Delegation Centralization & Decentralization

By Rokov Zhasa NU/MN-22/11

17th October, 2011

Knowledge Objectives
Delegation Centralization Decentralization Comparison
i. Delegation vs. Decentralization
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MGT 101 Management Process and Principles

DELEGATION
Part I
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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

Nature of Delegation
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
MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

CENTRALISATION
Part II
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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

ADVANTAGES
Provides personal leadership Promotes integration and co-ordination Promotes uniform action To handle emergent situation:
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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

DECENTRALIZATION
Part III
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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

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 Firms 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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MGT 101 Management Process and Principles

ADVANTAGES
Effective communication Reduces Red-tapism Fast Decision-Making Enhances Employee Job satisfaction Executive Development Competitive advantage
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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

Attention!!
Centralize or Decentralize?
This question that has challenged generations of managers

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MGT 101 Management Process and Principles

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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MGT 101 Management Process and Principles

COMPARISON
Part IV
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MGT 101 Management Process and Principles

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

Delegation vs. Decentralization

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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.

Conclusion
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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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MGT 101 Management Process and Principles

THANK YOU
And I am open to queries
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MGT 101 Management Process and Principles