5.1 MEANING AND DEFINITION OF AUTHORITY The term ‘authority’ implies the right of an individual to take decisions and to command bis subordi . It is the sum of rights and powers entrusted to a person to enable him to perform the assis . Henri Fayol has defined it as "the right to give orders and the power to exag obedience." Adcording to Koontz and O'Donnell, "Authority is the legal or rightful power, 2 right to command\or to act. Applied to the managerial job, authority is the power to command others, to act or not.to act in a manner deemed by the possessor of the authority to further enterprise or departmental purpose." These definitions reveal the following features of authority: (a) It is the legitimate right of an individual. (b) It is the right to command.and control others. (c) It is bound by certain limits. In.addition to the limits implied in the position occupied by an individual, there are legal, social and biological limits to his authority. (d) It is used to achieve organisational objectives. It is needed to perform the assigned task. (ce) Authority determines the superior-subordinate relationship and helps to maintain order in the organisation. \ (f) Authority is the key to the manager's job. A person cannot be a some authority. In order to get things done through‘others, an in manager without having dividual must have (es)Fig. 5.1 : Sources of Authority There are three sources from which a manager can derive his authority. 1. Formal Authority Theory : According to this theory, authority originates at the top of an organisation and flows downward through the process of delegation. The ultimate source of authority in a company lies with the shareholders due to the institution of private property. The shareholders entrust the management of the company to the Board of Directors and delegate most of their authority to it. The Board of Directors delegates authority to the Chief Executive who in turn delegates it to departmental heads, and so on. Every manager in the organisation has only that much authority which has been delegated to him by his superior. He derives his authority from his formal position in the organisation. Therefore, the authority is known as formal authority. Such authority may be called traditional and legitimate. It is legal and rational. Acceptance Authority Theory : Formal authority has no significance unless it is accepted by the subordinates. The degree of effective authority possessed by a manager Veo). it. The right to willingness of Se eerie ae cen cmt depends upon whether rebordinates may decide to endure the punishment or qua. secure acceptance. But the sul es tC ara organisation rather than accept the ¢ accruing to him from = will accept an exercise of authority if the advantages cee ACCEPINE Dh, the disadvantages acerung to him from not accepting exceed the advantages acering to him from not accepting plus the disadvantages accruing to him from accepting. 25 conversely, he will not accept an exercise of authority if the latter factors exceed i, former.” Thus, the positive and negative consequences determine the acceptability fan order. Some orders may be fully acceptable, others partially acceptable and sin others fully unacceptable. Barnard suggests that a subordinate will accept an order if jy understands it well, if he believes it is consistent with the organisational objectives ang compatible with his personal interests and if he is able both mentally and physically 4, comply with it. The acceptance theory of authority maintains that a manager has authority if be gey obedience from the subordinates, But a manager is not able to know whether his ore. will be obeyed by his subordinates unless the order is carried out or disobeyed by them. Acceptance authority flows upwards from lower to upper levels . Competence Authority Theory : According to this theory, an individual derives author from his personal competence and charisma. According to Urwick, formal authority conferred by organisation, technical authority is implicit in special knowledge or skit whereas personal authority is conferred by superiority or popularity. Thus, a person may get his order accepted not because he is having any formal authority, but because of his personal qualities. These qualities include technical competence and social prestige in the organisation. For example if a person is expert in a particular field of knowledge other people seek his guidance and follow his advice as if that were an order. Similarly, in other social groups people with charisma have the same authority. All the three theories have their utility. Formal authority is basic to managerial job Acceptance authority and competence authority are the products of leadership. Thus. authority is generated from all sources. 