In this type of organization, all the important rights and powers are in the hands of the top level management. Decision-making will be time consuming. When a subordinate is assigned some duties to be performed, he will be accountable to his superior for doing or not doing that work. Definition of Delegation The assignment of authority or decision-making power or duty of a person who is at a higher level to an individual who is below his level is known as Delegation. This minimizes interference of top executives in the working of operating units. The fewer people to be, consulted, and the lower they are on the management hierarchy, the greater the degree of decentralization. Regulation of the Government: If Government has strict policies and procedures for business firms, managers cannot take the risk of delegating decision-making powers to people at lower levels.
Communication: Where delegation becomes ineffective because subordinates do not have the information for making decisions, an effective system of communication should be developed so that information flows freely from superiors to subordinates. However ,decentralization is completed only when the fullest possible delegation is made to all or most of the people who are delegated a specific kind of responsibility. Flexibility: A decentralised organisation is more flexible as managers at different levels can change their policies according to changes in environment. This is also a form of delegation where authority is divided among all levels of management. Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. There is greater tendency for decentralisation. Key Difference — Delegation vs Decentralization Delegation and decentralization are commonly used management concepts by organizations in order to effectively manage the business operations.
The need for decentralisation is felt when the business grows in its size which necessiates diversification of office activities. If sub national governments and private organizations are to carry out decentralised functions effectively, they must have an adequate level of revenues either raised locally or transferred from the national government— as well as the authority to make decisions about expenditure. In a highly decentralised organisation, the top management restricts itself to major decisions in areas like policy making, coordination and control. Responsibility - is the duty of the person to complete the task assigned to him. Unsuitable for Small Firms: Departmentalization is completely unsuitable for small firms as it involves high operating costs.
More cost—Decentralisation is costly because it encourages duplication of functions and equipments. Setting measures of control to ensure that actual performance conforms to planned performance is centralised with the top management. While both approaches have a number of advantages and disadvantages as mentioned above, effective results can be achieved when clear guidelines are given to employees as to what their level of responsibilities and authorities are. Decentralization can also be said as an addition to Delegation of authority. Without decentralization, is meaningless and practically impossible. Chief executive should retain power to coordinate the activities of different divisions and departments.
In an organization, it is not possible for one to solely perform all the tasks and take all the decisions. It reflects the philosophy of the organization and management. Hence, decentralisation promotes more effective control by the management. It is a requirement of the all the organisation, for its growth and development. Fiscal decentralisation Financial responsibility is a core component of decentralisation.
Barriers Related to Subordinates: Subordinates present the following barriers to effective delegation: 1. On the other hand, Decentralization refers to the dissemination of powers by the top management to the middle or low-level management. Delegating authority for accomplishing these tasks. ? For an effective decentralization process, open and free communication in the organization must be there. Related: In the first place, as has been noted, decisions on some matters are reserved by and others may be made only by the top managers and, in some cases, even by the board of directors. Decentralisation may or may not be practised as a systematic policy in the organisation. Thus, decentralisation promotes efficiency of workers resulting in higher results.
Authority commands fear but power commands respect. Decentralisation is delegation of authority to the maximum possible extent. It elucidates how the power to take decisions is distributed in the organizational hierarchy. While decentralisation poses a great problem in this regard since extreme freedom of action is given to the people by creating self-sufficient or autonomous units. This promotes a sense of responsibility amongst the employees. It is the systematic transfer of powers and responsibility, throughout the corporate ladder. Each form raises different legal issues.
Bargain with trade unions: If trade unions agree to bargain with lower level managers, decision-making power can be decentralised but if trade unions bargain only with top management, the organisation tends to be more centralised. Though control helps in monitoring the activities of subordinates, it should not be strict in nature. In the second place, delegation to subordinate managers of authority to make decisions at their respective levels does not mean that these managers will allow their subordinates to share in top-level decision-making. Decentralization of authority is broader in scope and involves the transfer of authority in the organizational context from top to the lower rungs of management In the hierarchy. Delegation means assigning work to others and to give them authority to do it. This is the greatest advantage of decentralization that the top management gets unburden, and timely decisions can now be taken on different matters. Second, unless the manager allows subordinates attempt new tasks, they will be unable to develop their skills.
In a devolved system, sub national governments often have clear and legally recognized geographical boundaries over which they exercise authority and within which they perform these functions. Article shared by : After reading this article you will learn about the barriers to delegation of authority and ways to overcome it. A manager should provide members with the information they require to do a good job, with them frequently, and giving them clear guidelines on the results that are expected. Wholesome authority means giving authority to one person only to solve the problem. The lower level managers have enough decision making authority and support to introduce innovativeness in their work. Dispersion: Dispersion refers to geographic separation of central head office from the operating units.
Related: Decentralization to the extent that authority is not delegated, it is centralized. Development of managers: Once the basic structure of organisation is designed, plans and standards for measuring performance are made and techniques of coordination and motivation are laid, managers decentralise the enterprise by delegating operating authority to lower level managers. Scope Scope of delegation is limited as superior delegates the powers to the subordinates on individual bases. Ability of subordinates: If lower level managers are inspiring and innovative, decision-making power can be given to them. Conclusion The difference between centralization and decentralization is one of the hot topics these days. This may be a cause of stress, hence dissatisfaction. Further those superiors who see a threat in the subordinates always try to avoid delegation.