ORGANIZING

MODULE – 5

Definitions of Organizing

According to Theo Haimann

Organizing is the process of defining and grouping the activities of the enterprises and establishing the
authority relationships among them. In performing the organizing function, the manager defines
departments and assigns activities so that they can be most effectively executed.

According to Louis A. Allen

Organizing is the process of identifying and grouping the work to be performed defining and delegating
responsibility and authority and establishing relationship for the purpose of enabling people to work most
effectively together in accomplishing objectives. An Organization is defined as a social structure designed to
coordinate the activities of two or more people through a division of labor and hierarchy of authority for the
achievement of a common purpose or goal.

Steps in Organizing

A manager performs organizing function with the help of following steps:-

1. Identification of activities - All the activities which have to be performed in a concern have to be
identified first. For example, preparation of accounts, making sales, record keeping, quality control,
inventory control, etc. All these activities have to be grouped and classified into units.
2. Departmentally organizing the activities - In this step, the manager tries to combine and group
similar and related activities into units or departments. This organization of dividing the whole
concern into independent units and departments is called departmentation.
3. Classifying the authority - Once the departments are made, the manager likes to classify the powers
and its extent to the managers. This activity of giving a rank in order to the managerial positions is
called hierarchy. The top management is into formulation of policies, the middle level management
into departmental supervision and lower level management into supervision of foremen. The
clarification of authority help in bringing efficiency in the running of a concern. This helps in achieving
efficiency in the running of a concern. This helps in avoiding wastage of time, money, effort, in
avoidance of duplication or overlapping of efforts and this helps in bringing smoothness in a
concern’s working.
4. Co-ordination between authority and responsibility - Relationships are established among various
groups to enable smooth interaction toward the achievement of the organizational goal. Each
individual is made aware of his authority and he/she knows whom they have to take orders from and
to whom they are accountable and to whom they have to report. A clear organizational structure is
drawn and all the employees are made aware of it.

Importance/Purpose of Organizing Function

1. Specialization - Organizational structure is a network of relationships in which the work is divided

into units and departments. This division of work is helping in bringing specialization in various
activities of concern.
2. Well defined jobs - Organizational structure helps in putting right men on right job which can be done
by selecting people for various departments according to their qualifications, skill and experience.
This is helping in defining the jobs properly which clarifies the role of every person.

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 3. Clarifies authority - Organizational structure helps in clarifying the role positions to every manager
(status quo). This can be done by clarifying the powers to every manager and the way he has to
exercise those powers should be clarified so that misuse of powers do not take place. Well defined
jobs and responsibilities attached helps in bringing efficiency into managers working. This helps in
increasing productivity.
4. Co-ordination - Organization is a means of creating co-ordination among different departments of
the enterprise. It creates clear cut relationships among positions and ensure mutual co-operation
among individuals. Harmony of work is brought by higher level managers exercising their authority
over interconnected activities of lower level manager.

Authority responsibility relationships can be fruitful only when there is a formal relationship between
the two. For smooth running of an organization, the co-ordination between authority- responsibility
is very important. There should be co-ordination between different relationships. Clarity should be
made for having an ultimate responsibility attached to every authority. There is a saying, “Authority
without responsibility leads to ineffective behaviour and responsibility without authority makes
person ineffective.” Therefore, co-ordination of authority- responsibility is very important.

5. Effective administration - The organization structure is helpful in defining the jobs positions. The
roles to be performed by different managers are clarified. Specialization is achieved through division
of work. This all leads to efficient and effective administration.
6. Growth and diversification - A company’s growth is totally dependent on how efficiently and
smoothly a concern works. Efficiency can be brought about by clarifying the role positions to the
managers, co-ordination between authority and responsibility and concentrating on specialization.
In addition to this, a company can diversify if its potential grow. This is possible only when the
organization structure is well- defined. This is possible through a set of formal structure.
7. Sense of security - Organizational structure clarifies the job positions. The roles assigned to every
manager is clear. Co-ordination is possible. Therefore, clarity of powers helps automatically in
increasing mental satisfaction and thereby a sense of security in a concern. This is very important for
job- satisfaction.
8. Scope for new changes - Where the roles and activities to be performed are clear and every person
gets independence in his working, this provides enough space to a manager to develop his talents
and flourish his knowledge. A manager gets ready for taking independent decisions which can be a
road or path to adoption of new techniques of production. This scope for bringing new changes into
the running of an enterprise is possible only through a set of organizational structure.