5.3 MEANING AND DEFINITION OF RESPONSIBILITY Responsibility means the obligation to perform the assigned tasks or duties to the best of one's ability. It also includes the obligation to use the authority and resources in the manner 2 desired by the superior. According to Koontz and O'Donnell, responsibility is the obligation of 4@ subordinate to whom a duty has been assigned, to perform the duty. ‘The main features of responsibility are as follows: (i) It is the obligation of an individual. (ii) It is the obligation to perform the assigned duties or tasks. (iii) It arises from the authority given to an individual. (iv) It always flows from lower levels to higher levels. Responsibility is always in relation to human beings as non-living things cannot be assigned # duty. Responsibility is of a person, not a machine. It always flows upwards from a subordinate {0 a superior. Responsibility arises only when a duty has been assigned by a superior to # subordinate. The essence of responsibility is the obligation to complete the job or to meet cert minimum level of performance. Responsibility may be continuing obligation or confined to the performance of a single function “It is a personal obligation and itis absolute, i.e, it can never be delegated. Responsibility is th obligation which a subordinate owes to his superior and he cannot reduce it by delegating his is measured by the .wa form the assi; ee eens to es uy: Responsibily should be unitary which means an ht, sol Perior at a given time for a certain duty or work. ¢ piFFERENCE BETWEEN AUTHORITY AND RESPONSIBILITY ty and responsibility are closely interrelated but they differ from each other in the 0 pects jovine et : soe weaning ¢ Se me ieee ight of the superior to command his subordinates awhile responsibility ts gation of a subordinate to perform the duties assigned to rim by his superior. issigne 4, Origin : Authority arises either from a formal contract or from legal provisions, It is tached to a particular position, and tends, therefore, to be impersonalised, On the other and, responsibility arises from a superior-subordinate relationship. When a subordinate ies authority from his superior, he becomes responsible to the latter. Responsibility js attached to a particular person and it is, therefore, personalised ‘te flow of authority and responsibility is shown in Fig, 5.2 Fig. 5.2 : Flow of Authority and Responsibility 3. Delegation : Authority can be delegated by a superior to his subordinate, But responsibility is absolute and can never be delegated. When a superior delegates his authority to a subordinate, he continues to be responsible to his own superior. 4, Direction or flow : Authority always flows downwards, i¢., from a superior to his subordinate, But the flow of responsibility is upward. A subordinate is responsible for his acts to his superior. § Continuity : Authority usually has a longer life than responsibility. Responsibility generally comes to an end after the assigned duty is performed. 6 Termination : Authority may be terminated by a notice. Responsibility cannot, however, be so terminated. Despite the above differences, authority and responsibility are closely interrelated. They ae the two wheels of the management cycle and management cannot be successful luless both move together. 5. 8 MEANING AND DEFINITION OF ACCOUNTABILITY saintly means personal answerability for the final outcome. When an individual gets athe his superior, he becomes obliged to render an account of how he has used his tema Ascording to McFarland, "Accountability isthe obligation of an individual to repor ' 10 his superior about the work he has done to discharge the responsibility." araa a The basic features of accountability are as follows, a) i ino obligation to carry out responsibility and exercise authority in fon to carry out responsibil (a) Accountabitity is the oblig tablished standards of performance, of established standards of per a b) tent of accountability depends upon the extent of authority and responsibii untability depends upon tl (b) The extent of account ot be held answerable for the tasks not axsigned to him, cova always move upward from a subordinate to a superior ©) Accountability always mo (4) accomanty aot be deeted A pero I accountable only for the work asin (a) Accountability cane to him, The manager delegating authority remains ben work as well at the work of his subordinates (©) Accountability requires a formal report by a subordinate to his superior. (® Accountability is different from responsibility, Responsibility is the work to be done while accountability is the obligation to do it satisfactorily, {g) Accountability is necessary because a superior must know if he ‘was justified in delegation of authority or not, Delegation will not serve its purpose if the subordinate is not made answerable to the superior, (8) Just as responsibility is a derivative of authority, accountability is a derivative of responsibility Thus, authority is delegated, responsibility is assumed and accountability is imposed Responsibility arises out of authority and accountability arises out of responsibility. Authority Rows downwards whereas responsibility and accountability flow upwards Foe example, when the managing director authorises the departmental heads to manage their respective departments, the departmental managers become responsible to the managing director fre due performance of assigned jobs. They are also accountable for the results of their departments. 5.6 INTER-RELATIONSHIP BETWEEN AUTHORITY, RESPONSIBILITY AND ACCOUNTABILITY There is a close interrelationship between authority, responsibility and accountability Responsibility is a derivative of authority, Whenever authority is delegated, the subordinate becomes responsible to the superior. For example, a factory manager authorises the factory Table 5.2 : Authority, Responsibility and Accountability at a Glance a Authority | Responsipiiny Accountability — Ri 1-Meaning | Right to command | Obligation wo perform | Answerability for outcome the assigned task of the assigned task 2. Delegation | Can be delegated | Cannot be fully delegated | Cannot be delegated at all 3: Origin | Arises from formal | Arises from delegated | Arises from responsibility | position authority . 