is successful, the staff
people receive credit.
 Staff people fail to see the whole picture. They tend to operate in
terms of the limited objectives of their own specialty rather than in
the interests of the business as a whole.

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 Complaints of Staff Departments
 Line people are generally ignorant and bull-headed. They resist
new ideas. They fear that changes in methods may expose
forbidden practices and departmental inefficiency. They fear
that changes in methods may bring personnel changes.
 Line people distrust, non-cooperate and even sabotage staff
plans.
 Staff has not enough authority to translate its advice into
action.
 Line departments receive preferential treatment in matters of
staff allowances and other facilities on the basis of their being
earning departments.

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 Two ways to reduce the Line and Staff conflict:
i. Better understanding of the nature of the relationship
between line and staff
ii. Reducing the visibility of status symbols

Delegation of Authority
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Delegation of authority can be defined as subdivision
and sub-allocation of powers to the subordinates in
order to achieve effective results.

Advantages of Effective Delegation
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 It relieves the manager of his heavy workload
 It leads to better decisions
 It speeds up decision-making
 It helps train subordinates and builds morale
 It serves as compensation to those employees who face the
prospect of limited advancement
 It helps create a formal organization structure

Barriers to Effective Delegation
(On the Manager’s Side)
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 Fear of Loss of Power
 The “I Can Do it Better Myself’ Fallacy
 Lack of Confidence in Subordinates
 Fear of Being Exposed
 Difficulty in Briefing
 Inability to Establish and Exercise Proper Controls

Barriers to Effective Delegation
(On the Subordinate’s Side)
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 They may refuse to accept authority because of their fear of criticism by
their superior in case they commit mistakes in decision-making.
 They may avoid accepting any authority if they feel that they lack mental
and physical ability, adequate information and resources to help them
discharge their duties properly.
 They may believe that the authority is inconsistent with the purposes of the
organization and this may be the cause for their unwillingness to accept it.
 They may avoid accepting any authority because there are no positive
personal gains to them for assuming extra responsibility.
 They may refuse to accept the authority because it is outside certain limits.

Guidelines to Effective Delegation
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 Make sure that delegation is not loss of power or that you cannot
do it yourself.
 Remember that only two tasks in a list of ten tasks deserve topmost
priority.
 Select the subordinate in the light of the job.
 Before delegating authority, make the nature and the scope of the
task clear. Avoid overstepping the subordinate’s “area of
acceptance”.
 Assign authority proportionate to the task.
 Make the subordinate clearly understand the limits of his authority
and deadlines.

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 Give the subordinate some positive incentives for accepting
responsibility.
 Train the subordinate properly.
 Create a climate of mutual trust and goodwill.
 Do not make the subordinate accountable to more than one
superior.
 Let there be no overlaps or splits in delegation which usually result
from the superior’s desire that the authority over a given situation
should be shared by individuals or units.
 Learn to manage time.

 Try to stretch the capacities of your second line in office for your
efficiency in future.
 Once a delegated job is done well, acknowledge and appreciate.
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Decentralization of Authority
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 Decentralization is the policy of delegating decision-making
authority down to the lower levels in the organization,
relatively away from and lower in a central authority.
 A decentralized organization shows fewer tiers in the
organizational structure, wider span of control, and a bottom-
to-top flow of decision-making and flow of ideas.

Difference between Delegation and
Decentralization
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Delegation Decentralization
Delegation is the process. It mainly
refers to the granting of the authority
and the creation of the responsibility as
between one individual and another
Decentralization is the end result of
delegation and dispersal of authority. It
is the system that exists as the result of
the systematic delegation of authority
through out the delegation.
In this, the superior continues to be
responsible for the work delegated to
his subordinate.
In this, the superior is relieved from his
responsibility of the work and the
subordinate becomes liable.
Delegation is vital and essential to the
management process. Only through
delegation, subordinates can be
involved in the organization and
management can get things done.
Decentralization is optional in the
sense that it may not be followed
systematically.

Decentralization - Advantages
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 Decentralization reduces problem of communication and red tape.
 Decentralization permits quicker and better decision-making.
 Decentralization recognizes and actually capitalizes on the
importance of the human element. Under decentralization,
employees are able to exercise more autonomy.
 Decentralization leads to a competitive climate within the
organization.
 Decentralization ensures the development of employees.
 Decentralization facilitates diversification of products, activities and
markets.

Centralization - Advantages
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 Coordination of activities of subordinates is better
achieved.
 There is no duplication of efforts or resources.
 Decisions take into account the interest of the entire
organization.
 Strong central leadership develops which may be required
in crisis.

How Much Decentralization?
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 Following situational factors are considered in determining the
amount of decentralization appropriate for an organization:
 Size of the Organisation
 History and Age of the Organisation
 Philosophy of Top Management
 Abilities of Lower-level Managers
 Strategy and the Organization's Environment
 Nature of Management Function
 Available Controls
 Costliness and Significance of Decisions

Empowerment
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 Empowerment is the authority of an employee to make decisions
in his area of responsibility, without first having to get approval
from someone else.
 Empowered employees are given not only the authority to make
decisions, but also financial resources to implement their
decisions.
 Empowerment is operationalized through participation,
innovation, access to information and
accountability/responsibility.

Empowerment
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Speed
Morale
Full use of Employees’ Potential
Non-financial Incentive
Greater Potential for Chaos
Role Conflict

Empowerments - Merits
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 Speed: When employees are liberated from dependency, they
can seize opportunities that are too local, too fleeting or too
many, to permit a centralised decision-making process.
 Morale: Employees feel better about their work because they
know they have greater control over it.
 Full use of Employees’ Potential: Empowerment brings out
people’s hidden potential, self-help and self-reliance.
 Non-financial Incentive: It is a sort of compensation for
limited career paths.

Empowerment - Demerits
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 Following situational factors are considered in determining the
amount of decentralization appropriate for an organization:
 Size of the Organization
 History and Age of the Organization
 Philosophy of Top Management
 Abilities of Lower-level Managers
 Strategy and the Organization’s Environment
 Nature of Management Function
 Available Controls
 Costliness and Significance of Decisions

Empowerments - Requisites for Success
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 Should be strong ideological commitment of the head of the
organization.
 The web of relationships should be increasingly horizontal.
 Scheme should be designed after identifying employees’ real needs
and with their participation.
 Should be transparency, openness, trust and greater error tolerance.
 Should be enhanced communication.
 Should be variable rewards with some group component.
 Should be 360 degree feedback to get a complete picture of employee’s
performance.
 Should be periodical evaluation of the scheme.

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