Principles of Organizing

The organizing process can be done efficiently if the managers have certain guidelines so that they can take
decisions and can act. To organize in an effective manner, the following principles of organization can be
used by a manager.

1. Principle of Specialization

According to the principle, the whole work of a concern should be divided amongst the subordinates
on the basis of qualifications, abilities and skills. It is through division of work specialization can be
achieved which results in effective organization.

2. Principle of Functional Definition

According to this principle, all the functions in a concern should be completely and clearly defined to
the managers and subordinates. This can be done by clearly defining the duties, responsibilities,
authority and relationships of people towards each other. Clarifications in authority-responsibility
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 relationships helps in achieving co-ordination and thereby organization can take place effectively. For
example, the primary functions of production, marketing and finance and the authority responsibility
relationships in these departments shouldbe clearly defined to every person attached to that
department. Clarification in the authority-responsibility relationship helps in efficient organization.

3. Principles of Span of Control/Supervision

According to this principle, span of control is a span of supervision which depicts the number of
employees that can be handled and controlled effectively by a single manager. According to this
principle, a manager should be able to handle what number of employees under him should be
decided. This decision can be taken by choosing either froma wide or narrow span. There are two
types of span of control:-

a. Wide span of control- It is one in which a manager can supervise and control effectively a
large group of persons at one time. The features of this span are:-
i. Less overhead cost of supervision
ii. Prompt response from the employees
iii. Better communication
iv. Better supervision
v. Better co-ordination
vi. Suitable for repetitive jobs

According to this span, one manager can effectively and efficiently handle a large number of
subordinates at one time.

b. Narrow span of control- According to this span, the work and authority is divided amongst
many subordinates and a manager doesn't supervises and control a very big group of people
under him. The manager according to a narrow span supervises a selected number of
employees at one time. The features are:-
i. Work which requires tight control and supervision, for example, handicrafts, ivory
work, etc. which requires craftsmanship, there narrow span is more helpful.
ii. Co-ordination is difficult to be achieved.
iii. Communication gaps can come.
iv. Messages can be distorted.
v. Specialization work can be achieved.
4. Principle of Scalar Chain

Scalar chain is a chain of command or authority which flows from top to bottom. With a chain of
authority available, wastages of resources are minimized, communication is affected, overlapping of
work is avoided and easy organization takes place. A scalar chain of command facilitates work flow
in an organization which helps in achievement of effective results. As the authority flows from top to
bottom, it clarifies the authority positions to managers at all level and that facilitates effective
organization.

5. Principle of Unity of Command

It implies one subordinate-one superior relationship. Every subordinate is answerable and

accountable to one boss at one time. This helps in avoiding communication gaps and feedback and
response is prompt. Unity of command also helps in effective combination of resources, that is,
physical, financial resources which helps in easy co-ordination and, therefore, effective organization.

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 Authority Flows from Top to Bottom

Managing Director

Marketing Manager

Sales/ Media Manager

Salesmen

According to the above diagram, the Managing Director has got the highest level of authority. This
authority is shared by the Marketing Manager who shares his authority with the Sales Manager. From
this chain of hierarchy, the official chain of communication becomes clear which is helpful in
achievement of results and which provides stability to a concern. This scalar chain of command
always flow from top to bottom and it defines the authority positions of different managers at
different levels.

Meaning and Definition of Departmentation

Departmentation is the process which is used to group activities into units for purpose of administration at
all levels. By this process, the personnel and functions of an enterprise are departmentalized by division into
separate units.

Dividing the work naturally means the identification of individual activities which have to be undertaken for
attaining the objectives of the enterprise. But once the various activities have been identified, it is necessary
to group them together on some logical basis. This process of grouping is known as departmentation.

