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What is Organization?

An organization is defined as a cooperative social system involving the coordinated

efforts of two or more people pursuing a shared purpose. In other words, when people
gather and formally agree to combine their efforts for a common purpose, an organization
is the result.

An organization is a group of two or more people that exists and operates to achieve
clearly stated, commonly held objectives. (Straub and Attner, Introduction to
Business, Kent publishing, 2004.p. 9109.)

Organization is a group of people working together in a structured and coordinated

fashion to achieve a set of goals. (Ricky W. Griffin, Management 7th Edition, Houghton
Mifflin Book Company, Boston, USA)

Organization is a systematic arrangement of people to accomplish some specific purpose.

(Stephen P. Robbins and Mary Coulter, Management, 5th Edition, Prentice Hall of
India Ltd)

Organization implies a formalized intentional structure of roles or positions. (Heinz

Weihrich and Harold Koontz, Management: A Global Perspective, 11th Edition, Tata
McGraw-Hill Book Company, India)

From the above definitions it is clear to us that people create organizations to help
achieved some pre -specific objectives or purposes.

For an organizational role to exist and be meaningful to people, it must incorporate, a)

verifiable objectives, b) a clear idea of major duties or activities involved and c) an
understood area of discretion or authority so that the person filling the roles knows what
he or she can do to accomplish goals.

It is in this sense we think organizing as a) the identification and classification of

required activities, b) the grouping of activities to attain objectives, c) the assignment of
each grouping to a manager with authority (delegation) necessary to supervise it, and d)
the provision for coordination horizontally and vertically in the organization structure.
Thus an organization implies a formalized intentional structure of roles or positions.


According to Edgar Schein, prominent psychologist, all organizations share four

characteristics: 1) coordination of effort, 2) common goal or purpose, 3) division of labor,
and 4) hierarchy of authority.

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Coordination of effort:
It is normally argued that two heads are sometimes better than one, Individuals who join
together and coordinate their mental and ‘or physical efforts can accomplish great and
exciting things. Building the great pyramid, The Tajmmahal, sending shuttle to moon –all
these achievements far exceeded the talents and abilities of any single individual.
Coordination of efforts multiplies individual contribution

Common Goal or Purpose:

Coordination of effort cannot take place unless those who have joined together to strive
for something of mutual interest.

Division of Labor:
By systematically dividing complex tasks into specialized jobs, an organization can use
its human resources efficiently. Division of labor permits each organization member to
become more proficient by repeatedly doing the same specialized task. The advantage of
division of labor is well known to all of us.

Hierarchy of Authority:
According to traditional organization theory, if anything is to be accomplished through
formal collective effort, someone should be given the authority to see that the intended
goals are carried out effectively and efficiently. Without a clear hierarchy of authority,
coordination of effort is difficult, if not impossible, to achieve. Accountability is also
enhanced by having people serve in what is often called, in military language, the chain
of command.

The Logic for Organizing:

Establishing enterprise objectives

Formulating supporting objective, policies and plans
Identifying and classifying the activities necessary to accomplish these
Grouping these activities in light of the human and material resources available
and the best way, under the circumstances, of using it
Delegating to the head of each group of the authority necessary to perform the
Tying the groups together horizontally and vertically, through authority
relationship and information flows.

Principles of Organizing:
In 1931, James D. Mooney and Alan C. Reiley authored Onward Industry, which was
revised in 1947 by Mooney and entitled The Principle of Organization (James D.
Mooney, The Principles of Organization ( New York: Harper & Row, 1947), and in this
book Mooney identified some principles of organization and these are as follows:

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• Coordination. The first principle of organization is coordination. Mooney

believed that coordination is the primary rationale for organizations; the reason
for organizing. Since organizations are natural outgrowths of specialization and
division of labor, their purpose must be to achieve coordinated performance of all
the jobs in the organization.
• Authority. The necessity for organization sets in motion other activities, which
in turn are guided by other principles. The first essential activity of authority is the
definition of each managerial job in terms of its duties and responsibilities. The
creation of managerial jobs resulted in the creation of a chain of command, or
hierarchy, in which each successive job up the chain has greater command in
organizations led Mooney to state that an underlying principles must be in effect-
the principle of authority.
• Leadership. The delegation of authority is guided by the principle of leadership,
which in Mooney’s terms is the personification of authority. Though the
delegation of authority, leaders confer authority on subordinates, and so on down
the chain.
• Specialization. Parallel to the process of delegating is the process of defining
tasks. The principle of specialization underlies this function. Regardless of the
type of organization, the necessity exists for people to do different jobs at
different times, as Fayol, Taylor, and other classical writers had observed.

The important principles of organization are: (Ivancevich & others, Fundamentals of

Management, 5th Edition, p.193)
• Division of labor-work should be divided according to the highest possible
degree consistent with economic efficiency.
• Unity of direction- jobs should be grouped according to function or process, and
jobs that are alike should be grouped in departments.
• Centralization of authority-accountability for the use of authority is retained at
the executive, or top management, level.
• Authority and responsibility-a job holder must have authority commensurate
with job responsibility.
• Unity of command- each job holder should report to one, and only one, superior.
Some principles of organizing have been considered in organizing large businesses,
medium-sized businesses and small businesses.

*Division of Labor:
A basic principle of organizing is that a job can be performed more efficiently is the
jobholder is allowed to specialize. This principle, called the division of labor, involves
dividing a major task into separate smaller tasks. For example the major task of
manufacturing in textile is divided into smaller tasks of weaving, finishing and needling.



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*Span of control:
Span of control is the number of subordinates reporting to a supervisor, or boss. The span
of control principle says there is a limit to the number of subordinates on superior should
supervise. The exact numbers that can be effectively managed by a supervisor depends on
certain factors.


*Scalar Principle:
The authority and responsibility should flow in a clear, unbroken line from the highest to
the lowest manager is called the scalar principle. Because managerial levels are arranged
in a hierarchy, the important of the scalar chain from top to bottom is obvious.

*Unity of Command:
The principle of unity of command states that no member of an organization should
report to more than one superior. Subordinates need to know from whom they receive the
authority to make decisions and do the job. Conflicting orders form different superiors
should be avoided; they cause confusion result in contradictory instructions, and create
frustration about which order to follow.


* Responsibility,


* Efficiency,

* Simplicity

* Flexibility,

* Balance,

* Unity of direction,

* Personal ability

* Downsizing: The procedure of keeping levels in a managerial hierarchy to a minimum

often means that downsizing or cutting out entire layers of managers in necessary.

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Authority and Power:

Managers in any organization both have authority and power to get things done
throughout the effort of others. Authority and power are frequently confused. Some
people think that authority and power as same. But management people know the
distinctions. Let us at first define two terminologies:

Authority generally is defined as the legally or organizationally sanctioned right to make

a decision without approval by a higher-ranking manager. (Ivancevich & others,
Fundamentals of Management, 5th Edition, p.170.)
Authority is a type of power that gives managers ability to act, exert influence, and make
decisions in carrying out responsibilities.

Responsibility is the obligation for managers to carry out assigned duties.

Authority is the power that has been legitimized by the organization.

Authority in an organization is the right in a position to exercise discretion in making

decisions affecting others.

Authority is a legitimate right that’s held because of a person’s position in an

organization. Authority goes with the job.

Authority is power that has been legitimated by the organization.

Responsibility is the obligation for mangers to carry out assigned duties.

Power is the ability to affect the behavior of others.

Power, a much broader concept than authority, is the ability of individuals or groups to
induce or influence the beliefs or actions of other persons or group.

Power refers to an individual’s capacity to influence decisions. Authority is one part of

the larger concept of power.