4. Flow Always flows Always flows upward | Always flows upward downward G2MEANING AND DEFINITION OF DELEGATION OF AUTHORITY 7 5.7 ion of authority takes place when a manager assigns a part of his work to others and aceon authority 0 perform the as i si ee ates responsible for signed tasks. The manager who delegates authority cs i egation trvokves adding al Lomesname of the assigned tasks, Thus, the entrusting auth i erst Sune populr deikion of dleguton sev ghrenieiews aaa initions of Delegation Delegation of authority merely means granting 0 + Dl ed lms ing of authority to subornats operat «Authority #8 delegated when enterprise discretion is vested in a subordinate by a superior. The aie oe of delegation involves the determination of results expected, assignment of tasks, transfer of ‘authority for accomplishment of these tasks, and exaction of responsibility for their accomplishment — Koontz and O'Donnell «Delegation is that part of the organising process by which an executive makes i possible for others 10 share the work of carrying out the company's purpose. 1 also includes the wo assigning duties, responsibilities and authority to those who he expects will ‘aid him in doing the work — D.E. McFarland iy 10 get results through others. It is the dynamics of management. viding the work assigned to him so that he of his unique organisational placement, can what remains. — Louis A. Allen ives another the right to perform work on his + Delegation takes place when one person gi fehalf and in his name qnd the second person accepts a corresponding duty or obligation — DS. Hiner to do what is required of him. . «¢ Delegation is the abilit ih is the process a manager follows in dis performs that part which only he, because perform and so that he can effectively get others 10 help him with ‘hes definitions reveal the following important characteristics of delegation of authority. (a) Delegation involves sharing of work and authority with others. A manager does not pass on his entire work and authority 10 his subordinates If he does so, his managerial positon becomes empty with no work and no authority He always retains some authority roeth ne exercises himsel. He retains the authority (0 tke important decisions and the tuthority to supervise and control the activities of his subordinates. (b) Delegation of authority is based on the elementary principle of division of work. No tnanager can perform the entre work assigned 10 him. He gets part of his work carried out by his subordinates. Infact, getting things done by subordinates is an essential aspect of a manager's job. (©) Delegation is always done within certain limit defines the limits within which subordinates can exercise their authority. (6) Delegation never means abdication of responsibility: ‘After delegating authority, a ‘manager remains responsible for the work which he has assigned to the subordinates. (0 Delegation docs not imply reduction in the authority of he superior. He can, at any time, take back or reduce the delegated authority ensure that the subordinates are using thei authority in its, While delegating authority, @ manager (A superior exercises control to { ‘he proper manner. ; ©) A perons can delegate authority only whep he himself has the authority i (h) Delegation does not mean avoiding decisions. A mane delegates authority for routine matters so that he can concentrate on more important ‘matters. Us rae(0 Delegation of authority is systematic process rather than an arbitrary or ad hoc exercise, A Wierarchy of managerial positions is ereated when authority is delegated systematically from bigher to lower levels : 4) Delegation of authority is an essential part of organising and managing. A manager ‘Manages by guiding and coordinating the activities of his subordinates. This presupposes delegation of tasks and authority. Managers have no alternative but to delegate. (k) Delegation involves downward transfer of authority from a superior to a subordinate, 5.6 IMPORTANCE OF DELEGATION OF AUTHORITY ‘When the size of an organisation expands, a manager alone cannot do all the work himself. He hhas to share bis work and authority with others, An executive can extend his personal capacity through delegation of authority. Delegation is the means by which a manager can get results through others. Failure to delegate reduces the efficiency of the individual and blocks the evelopment of bis juniors. How one delegates determines how one manages. Just as authority is the key to the manager's job, delegation is the key to organisation.results in better utilisation of human and material resources. It improves the competitive strength of the organisation. Quick Decisions : When authority is delegated, lower level employees can take decisions quickly without consulting senior executives. Subordinates are better in touch with local conditions and can take more practicable decisions within the policy framework laid down by top management. _ Motivation of Subordinate : Delegation provides a feeling of status and recognition to subordinates. Their independence and job satisfaction increases due to the authority they enjoy and the rewards they get for good performance. Responsibility for work improves self-esteem and confidence of employees. Thus, delegation promotes a sense of initiative and responsibility among employees. It inspires employees to make full use of their skills. 6. Executive Development : Delegation gives an opportunity to employees to learn decision-making and leadership skills by exercising authority. It helps to improve the quality of personnel at lower levels because they are required to handle situations and solve managerial problems. They acquire competence and experience and can take up higher responsiblities in course of time. In this way, delegation of authority is a means of developing future managers. 