Basis of Departmentation # 1. Departmentation by Function:

Similar activities of a business are grouped into major departments or divisions under an executive who
reports to the chief executive.

This departmentation is most widely used basis for organising activities and is present in every organisation
at some level (Fig. 6.6).

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Merits of Departmentation by Function:

1. It suits well the small enterprises for creating major departments.

2. It promotes specialization.

3. It economizes operations and makes possible the adoption of logical and comprehensible structure.

4. It facilitates inter-departmental co-ordination.

5. It suits well for those organisations which have single product line.

Demerits of Departmentation by Function:

1. It may lead to excessive centralization.

2. Decision making process is delayed.

3. Poor inter-departmental co-ordination.

4. It is rather difficult to set up specific accountability and profit centres within functional departments so
the performance is not accurately measured.

5. It hinders human development in all the areas.

Basis of Departmentation # 2. Departmentation by Product:

In a multiproduct organisation the departmentation by product most suits. Here the activities are grouped
on the basis of produce or product lines. All functions related to particular product are bought together
under the umbrella of product manager. Fig. 6.7 illustrates the product departmentation.

Merits of Departmentation by Product:

1. Each product division can be taken as a viable profit centre for accountability purposes. The performance
of individual products can be easily accessed to distinguish between profitable and unprofitable products.

2. Marketing strategy becomes more pragmatic.

3. Top management is relieved of operating task responsibility and can concentrate on such centralized
activities as finance, research etc.

4. It facilitates decentralization.
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5. Attention is given to product lines, which is good for further diversification and expansion.

Demerits of Departmentation by Product:

(1) It increases management cost. Service functions are duplicated both at the top and at the operating levels
of management.

(2) High cost of operation prevents the small & medium sized concerns from adopting this basis of
classification, particularly for creating major units.

(3) There are problems at the top of co-ordination.

Basis of Departmentation # 3. Departmentation by Territory:

It is suitable for organisations having wide geographical market such as pharmaceuticals, banking, consumer
goods, insurance, railways etc. Here, the market is broken up into sales territories and a responsible
executive is put in charge of each territory. The territory may be known as district, division or region. The fig.
6.8 shows the geographical departmentation.

Merits of Departmentation by Territory:

1. It helps in achieving the benefits of local operations such as local supply of materials & labour, local
markets etc.

2. Full attention can be paid to local customer groups.

3. A regional division achieves a better co-ordination and supervision of activities in a particular area.

4. It helps in reducing transportation and distribution costs.

5. It facilitates the expansion of business to different regions.

6. It provides an opportunity to a regional manager to gain broad experience as he looks after the complete
operation in a particular territory

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Demerits of Departmentation by Territory:

1. It creates the problem of communication and co-ordination between various regional offices.

2. It may be uneconomical due to costly duplication of personnel & physical facilities.

3. It may be difficult to provide efficient centralized services to various departments located in different
areas.

4. Various regional units may become so engrossed in short term competition among themselves that the
overall long term interests of the organisation as a whole may be overlooked.

5. The problem of top management control becomes difficult.

Basis of Departmentation # 4. Departmentation by Customers:

This type of classification is adopted by enterprises offering specialized services. To give the attention to
heterogeneous groups of buyers in the market, marketing activities are often split into various several parts.

Such groups are suitable to organisations serving several segments like a pharmaceutical company supplying
to institutional buyers such as hospitals and government and non-institutional buyers as wholesalers and
retail chemists.

The general organisation of this type of departmentation is depicted big fig 6.9:

Merits of Departmentation by Customers:

1. The main advantage of following this type of departmentation is that particular needs of the particular-
customers can be solved.

2. Benefits of specialization can be obtained.

Demerits of Departmentation by Customers:

1. There may be duplication and underutilization of facilities and resources.

2. It may be difficult to maintain co-ordination among the different customer departments.

Thus, customers’ departmentation is useful for those enterprises which have to cater to the special and
varied needs of different classes of customers.