Distinction Between Authority and Power

Now we are trying to take attempt to make distinction between authority and power.
Authority Power
 It is the institutional right of a supervisor to  It is the ability of a person to influence another
command and compel his subordinates to person to perform an act
perform a certain act.  It rests in individuals. Hence even his position
 It rests in the position, with the change in has changed his power remains with him
position, the authority of the individual also
changes  The individual earns it with his own effort
 It is normally obtained by means of delegation  It is normally ill-defined, inconspicuous and
 It is normally well-defined, conspicuous infinite
(visible) and finite  It is what exists in fact. It is a de facto concept
 It is legitimated, It is a de jure concept  It serves as a basis of informal organization.

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 It serves as a basis of formal organization

Acceptance Theory of Authority:

The acceptance theory of authority was primarily developed by Mary Parker Follet and
later on developed by C.I. Barnard. The authority of a supervisor will only be accepted by
the subordinate when:
The message is understood,
The subordinate believes that it is consistent with the organization’s purpose,
It serves the subordinate’s interest,
The subordinate is able to comply.

Disobedience of a communication from a manager is treated as a denial of authority by

the subordinate.

Mechanistic and Organic Organization:

A mechanistic organization is most frequently found in stable environments. Free from
uncertainty, organizations structure their activities in rather predictable ways by means of
rules, specialized jobs, and centralized authority. Mechanistic organizations are also quite
similar in nature to bureaucracies. Mechanistic organization thus is defined as a rigid and
bureaucratic form of design most appropriate for stable environments.

An organic organization, on the other hand, is most often found in unstable and
unpredictable environments, in which constant change and uncertainty usually dictate
higher level of fluidity and flexibility. Thus an organic organization is a fluid and flexible
design most appropriate for unstable and unpredictable environments.
Following table will show the basic differences between Mechanistic and Organic

Mechanistic Organic
Tasks are highly fractionated and Tasks are more interdependent; emphasis is on
specialized; little regard is paid to clarifying relevance of tasks and organizational objectives.
relationship between tasks and organization
Tasks are continually adjusted and redefined
Tasks tend to remain rigidly defined unless through interaction of organization members.
altered formally by top management
Generalized roles are defined (members accept
Specific roles are defined (rights, general responsibility for tasks accomplishment
obligations, and technical methods are beyond individual role definition).
prescribed for each member).
Structure of control, authority, and
Structure of control, authority, and communication is a network; sanctions derive more
communication is hierarchical; sanctions derive from community of interest than from contractual
from employment contract between employee relationship.
and organization.

Information relevant to situation and Leader is not assumed to be omniscient;

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operations of the organization formally knowledge centers are identified throughout

assumed to rest with chief executive. organization.

Communication is primarily vertical Communication is both vertical and horizontal,

between supervisor and subordinate. depending on where needed information resides.

Communications primarily take the form Communications primarily take the from of
of instructions and decisions issued by information and advice.
superiors, and of information and requests for
decisions supplied by inferiors.

Insistence on loyalty to organization and Commitment to organization’s tasks and goals is

obedience is superior is present. more highly valued than loyalty or obedience.

Importance and prestige are attached to Importance and prestige are attached to
identification with organization and its affiliations and expertise in external environment.


In large companies, increased diversity leads to numerous product and project efforts of
major strategic significance. The result is a need for an organizational form that provides
skills and resources where and when they are most vital. This leads to the development of
a unique structure that meets the demands of these diversified companies.

During the 1960s, am unusual organization arrangement known as the matrix

organization was developed in the U.S. aerospace industry to help them cope with the
demands of efficiently and effectively managing a number of concurrent projects. It is
normally defined as the organization approach that uses specialists from different
functional departments to work on one or more projects that are led by a project manager.

The matrix design is a very popular organization structure. The basis of matrix
organization is that it is based on two overlapping departmentalization in the same
organization structure. The foundation of a matrix is a set of functional departments. A set
of product groups, or temporary departments, is then superimposed across the functional
departments. Employees in a matrix are simultaneously member of a functional
department such as (Marketing or engineering) and of a project team.

