Delegation, Centralization and Decentralization

Delegation

Centralization &

Decentralization By

Rokov Zhasa

NU/MN-22/11

17th October, 2011

Knowledge Objectives

•Delegation

•Centralization

•Decentralization

•Comparison

i. Delegation vs. Decentralization

MGT 101 Management Process and Principles

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DELEGATION Part I


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Delegation • The process of giving authority to a subordinate in order to

perform the assigned activities by a superior is called

delegation of authority.

• Process of delegation involves:

I. Determining the results/outcomes from a position

II. Assigning tasks

III. Delegating authority for accomplishing tasks

IV. Holding the person responsible for accomplishment of task


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• It gives direction to a manager in performing his duties

• It has dual characteristics in the sense that though the

authority is delegated, it is still retained with the superior.

• It can be modified even after the action is over

• Manager cannot delegate authority which he does not

possess

• It may be specific or general and

• It is an art rather than a science

Nature of Delegation


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PRINCIPLES OF DELEGATION

• Delegation of results expected

• Co-equal Authority and Responsibility

• Absoluteness of Responsibility

• Creation of accountability

• Unity of Command

• Limits of Authority


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BENEFITS OF DELEGATION

• Relief to the Manager from routine work and concentration

on policy issues

• Basis for effective functioning

• Effective and Timely Decisions

• Empower and Develop Subordinates

• Satisfaction to subordinates

• Effective utilisation of organisational human resources


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BARRIERS TO DELEGATION

• Fear of loss of power

• Avoidance of risk

• Lack of confidence in subordinates

• Autocratic style

• Fear of misuse of authority

• Over confidence of the superiors


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THE ART OF DELEGATION Guide for overcoming weak delegation

Define assignments & delegate in the light of

results expected

Select the person in light of job to be done

Maintain open lines of communication

Establish proper controls

Reward effective delegation


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EFFECTIVE DELEGATION

• Establish clear-cut goals and define authority and responsibility

• Arrangements are made for guidance, coaching, supervision,

direction, communication and control.

• Set clear-cut assignment, delegate the details of coordination,

specific progress information needed, provide counselling,

guidance and adequate training followed up by appraisal of

current performance, counselling for improvement and coaching on

the job.


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CENTRALISATION Part II


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CENTRALISATION

• Centralisation is the systematic and consistent

reservation or withholding of authority at control

points within the organisation.

• If authority is not delegated, it is centralised.


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CENTRALIZATION

• Centralization is tendency to concentrate decision

making authority in organized structure

• Tendency to restrict delegation of decision

making:

Geographical

Departmental concentration of activities


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ADVANTAGES

• Provides personal leadership

• Promotes integration and co-ordination

• Promotes uniform action

• To handle emergent situation:


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DISADVANTAGES

• Delay in Communication

• Delay in Decision-making

• Fail to pay proper alternative on policy issues

• Under utilisation of Organisational Human

Resources

• Employee Dissatisfaction


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DECENTRALIZATION Part III


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Decentralization

• Tendency to disperse decision

making authority in organized

structure

• Decentralization applies to the

systematic delegation of authority

in an organization wide context.


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Decentralization • Decentralization as a Philosophy & Policy: Decentralization

implies more than delegation:

• It requires

careful selection of which decisions to be pushed down &

which to be hold near the top

specific policy making to guide decision making

proper selection & training of people

adequate controls & feedback


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DEGREE OF DECENTRALISATION

The degree of Decentralisation is determined by:

• Kind of authority to be delegated;

• the extent to which authority is to be delegated

downward in the organisation; and

• how consistently the authority is to be delegated


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INDICATORS • Hiring and fixing of employees,

• Approval of increases in pay (wage/ salary),

• Promotion of officers,

• Purchase and sale of capital equipment

• Approval of price quotations

• Acceptance of sales orders,

• Approval of travel expenses, etc.


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DETERMINING FACTORS • Costliness of Decision

• Need for uniformity

• Size

• Firm’s history and Management Philosophy

• Capable Managers

• Control Techniques

• Dynamic conditions


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When to Decentralize?

• Relief to top executives

• Diversification

• Emphasis on Product and Market.

• Management Development

• Higher motivation


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ADVANTAGES

• Effective communication

• Reduces Red-tapism

• Fast Decision-Making

• Enhances Employee Job satisfaction

• Executive Development

• Competitive advantage


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Limitations of Decentralization • Makes it difficult to have a uniform policy

• Increases complexity

• Results in some loss of control by top managers

• May be constrained by inadequate planning

• May be constrained by inadequate qualified managers

• Involves considerable EXPENSES


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Centralize or Decentralize?

Attention!!

This question that has challenged generations of managers

Balance

• Fine balance

• Preferably centralization for financing, budgeting, profit goals,

capital items, new products, major marketing strategies, personnel

policy etc.

In an organization there could be no absolute decentralization or

centralization


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COMPARISON Part IV


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Delegation vs. Decentralization

Delegation

• Delegation is a process

• Delegation is between one superior and

one subordinate

• Delegation is a must for management

and it creates and organisation

• The superior or delegator exercises

supervision and control over the

delegate

Decentralization

• Decentralisation is the end-result of planned delegation

• Decentralisation is a company wide delegation as between top management and divisions and/ or departments

• Decentralisation is optional and appears on the scene when the organisation grows and is large and complex.

• In decentralisation top management exercises broad and minimum control


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Conclusion

Decentralisation :

• When an organisation is large and complex and when competent managers are available, higher

decentralisation is always preferable.

• In a divisionised structure we have greater decentralisation.

• Similarly with a fast and effective communication systems e.g., computerised management information

system

• When quick, responsive, adaptive creative action is necessary we should have flat (decentralised)

structure

Centralisation:

• When repetition and standardisation of operations can be introduced in the work place. Centralised

control is feasible.

• When we have narrow span of control and numerous levels in management hierarchy, organisations are

tall and centralised.

• When we have wide span of control and few levels of management, organisations are flat and

decentralised.


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References • Sherlekar, SA, Sherleker, VS, Principles of Business Management, Himalayan

Publishing House, Reprint 2009, pg 257-265

• Rao, P. Subba , Management and Organisational Behaviour (Text, Cases and

Games), Himalayan Publishing House, pg 137-149

• Mullins, Laurie J., Management and Organizational Behaviour, Second Editon, pg

121, 125, 275-285

• http://en.wikipedia.org/wiki/Decentralization, Monday 03 October 2011 04:06 PM

• http://en.wikipedia.org/wiki/Delegation, Monday 03 October 2011 04:07 PM

• http://www.expertmanage.com/index.php?option=com_content&view=article&id=11

2&Itemid=75, Saturday 08 October 2011 10:05 AM


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THANK YOU


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And I am open to queries……

Documents

Delegation, Centralization and Decentralization