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Basis of Departmentation # 5. Departmentation by Process:

The production function may be further subdivided on the basis of the process of production when the
production process has distinct activity groups, they are taken as the basis of departmentation. The
departmentation by process can be shown as (Fig 6.10).

Process departmentation is suitable when the machines or equipment’s used are costly and required special
skill for operating. It is useful for organisations which are engaged in the manufacture of products which
involves several processes.

Merits of Departmentation by Process:

1. It provides economy of operation

2. The benefits of specialization are available.

3. Efficient maintenance of equipment’s is possible.

4. It simplifies supervision and plant layout.

Demerits of Departmentation by Process:

1. There may be difficulties in coordinating the activities of different departments

2. Due to specialized activity, the employee mobility is reduced.

3. Extreme specialization may reduce flexibility of operations.

4. This type of departmentation may not provide opportunity for the all-round development of managerial
talent.

5. Conflicts may arise among managers of different processes, particularly when they loose sight of the
overall company goals.

Basis of Departmentation # 6. Departmentation-Combined Base:

Sometimes, several bases of departmentation may be used simultaneously. Fig. 6.11. Denotes the combined
base departmentation. First the organisation is divided on the basis of functions. The marketing department
is further divided on the basis of product lines i.e., refrigeration and chemical division.

The refrigeration division is further divided on the basis of territory and the territory is further divided on
the basis of customers i.e., retail and wholesale.

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Combined base departmentation is also called as composite departmentation or mixed departmentation.
This type of departmentation provide the benefits of both functional and product structures. But the
conflicts between different departments and division may increase. It becomes necessary to differentiate
clearly between the line authority and functional authority of managers.

Span of Management

Definition: The Span of Management refers to the number of subordinates who can be managed efficiently
by a superior. Simply, the manager having the group of subordinates who report him directly is called as the
span of management.

The Span of Management has two implications:

1. Influences the complexities of the individual manager’s job

2. Determine the shape or configuration of the Organization

The span of management is related to the horizontal levels of the organization structure. There is a wide and
a narrow span of management. With the wider span, there will be less hierarchical levels, and thus, the
organizational structure would be flatter. Whereas, with the narrow span, the hierarchical levels increases,
hence the organizational structure would be tall.

Both these organizational structures have their advantages and the disadvantages.

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Characteristics of a Flat Organizational Structure (Wide Span of Control)

Pros

 Encourages delegation. Managers must better delegate to handle larger numbers of subordinates,
and grant opportunities for subordinates to take on responsibilities
 Agile. Improves communication speed and quality
 Reduces costs. More cost effective because of fewer levels, thus requiring fewer managers
 Helps prevent the workforce from disengaging by focusing on empowerment, autonomy and self-
direction

Cons

 High managerial workload comes with high Span of Control

 Role confusion more likely
 May cultivate distrust of management

Characteristics of a Tall Organizational Structure (Narrow Span of Control)

Pros

 More rapid communication between small teams

 Groups are smaller and easier to control/manage
 There’s a greater degree of specialization and division of labor
 More and better opportunities for employee promotion

Cons

 Communication can take too long, hampering decision-making

 Silos may develop and prevent cross-functional problem solving
 Employees may feel lost and powerless

Factors Determining Span of Management

The span of management can be determined on the basis of a number of relationships that a manager can
manage. These are:

1. Capacity of Superior: Here the capacity means the ability of a superior to comprehend the problems
quickly and gel up with the staff such that he gets respect from all. Also, the communication skills,
decision-making ability, controlling power, leadership skills are important determinants of
supervisory capacity. Thus, a superior possessing such capacity can manage more subordinates as
compared to an individual who lack these abilities.
2. Capacity of Subordinate: If the subordinate is trained and efficient in discharging his functions
without much help from the superior, the organization can have a wide span. This means a superior
can manage a large number of subordinates as he will be required just to give the broad guidelines
and devote less time on each.
3. Nature of Work: If the subordinates are required to do a routine job, with which they are well versed,
then the manager can have a wider span. But, if the work is complex and the manager is required to
give directions, then the span has to be narrower. Also, the change in the policies affects the span of
management. If the policies change frequently, then the manager needs to devote more time and
hence the span would be narrow whereas if the policies remain stable, then a manager can focus on