7. Growth and Diversification : Delegation of authority at all levels facilitates expansion and growth of the organisation. As the quality of managerial talent at all levels improves, the organisation can face the future challenges better. It can grow and expand to a bigger size. It can also undertake new types of business activities.5.1 PRINCIPLES OF DELEGATION OF AUTHORITY Delegation of authority cannot be effective unless cert are followed in practice. While delegating authority, observe the following principles. principles @ manager should 1, Functional Definition : Before delegating authority a manager should define clearly the functions to be performed by subordinates. The objectives of each jobs, the activities involved in it and its relationship with other jobs should be defined Functional Definition Delegation by Results Expected precisely. 2. Delegation by Results Expected : Authority should be delegated - only after the results to be achieved by the subordinates are Parity peter Authority and decided. This will enable them to know by what standards their ae performance will be judged. 3. Parity between Authority and Responsibility : There must be a proper balance between authority and responsibility of @ subordinate. Responsibility without authority will make 4 subordinate ineffective as he cannot discharge his duties. Similarly, authority without responsibility will make the subordinate irresponsible. Therefore, authority and responsibility should be co-extensive. ; ; 4. Absoluteness of Responsibility: Responsibility cannot be WelkDefined Limits of Authority delegated. No manager can avoid his responsibility by delegating his authority to subordinates. After delegating authority he : remains accountable for the activities of his subordinates, Authority Level Principle Similarly, the subordinates remain accountable to their superior for the performance of assigned duties. Fig. 5.5: Delegation of authority Absoluteness of Responsibility Unity of Command * Unity of Command : At one time, a subordinate should receive command and be aom accountable to only one superior, If a person reports to two superiors for the same jo, confusion and conflict will arise. He may receive conflicting orders and his loyalty yj be divided. Therefore, dual subordination should be avoided. 6. Well-Defined Limits of Authority : The limit of authority of each subordinate should be clearly defined. This will avoid overlapping of authority and will allow the subordinate to exercise initiative. He will refer only those matters to the superior which are outside the limits of his authority. 7. Authority Level Principle : This principle states that the decision-making shoul remain at the level at which authority is delegated. Generally the managers delegates the authority, but have the temptation to make decisions. The subordinates should be allowed to take decisions regarding the authority delegated. The delegation of authority will be effective only when it is clear and understandable to subordinates. Only those decisions which cannot be made at a given level are to be referred upward. In the words of Koontz and O'Donnell, the authority level principle would be "maintenance of intended delegation requires that decisions within the authority competence of individuals be made by them and not be referred upward in the organisational structure.” 5.12 MEANING OF CENTRALISATION AND DECENTRALISATION OF AUTHORITY The concepts of centralisation and decentralisation are related to the concept of delegation of authority. Centralisation and decentralisation represent the pattern of distribution of authority among managers at different levels. Centralisation Centralisation of authority refers to systematic and consistent retention or concentration of authority for decision making at top or higher levels of management. An organisation is said to be centralised when top management retains absolute authority for making almost all decisions on the functioning of the organisation. In a centralised organisation, all decisions on specific ‘matters are taken by one or a few managers at the top level. In such an organisation, very little authority is delegated to managers at middle and lower levels. They have to depend on the top management for instruction and guidance in their day-to-day activities. They are expected to show no initiative and freedom in their day-to-day activities, The top management exercise strict supervision and control over all the activities in the organisation. For example, let us take the case of a medium size stationery manufacturing firm. The owner along with his two sons manages the whole business. He has established separate departments for production, purchasing, stores, marketing and accounts. Each department is under the charge of a qualified manager. However, all decisions on purchase of materials, production of ball pens and on their marketing are made by the owner and his sons. They also supervise the activities of various departments, The managers of various departments are required to carry out the decisions and instructions. This is how a centralised organisation works. Decentralisation Decentralisation of authority means systematic dispersal of authority in all departments and at all levels of management for taking decisions and actions appropriate at the