chapter_8 authority delegation

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Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. PRINCIPLES OF MANAGEMENT P C Tripathi P N Reddy

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Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.PRINCIPLES OFMANAGEMENTP C Tripathi P N Reddy

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Authority delegation and decentralisationChapter 82

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.3LEARNING OBJECTIVESDefine formal authorityExamine the source of authorityIdentify the meaning and types of powerExplain the difference between authority and powerDiscuss the types of power of the rank and file/group or departmentProvide within the discussion of power the concept of influence

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.4LEARNING OBJECTIVESDefine responsibilityExplain line, staff and functional authorityDescribe the line and staff conflictDescribe the delegation of authority and its advantagesDiscuss decentralisationExplain EmpowermentLearning

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.5FORMAL AUTHORITYOrganisational 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 normssecures expertise in the making of decisionspermits centralisation of decision-making and coordination of activity

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

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6SOURCE OFFORMAL AUTHORITYClassical 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.7POWERPower 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 rewardCoercion-power to give punishmentReferent-desire to get emulate or imitate others work habitsExpert-power through expertiseLegitimate-legal right determine behaviorThree additional types of power:Charismatic powerReflected powerEmotional power

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.8POWER

Three additional types of power:Charismatic power- gets derived from persons magnetic personality or extraordinary qualitiesReflected power-derives from closeness to a powerful individualEmotional power

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.9DIFFERENCE BETWEENAUTHORITY AND POWERAUTHORITYPOWERIt 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.It can be delegated to a subordinate by his superior. A manager who has the authority to purchase machine worth Rs 10 lakh on his own, can delegate his authority to his assistant, empowering him to make purchases worth Rs 10 thousand on his own.

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10DIFFERENCE BETWEENAUTHORITY AND POWERAUTHORITYPOWERIt 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.It can be delegated to a subordinate by his superior. A manager who has the authority to purchase machine worth Rs 10 lakh on his own, can delegate his authority to his assistant, empowering him to make purchases worth Rs 10 thousand on his own.

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11DIFFERENCE BETWEENAUTHORITY AND POWERAUTHORITYPOWERIt 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.It can be delegated to a subordinate by his superior. A manager who has the authority to purchase machine worth Rs 10 lakh on his own, can delegate his authority to his assistant, empowering him to make purchases worth Rs 10 thousand on his own.

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12TYPES OF POWER Rank and FileCentral positionDependenceSpecialisationUnited front

Group or DepartmentSubstitutabilityDependenceCentralityAbility to cope with uncertaintyControl over strategic resources

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.13INFLUENCEInfluence 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 privilegesBy channeling all important information through himBy backing-up his decisionsBy regularly paying attention to his advice

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.14RESPONSIBILITYResponsibility 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-obligationResponsibility to-acoountabilityResponsibility cannot be delegated or transferred.Responsibility is divided into two parts at the time of delegation:Operating responsibilityUltimate responsibilityResponsibility may be specific or continuing.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.15LINE, STAFF ANDFUNCTIONAL AUTHORITYLINE AUTHORITYIn 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.16STAFF AUTHORITYIts 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 consultationCompulsory consultationConcurring authorityFunctional authorityVoluntary ConsultationCompulsory ConsultationConcurring ConsultationFunctional ConsultationHIGHESTLOWESTLINE, STAFF ANDFUNCTIONAL AUTHORITY

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.17FUNCTIONAL 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, STAFF ANDFUNCTIONAL AUTHORITY

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.18LINE AND STAFF CONFLICTComplaints of Line DepartmentsThe 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.19Complaints of Staff DepartmentsLine 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.LINE AND STAFF CONFLICT

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.20LINE AND STAFF CONFLICTTwo ways to reduce the Line and Staff conflict:Better understanding of the nature of the relationship between line and staffReducing the visibility of status symbols

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.21DELEGATION OF AUTHORITYDelegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.22ADVANTAGES OF EFFECTIVE DELEGATIONIt relieves the manager of his heavy workloadIt leads to better decisionsIt speeds up decision-makingIt helps train subordinates and builds moraleIt serves as compensation to those employees who face the prospect of limited advancementIt helps create a formal organisation structure

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.23BARRIERS TO EFFECTIVE DELEGATIONON THE MANAGERS SIDEFear of Loss of PowerThe I Can Do it Better Myself FallacyLack of Confidence in SubordinatesFear of Being ExposedDifficulty in BriefingInability to Establish and Exercise Proper Controls

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.24They 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.BARRIERS TO EFFECTIVE DELEGATIONON THE SUBORDINATES SIDE

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.25Make 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.GUIDELINES FOR EFFECTIVE DELEGATION

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.26Give 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.GUIDELINES FOR EFFECTIVE DELEGATION

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.27Decentralization 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.DECENTRALISATION OF AUTHORITY

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.28DIFFERENCE BETWEENDELEGATION AND DECENTRALISATIONDELEGATION DECENTRALISATIONDelegation is a process. It mainly refers to the granting of authority and the creation of responsibilityas between one individual and another.Decentralisation is the end result of delegation and dispersal ofauthority. 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, subordinatescan 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.It can be delegated to a subordinate by his superior. A manager who has the authority to purchase machine worth Rs 10 lakh on his own, can delegate his authority to his assistant, empowering him to make purchases worth Rs 10 thousand on his own.

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29Decentralisation reduces problem of communication and red tape.Decentralisation permits quicker and better decision-making.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.DECENTRALISATIONADVANTAGES

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.30Coordination 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.CENTRALISATIONADVANTAGES

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.31Following situational factors are considered in determining the amount of decentralisation appropriate for an organisation:Size of the OrganisationHistory and Age of the OrganisationPhilosophy of Top ManagementAbilities of Lower-level ManagersStrategy and the Organisations EnvironmentNature of Management FunctionAvailable ControlsCostliness and Significance of DecisionsHOW MUCH DECENTRALISATION?

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.32EMPOWERMENT 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.33EMPOWERMENT

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.34EMPOWERMENTMERITSSpeed: 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 peoples hidden potential, self-help and self-reliance.Non-financial Incentive: It is a sort of compensation for limited career paths.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.35EMPOWERMENTDEMERITSGreater 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.

Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved.36EMPOWERMENTREQUISITES FOR SUCCESSShould 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.

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