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 a large number of subordinates. Likewise, policies technology also plays a crucial role in determining
the span.
4. Degree of Decentralization: If the manager delegates authority to the subordinates then he is
required to give less attention to them. Thus, higher the degree of decentralization, the wider is the
span of management. But in case, subordinates do not have enough authority, then the manager is
frequently consulted for the clarifications, and as a result superior spends a lot of time in this.
5. Planning: If the subordinates are well informed about their job roles, then they will do their work
without consulting the manager again and again. This is possible only because of the standing plans
that they follow in their repetitive decisions. Through a proper plan, the burden of a manager reduces
manifold and can have a wider span of management.
6. Staff Assistance: The use of staff assistance can help the manager in reducing his workload by
performing certain managerial tasks such as collecting information, processing communications and
issuing orders, on his behalf. By doing so, the managers can save their time and the degree of span
can be increased
7. Supervision from Others: The classical approach to the span of management, i.e., each person should
have a single supervisor is changing these days. Now the subordinates are being supervised by other
managers in the organization such as staff personnel. This has helped the manager to have a large
number of subordinates under him.
8. Communication Techniques: The mode of communication also determines the span of management.
If in the manager is required to do a face to face communication with each subordinate, then more
time will be consumed. As a result, the manager cannot have a wider span. But in case, the
communication is in writing and is collected through a staff personnel; the manager can save a lot of
time and can have many subordinates under him.

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LINE AND STAFF ORGANIZATION

Line relationship is decision maker and staff personnel are an advisor.

Definitions:

According to Henry Fayol, “Staff is a group of men who have the strength, knowledge and time which the
line manager may lack”.

According to Allen, “Line refers to those positions and elements of organisation, which have the
responsibility and authority and are accountable for the accomplishment of primary objectives. Staff
elements are those which have responsibility and authority for providing advice and service to the line in the
attainment of objectives.”

Meaning:

In a line and staff organization structure, both the line managers and the staff have their own important
roles to play. In this structure, the authority flows from the top down.

The line manager is the one in charge. He is the one with the authority to make all the important decisions
of the company. And he is also responsible for these decisions and the performance of his employees.

The staff is the experts in this scenario. They have the knowledge and expertise of their field and are there
to assist their line managers. They have an advisory role in the firm.

But since they do not have authority over the line managers, the line managers can choose to take their
advice or ignore it. So the main objective of the staff is to come up with solutions to problems. They help the
line manager in attaining the company’s objectives and goals.

Merits of Line and Staff Organization

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  One of the main advantages is that the line executives receive expert advice from the staff. The staff
has expertise on the matter, and the line executives can greatly benefit from this advice. So they can
leave the planning and research to the staff and concentrate on the execution of the plan.
 There is the benefit of specialization in this system. The whole organization is planned in such a way
that the work is divided according to specialization.
 This concentration of authority also helps with better and more efficient decision making. They have
the tools to take a more balanced decision. This results in better coordination in the organization.
 There is also a lot of scope for growth of employees in a line and staff organization. It gives each
individual the freedom to grow and flourish in their own specialty.

Demerits of Line and Staff Organization

 There is a dual authority in a line and staff organization. So this may confuse the employees when it
comes to following instructions and reporting. It can create certain communication issues in the firm.
 There are sometimes conflicts between the line executives and the staff managers. They could have
a difference of opinions. This can prevent the harmonious relations between the two and cause an
imbalance in the company.
 Sometimes the expert advice given by the staff is misunderstood or misinterpreted by the line
executives.
 The staff and line system are costlier than a simple line or functional organization. The staffing
specialist has a high remuneration cost generally.

