PRINCIPLES OF

MANAGEMENT

P C Tripathi

P N Reddy

Copyright 2012 by The McGraw-Hill Companies, Inc. All

Copyright 2012 by The McGraw-Hill Companies, Inc. All

Chapter
8

AUTHORITY DELEGATION
AND DECENTRALISATION

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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
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LEARNING OBJECTIVES
Define responsibility
Explain line, staff and functional authority
Describe the line and staff conflict
Describe the delegation of authority and its
advantages
Discuss decentralisation
Explain Empowerment
Learning

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FORMAL AUTHORITY
Organisational 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 centralisation 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 organisation and then flows

downward to subordinates. Managers at each level of
the organisation 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 behaviour or attitude.
French and Raven have suggested that there are five types
of power an individual may possess:
Reward-power to deliver reward
Coercion-power to give punishment
Referent-desire to get emulate or imitate others work
habits
Expert-power through expertise
Legitimate-legal right determine behavior
Three additional types of power:
Charismatic power
Reflected power
Emotional power
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POWER
Three additional types of power:
Charismatic power- gets derived from persons magnetic
personality or extraordinary qualities
Reflected power-derives from closeness to a powerful
individual
Emotional power

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DIFFERENCE BETWEEN
AUTHORITY AND POWER
AUTHORITY

POWER

It is narrower in scope being

only a sub-set of power.

It is wider in scope.

It is the legitimate right of a

superior to command and
compel his subordinates to
perform a certain act.

It is the ability of a person to

influence another person to
perform an act.

It rests in the chair (or

position). With the change in
position, the authority of the
individual also changes. A traffic
Policeman on duty has the
authority to direct and control
traffic. But after retirement he
cannot do it because he has no
authority now.

It rests in the individual. Hence

even when his position has
changed, his power remains
with him.

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DIFFERENCE BETWEEN
AUTHORITY AND POWER
AUTHORITY

POWER

It can be delegated to a
subordinate by his superior. A
manager who has the authority
to purchase machine worth `10
lakh on his own, can delegate
his authority to his assistant,
empowering him to make
purchases worth `10 thousand
on his own.

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 on the
organisation chart) and finite
(i.e., commensurate with
responsibility).

It is undefined, inconspicuous
and infinite. Its location cannot
be known from the formal
organisation chart. As a matter
of fact, one might find it in
unspecified places.

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10

DIFFERENCE BETWEEN
AUTHORITY AND POWER
AUTHORITY

POWER

It is what exists in the eye of

law.

It is what exists in fact. Some

people in organisations exercise
significant power far beyond the
accepted borders of their
authority. They are the real wire
pullers behind the figureheads.

It serves as a basis of formal

organisation.

It serves as a basis of informal

organisation.

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11

TYPES OF POWER
Rank and File
Central position
Dependence
Specialisation
United front

Group or Department
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12

INFLUENCE
Influence has no element of fear. Employees accept
influence voluntarily
The following are some other ways in which an
organisation can develop the influence of an
executive:
By giving him an impressive title, salary, office and
privileges
By channeling all important information through him
By backing-up his decisions
By regularly paying attention to his advice

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13

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:
Responsibility for-obligation
Responsibility to-acoountability

Responsibility cannot be delegated or transferred.

Responsibility is divided into two parts at the time of
delegation:
Operating responsibility
Ultimate responsibility

Responsibility may be specific or continuing.

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14

LINE, STAFF AND

FUNCTIONAL AUTHORITY
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
organisation are carried out.

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15

LINE, STAFF AND

FUNCTIONAL AUTHORITY
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

HIGHEST

Compulsory consultation

Functional Consultation

Concurring Consultation

Concurring authority
Compulsory Consultation

Functional authority
LOWEST
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Voluntary Consultation
16

LINE, STAFF AND

FUNCTIONAL AUTHORITY
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.

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17

LINE AND STAFF CONFLICT

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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18

LINE AND STAFF CONFLICT

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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19

LINE AND STAFF CONFLICT

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

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20

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

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21

ADVANTAGES OF
EFFECTIVE DELEGATION
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 organisation structure

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BARRIERS TO
EFFECTIVE DELEGATION
ON THE MANAGERS SIDE
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

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BARRIERS TO
EFFECTIVE DELEGATION
ON THE SUBORDINATES SIDE

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 organisation and this may also 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.

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GUIDELINES FOR
EFFECTIVE DELEGATION

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.

Before delegating authority, make the nature

and the scope of the task clear. Avoid
overstepping the subordinates 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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GUIDELINES FOR
EFFECTIVE DELEGATION
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 superiors desire
that the authority over a given situation should
be shared by individuals or units.
Learn to manage time.
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DECENTRALISATION OF
AUTHORITY
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.

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DIFFERENCE BETWEEN
DELEGATION AND DECENTRALISATION
DELEGATION

DECENTRALISATION

Delegation is a process. It mainly

refers to the granting of authority
and the creation of responsibility
as between one individual and
another.

Decentralisation is the end result

of delegation and dispersal of
authority. It is the situation which
exists as a result of the
systematic delegation of authority
throughout the organisation.

In this, a superior continues to be

responsible for the work
delegated to his subordinates.

In this, the superior is relieved

from his responsibility for the
work decentralised and the
subordinate becomes liable.

Delegation is vital and essential to

the management process. Only
through delegation, subordinates
can be involved in the
organisation and the management
can get things done.

Decentralisation is optional, in the

sense, that it may or may not be
practised as a systematic policy.

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DECENTRALISATION
ADVANTAGES

Decentralisation reduces problem of communication

and red tape.
Decentralisation permits quicker and better decisionmaking.
Decentralisation recognises and actually capitalizes
on the importance of the human element. Under
decentralisation, employees are able to exercise
more autonomy.
Decentralisation leads to a competitive climate within
the organisation.
Decentralisation ensures the development of
employees.
Decentralisation facilitates diversification of products,
activities and markets.

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CENTRALISATION
ADVANTAGES

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 organisation.
Strong central leadership develops which may
be required in crisis.

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HOW MUCH DECENTRALISATION?

Following situational factors are considered in determining
the amount of decentralisation appropriate for an
organisation:

Size of the Organisation

History and Age of the Organisation
Philosophy of Top Management
Abilities of Lower-level Managers
Strategy and the Organisations Environment
Nature of Management Function
Available Controls
Costliness and Significance of Decisions
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EMPOWERMENT

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 operationalised through

participation, innovation, access to information
and accountability/responsibility.

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EMPOWERMENT

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EMPOWERMENT
MERITS

Speed: When employees are liberated from dependency,

they can seize opportunities that are too local, too
fleeting or too many, to permit a centralised decisionmaking 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 peoples hidden potential, self-help and selfreliance.

Non-financial Incentive: It is a sort of

compensation for limited career paths.

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EMPOWERMENT
DEMERITS

Greater Potential for Chaos: Excessive

competition among employees may lead to different

levels of customer service, which in turn may give
conflicting message to customers.

Role Conflict: Managers with ultimate authority and

responsibility for functional units may experience role

conflict between two cultures: one to relinquish
control and the other to maintain.

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EMPOWERMENT

REQUISITES FOR SUCCESS

Should be strong ideological commitment of the head of the
organisation.
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
employees performance.
Should be periodical evaluation of the scheme.
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