When a project structure is superimposed on a functional structure, the result is a matrix.

A matrix structure is the most complex of all designs because it depends upon both
vertical and horizontal flows of authority and communication (hence the term matrix).
((Fred R David, Strategic Management, 10th edn. p.253.)

This kind of organization occurs frequently in constructions (building a bridge), in

aerospace (designing and launching a weather satellite), in marketing (an advertising
campaign for a major new product), in the installation of an electronic data processing
system, or in management consulting firms where management experts work together on
a project.

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The matrix structure creates a dual chain of command. It explicitly violates the classical
principle of unity of command. Functional departmentalization is used to gain the
economies from specialization. Employees in the matrix have two bosses: their functional
departmental manager and their project or product manager. The project managers have
authority over the functional members who are part of the manager’s project team.
Authority is shared between the two managers. Typically, this is done by giving the
project manager authority over project employees relative to the project’s goals.
However, decisions such as promotion, salary recommendations, and annual reviews
remain the functional manager’s authority. To work effectively, project and functional
managers must communicate regularly and coordinate the demands on the common

Advantages and Disadvantages of Matrix Organization Structure:

Strategic Advantages Strategic Disadvantages

1. Accommodates a wide variety of project- 1. May result in confusion

oriented business activity. and contradictory policies.
2. Provides good training grounds for 2. Necessitates tremendous
strategic managers. horizontal and vertical
3. Maximizes efficient use of functional coordination.
managers. 3. Can proliferate information
4. Fosters creativity and multiple sources of logjams and excess
diversity reporting.
5. Gives middle management broader 4. Can trigger turf battle and
exposure to strategic issues loss of accountability.

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Efficient use of resources: Individuals and as well as equipment can be shared

across projects.
Project Integration: There is a clear and workable mechanism for coordinating
work across functional lines.
Improved information flow: Communication is enhanced both laterally and
Flexibility: Frequent contact between members from different departments
expedites decision-making and adaptive resources.
Discipline retention: Functional experts and specialists are kept even though
projects come and go.
Improved Motivation and commitment: Involvement of members in decision-
making enhances commitment and motivation.


Power struggle: Conflicts occur because boundaries of authority and

responsibility overlap.
Heightened Conflict: Competition over scarce resources especially when
personnel are being shared across projects.
Slow reaction time: Heavy emphasis on consultation and shared decision-making
retards timely decision-making.
Difficulties in monitoring and controlling: Multi-discipline involvement heightens
information demands and makes it difficult to evaluate responsibility.
Excessive overheads: Double management is created by creating project managers
necessarily increases overheads.
Experienced Stress: Dual reporting relations contribute to authority ambiguity and
role conflict.

Advantages of Matrix Organization:

Research shows six major advantages with matrix structure and these are as follows:
It enhances flexibility because teams can be created, refined and dissolved as
They assume a major role in decision-making; team members are likely to be
highly motivated and committed to the organization,
Considerable opportunity to learn in matrix structure,
It provides an efficient way for the organization to take full advantage of its
human resources,
Team members retain membership in their functional unit so they can serve as
a bridge between functional unit and the team, enhancing cooperation,
Gives top management a useful vehicle for decentralization.

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Uncertain about reporting relationship,
May create anarchy in which they have unlimited freedom,
Group decision-making may take long time,
More time may be required for coordinating task-related activities.
*Source: Griffin

Theorists who advocate a matrix structure maintain that these advantages outweigh the
inherent disadvantages. In particular, “ Matrix organizations tend to have high levels of
performance in dealing with complex, creative work products. Also, because of the
amount of interaction among members in matrix structures, and the high levels of
responsibility the y posses, matrix organization have greater worker job satisfaction.”

Many contemporary organizations which are facing tremendous structural and technical
complexity have no choice but to move to a matrix arrangements. The critical need for
coordination and fictional interrelationships can be met by adding a horizontal
dimensions to the functional structure.