Comparison Chart

Basis for Line Organization Line and Staff Organization

Comparison
Meaning The organization in which the authority The organization structure, in which
and responsibility moves downward, and specialist are added to the line managers to
accountability flows upward, is called line provide guidance and support, is called line
organization. and staff organization.
Authority Command Command and Advise
Discipline Strict Loose
Executives Line executives are generalist. Line executives are generalist and staff
executives are specialist.
Degree of Absolute centralization Partly centralized and partly decentralized
centralization
Appropriate for Small organization with less number of Large organization with a number of
employees. employees.

Line and Staff Conflicts:

Line and staff managers are supposed to work harmoniously to achieve the organizational goals. But their
relationship is one of the major sources of conflict in most organizations. Since such conflicts lead to loss of
time and organizational effectiveness, it is always desirable to identify the sources of such conflicts and
initiate necessary action to overcome them.

Theoretically, it is impossible to differentiate between line and staff functions and because of this, conflicts
cannot be avoided. However, line and staff conflicts can be grouped into three categories—conflicts due to
line viewpoint, conflicts due to staff viewpoint, and conflicts due to the very nature of line and staff relation-
ships.

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Conflicts due to Line Viewpoint:

1. Lack of accountability:

Line managers generally perceive that staff managers are not accountable for their actions. Such lack of
accountability on the part of staff leads to ignoring of the overall organizational objectives. Staff takes the
credit for achieving the results, which is actually achieved by the line people. But if anything goes wrong,
they blame the line. Such perception among the line managers is one of the most important sources of line
and staff conflict.

2. Encroachment on line authority:

Line managers often allege that staff managers encroach upon their authority by giving recommendations
on matters that come within their purview. Such encroachments influence the working of their departments
and often lead to hostility, resentment, and reluctance to accept staff recommendations.

3. Dilution of authority:

Staff managers often dilute the authority and be- little the responsibilities of line managers. Line managers
fear that their responsibilities may be reduced and they even suffer from a feeling of insecurity.

4. Theoretical basis:

Staff being specialists, they generally think within the ambit of their specialization. They fail to relate their
suggestions to the actual reality and are unable to understand the actual dimensions of the problems. This
is because staff is cut-off” from the day-to-day operations. This results in impractical suggestions, making it
difficult to achieve organizational goals.

Conflicts due to Staff Viewpoint:

1. Lack of proper use of staff:

Staff managers allege that line managers often take decisions without any input from them. Line just informs
staff after taking decisions. This makes staff managers feel that line do not need staff. But even in such cases
(where line takes its own decisions without consulting staff), if anything goes wrong, staff is made respon-
sible.

2. Resistance to new ideas:

Line managers resist new ideas as they feel implementing new ideas means something is wrong with the
present way of working. Such rigidity of line managers dissuades staff from implementing new ideas in the
organization and adds to their frustration.

3. Lack of proper authority:

Staff often alleges that despite having the best solutions to the problems being faced in their areas of
specialization, they fail to contribute to organizational goals. This is because the staff lack the authority to
implement the solutions and are unable to persuade the line managers (who have the authority) to
implement them.

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To overcome the line and staff conflict, it is necessary for an organization to follow certain approaches:

1. Clarity in relationships:

Duties and responsibilities of both line and staff should be clearly laid down. Relationships of staff with the
line and their scope of authority need to be clearly defined. Similarly, line managers should also be made
responsible for decision making and they should have corresponding authority for the same. Line should
enjoy the freedom to modify, accept, or reject the recommendations or advice of the staff.

2. Proper use of staff:

Line managers must know how to maximize organizational efficacy by optimizing the expertise of staff
managers. They need to be trained on the same. Similarly, staff managers should also help the line to
understand how they can improve their activities.

3. Completed staff work:

Completed staff work denotes careful study of the problem, identifying possible alternatives for the
problem, and providing recommendations based on the compiled facts. This will result in more staff work
and pragmatic suggestions.

4. Holding staff accountable for results:

Once staff becomes accountable, they would be cautious about their recommendations. Line also would
have confidence on staff recommendations, as staff is accountable for the results.

DELEGATION

Definitions:

Allen:

The entrustment of a part or responsibility and authority to another and the creation of accountability for
performance.”