respective levels. ‘According to Louis Allen, decentralisation is : "The systematic effort to delegate to the lowest levels all authority, except that which can be exercised at central points.” An organisation is said to be decentralised when managers at middle and lower levels are given the authority to take decisions and actions on matters relating to their respective areas of work. The top management ‘etains the authority for taking major decisions and formulating policies for the organisation eva whole. Top management also retains authority for overall coordination and contol ofthe saya sa hahaa lionel anak = tras BBeean SSeeave a mere authori I levels. oteconhy involving Selective dispersal of author n° Muenity 10 lower festment, marketing methods are taken by the sive heads of departments. The marketing manager, for instance, authorised to decide the ope prices of products, channels of distribution, al managers are required to keep in view este cisons 00 matters within their authority ston and decentralisation are opposite terms. They should not be confused with location ti work An organisation having branches in different cities may be centralised. Similarly, 3 may be decentralised even though all its offices are located in one building. te aa and decentralisation are relative terms. No organisation can be completely centalised or completely decentralised. They exist together and there is need for a balance reween the two. For example, even in a decentralised organisation the top management retains te athorty for overall policy decisions to ensure coordination and control. The degree of cesalisation and decentralisation differs from one organisation to another. According to Henri gol "Everything which goes to increase the subordinate’s role is decentralisation; everything sich goes to decrease it is centralisation,” 513 DISTINCTION BETWEEN DELEGATION AND DECENTRALISATION The min points of difference between delegation and decentralisation are given below. advertising with his authority. However, the overall policies of the company while This is how a decentralised organisation 1, Nature : Delegation is the process of devolution of authority while decentralisation is the end result which is achieved when authority is delegated at different levels. Delegation is the cause, decentralisation is the result. Delegation can take place without decentralisation ‘but decentralisation is not possible without delegation of authority. 2. Scope : Delegation of authority is confined to a manager and his immediate subordinates in a work unit. It refers to granting authority by one individual to another. It takes Place when a manager shares his authority with his subordinates and empowers them to ‘decide and act on his behalf in respect of the tasks assigned to them. On the other hand, decentralisation involves ‘systematic dispersal of authority at all levels and in all functions of the organisation. It is an extension of delegation to the lowest level. Delegation creates 4 relationship between two individuals while decentralisation creates a relationship ‘een top management and the rest of the organisation. Thus, decentralisation is wider | scope and consequence than delegation. 3 Completion : Delegation can take place from a manager to his subordinate and be 4 complete process. But decentralisation is completed only when the fullest possible Aelegation is made to the lowest level. “ Siguticance : Delegation is a means of getting things done through others. It is 4n essential technique because a manager cannot do everything himself. But Uralisation is a philosophy of management. The top management may or may ‘(01 adopt it. An organisation cannot function without delegation of authority but it <2 function without decentralisation. Therefore, delegation is an essential feature of isation and management. On other hand, decentralisation is a matter of choice and of the top management. It is adopted to provide greater freedom of action to ‘nutagersat various levels so that they may tackle problems quickly. It is also necessary By With competitive, technological and other complex changes in the environment. ‘Mtralisation is not an essential feature of organising and managing. Many "sations are operated with little decentralisation of authority. sytau oD 5. Freedom of Action + larly ex ‘farenalised organisation, 10Wer 1 does not exercise close After delegating authority to his subordinates, a manage, M cemupervision and control on their behaviour and performance. But iy level managers enjoy greater freedom of action, Toy supervision and control on them. They are fire 1 1 hroad guidelines and targets laid down by the top management, work within Comparison between Delegation and Decentratisation i Decentralisation Basis Delegation LNature | Delegation is a compulsory act as no. | Decentralisation is an optional policy ‘manager can perform all tasks on his own — decision at the discretion of the top management | 2. Purpose | To reduce the burden of the manager | To increase the role and autonomy of lower level managers 3. Scope Its scope is narrow as it is confined _| Its scope is wide as it involves to a superior and his immediate extension of delegation to the lowest subordinate level of management | 4. Status ~ It is a process of sharing tasks and It is the result of the policy decision authority taken by the top management 5. Freedom of | There is less freedom to take There is more freedom of action due to action decisions due to more control by the | less control by the top management superior