O.S. Hiner:

“Delegation takes place when one person gives another the right to perform work on his behalf and in his
name, and the second person accepts a corresponding duty or obligation to do what is required of him.”

Douglas C. Basil:

“Delegation refers to a manager’s ability to share his burden with others. It consists of granting authority or
the right to decision making in certain defined areas and charging subordinates with responsibility for
carrying through an assigned task.”

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Characteristics of Delegation:

1. Delegation takes place when a manager grants some of his powers to subordinates.

2. Delegation occurs only when the person delegating the authority himself has that authority i.e. a manager
must possess what he wants to delegate.

3. Only a part of authority is delegated to subordinates.

4. A manager delegating authority can reduce, enhance or take it back. He exercises full control over the
activities of the subordinates even after delegation.

5. It is only the authority which is delegated and not the responsibility. A manager cannot abdicate
responsibility by delegating authority to subordinates.

Elements of Delegation:

1. Assignment of Responsibility:

The first step in delegation is the assignment of work or duty to the subordinate i.e. delegation of authority.
The superior asks his subordinate to perform a particular task in a given period of time. It is the description
of the role assigned to the subordinate. Duties in terms of functions or tasks to be performed constitute the
basis of delegation process.

2. Grant of Authority:

The grant of authority is the second element of delegation. The delegator grants authority to the
subordinates so that the assigned task is accomplished. The delegation of responsibility with authority is
meaningless. The subordinate can only accomplish the work when he has the authority required for
completing that task.

Authority is derived from responsibility. It is the power, to order or command, delegated from superior, to
enable the subordinate to discharge his responsibility. The superior may transfer it to enable the subordinate
to complete his assigned work properly. There should be a balance between authority and responsibility.
The superior should delegate sufficient authority to do the assigned work.

3. Creation of Accountability:

Accountability is the obligation of a subordinate to perform the duties assigned to him. The delegation
creates an obligation on the subordinate to accomplish the task assigned to him by the superior. When a
work is assigned and authority is delegated then the accountability is the by-product of this process.

The authority is transferred so that a particular work is completed as desired. This means that delegator has
to ensure the completion of assigned work. Authority flows downward whereas accountability flows upward.
The downward flow of authority and upward flow of accountability must have parity at each position of
management hierarchy. The subordinate should be made accountable to only one superior. Single
accountability improves work and discipline.

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Types of Delegation:

General or Specific Delegation:

When authority is given to perform general managerial functions like planning, organizing, directing etc., the
subordinate managers perform these functions and enjoy the authority required to carry out these
responsibilities. The chief executive exercises overall control and guides the subordinates from time to time.

The specific delegation may relate to a particular function or an assigned task. The authority delegated to
the production manager for carrying out this function will be a specific delegation. Various departmental
managers get specific authority to undertake their departmental duties.

Formal or Informal Delegation:

Formal delegation of authority is the part of organizational structure. Whenever a task is assigned to a person
then the required authority is also given to him. This type of delegation is part of the normal functioning of
the organization. Every person is automatically given authority as per his duties. When production manager
gets powers to increase production then it is a formal delegation of authority. Informal delegation does not
arise due to position but according to circumstances. A person may undertake a particular task not because
he has been assigned it but it is necessary to do his normal work.

Lateral Delegation:

When a person is delegated an authority to accomplish a task, he may need the assistance of a number of
persons. It may take time to formally get assistance from these persons. He may indirectly contact the
persons to get their help for taking up the work by cutting short time of formal delegation. When the
authority is delegated informally it is called lateral delegation.

Reserved Authority and Delegated Authority:

A delegator may not like to delegate every authority to the subordinates. The authority which he keeps with
him is called reserved authority and the authority which is assigned to the subordinates is delegated
authority.

Pre-Requisites for Delegation:

Every superior tries to retain as much authority as possible. The load of work or circumstances may compel
delegation downwards. If the authority is not willingly delegated then it will not bring desired results. It is
important that appropriate authority should go downwards so that work is undertaken smoothly and
efficiently. The process of delegation will be complete only if following prerequisites are fulfilled.

Willingness to Delegate:

The first prerequisite to delegation is the willingness of the superior to part with his authority. Unless the
superior is psychologically prepared to leave his authority, delegation will not be effective. If a superior is
forced to delegate authority downward without his sweet will, he will try to devise methods to interfere with
the subordinate’s working. He may over shadow the subordinate to such an extent that every decision is
implemented with the approval of the boss or performance may pass through him with his close scrutiny. It
will be better not to delegate authority unless the superior is mentally prepared to do so.

Isha Joshi
Climate of Trust and Confidence:

There should be a climate of trust and confidence among superiors and subordinates. The subordinates
should be given enough opportunities or real job situations where they use their talent and experience. In
case they make some mistakes then superiors should guide and correct them. The superiors should trust
their subordinates and should not take them as their competitors. The climate of trust and confidence will
help the subordinates to learn and grow and this will help the process of delegation.

Faith in Subordinates:

Sometimes the superiors do not delegate authority with the fear that subordinates will not be able to handle
the job independently. They are not confident of the qualities of subordinates and do not want to take risks.
The superior may be over conscious of his skill and competence with the result that he is hesitant to delegate
authority. The superiors should avoid this type of thinking and attitude. They should have faith in their
subordinates and should rather help them in learning the job properly. After all the superiors also learnt
many things from their superiors and present subordinates are also to take up higher responsibilities. The
climate of faith will help the subordinates to learn the things faster and take up more responsibilities.

Fear of Supervisors:

There is often a fear among superiors that their subordinates may not over take them, once they are given
higher responsibility. This is a case of inferiority complex. The superiors may give many logics for delegating
authority but this fear is one of the important causes. The superiors should avoid this type of thinking and
have positive attitude towards subordinates. The subordinates should be encouraged to take up more
responsibilities and they will have more respect for the superiors and their ability have faith in their
subordinates and should rather help them in learning the Job properly. After all the superiors also learnt
many things from their superiors and present subordinates are also to take up higher responsibilities. The
climate of faith will help the subordinates to learn the things faster and take up more responsibilities.

Delegation and Decentralization

Basis Delegation Decentralization

Managers delegate some of their

Right to take decisions is shared by top
Meaning function and authority to their
management and other level of management.
subordinates.

Scope of delegation is limited as

Scope is wide as the decision making is shared
Scope superior delegates the powers to the
by the subordinates also.
subordinates on individual bases.

Responsibility remains of the Responsibility is also delegated to

Responsibility
managers and cannot be delegated subordinates.

Freedom is not given to the

Freedom to work can be maintained by
Freedom of subordinates as they have to work as
subordinates as they are free to take decision
Work per the instructions of their
and to implement it.
superiors.

Isha Joshi
 Nature It is a routine function It is an important decision of an enterprise.

Delegation is important in all Decentralization becomes more important in

Need on concerns whether big or small. No large concerns and it depends upon the
purpose enterprises can work without decision made by the enterprise, it is not
delegation. compulsory.

Grant of The authority is granted by one It is a systematic act which takes place at all
Authority individual to another. levels and at all functions in a concern.

Grant of Authority with responsibility is delegated to

Responsibility cannot be delegated
Responsibility subordinates.

Degree of delegation varies from Decentralization is total by nature. It spreads

Degree concern to concern and department throughout the organization i.e. at all levels and
to department. all functions

Delegation is a process which It is an outcome which explains relationship

Process explains superior subordinates between top management and all other
relationship departments.

Delegation is essential of all kinds of Decentralization is a decisions function by

Essentiality
concerns nature.

Delegation is essential for creating Decentralization is an optional policy at the

Significance
the organization discretion of top management.

It is considered as a general policy of top

Delegated authority can be taken
Withdrawal management and is applicable to all
back.
departments.

Freedom of Very little freedom to the

Considerable freedom
Action subordinates

Decentralization can be called as extension of delegation. When delegation of authority is done to the fullest
possible extent, it gives use to decentralization.

Isha Joshi