Situations when Matrix organization is preferred:

o When there is strong pressure from the environment. For Example: intense
internal competition may dictate the sort of strong marketing thrust that is best
spearheaded by functional department b but the diversity of a company’s
product may argue for product departments,
o When large amount of information needed to be processed. Creating lateral
relationship by means of a matrix is one effective way to increase the
organization capacity to process information,
o Pressure for shared resources. A company with ten product departments may
have resource for only three marketing specialists. A matrix design would
allow all the departments to share the company’s scare marketing resources.

Many contemporary organizations which are facing tremendous structural and technical
complexity have no choice but to move to a matrix arrangements. The critical need for
coordination and fictional interrelationships can be met by adding a horizontal
dimensions to the functional structure.

Where matrix are used:

• Manufacturing- aerospace, chemicals, electronics

• Service- banking, insurance, retailing
• Professional –accounting, consulting, law
• Nonprofit - hospitals, United Nations, universities.

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Strategic Business Unit (SBU)

The concept of SBU was the contribution of General Electric. In 1971,one of the world’s
most diversified companies, managers at GE realized that they needed a more logical
framework for viewing their organization. They decided to view their strategic planning
as a “portfolio of businesses”. For example, One SBU was defined as all food preparation
appliances (toaster ovens, ranges and so on). GE’s nine product groups and forty-eight
divisions were reorganized into forty-three SBUs. Such a division has its own mission,
resources, and management personnel. The concept was quickly adopted by numerous
diversified organizations, including General Motors, Union Carbide, International paper,
and Boise Casade. Campbell Soup Company has been divided into fifty autonomous
business units, including such product categories as soup, beverage and frozen foods. An
estimated 45 percent of the 500 largest corporations in the United States are currently
using the SBU concept.

SBUs are distinct business set up as units in a large company to ensure that a certain
product or product lines is promoted and handled, as though it were independent

A strategic business unit (SBU) is an operating division of a firm which serves a distinct
product/market segment or a well-defined set of customers or geographic area. The SBU
is given the authority to make its own strategic decisions within corporate guidelines as
long as it meets corporate objectives. (GLUECK & JAUCH: 1984).

A divisional/SBU structure allows corporate management to delegate authority for the

strategic management of distinct business entities-the division/SBU. This expedites
decision making in response to varied competitive environments and enables corporate
management to concentrate on corporate-level strategic decisions. This division /SBU
usually is given profit responsibility, which facilitates accurate assessment of profit and
loss. (Pearson: Strategic Management, 10th edition , p. 362.)

A strategic business unit (SBU) is a corporate unit consisting of key business (BOONE &
KURTZ: 1992).

The SBU structure groups similar divisions into strategic business units and delegates
authority and responsibility for each unit to a senior manager who reports directly to the
chief executive officer. (Fred R David, Strategic Management, 10th edn. p.253.)

Generally, SBUs have the following characteristics:

Each one has its own mission
Each is a single unit or set of related units
Each has its own competitors
Each has its own unique strategy apart from that of other units in the
Each manages its resource in key areas

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Each has neither a proper size neither too long nor too small.

Obviously, in practice it might be difficult to define SBUs that meet all of these criteria.

Advantages and Disadvantages of SBU form of Organization


Strategic Advantages Strategic Disadvantages

1. Forces coordination and necessary 1. Foster potentially dysfunctional
authority down to the appropriate competition for corporate level
level for rapid response. resources.
2. Places strategy development and 2. Presents the problem of
implementation in closer proximity determining how much authority
to the unique environments of the should be given to division/SBU
divisions/SBUs. managers.
3. Free chief executive officer for 3. Creates a potential for policy
broader strategic decision making. inconsistence among
4. Sharply focuses accountability for divisions/SBUs.
performance. 4. Presents the problem of
5. Retains functional specialization distributing corporate overhead
within the division/SBU. costs in a way that’s acceptable to
6. Provides good training grounds for division managers with profit
strategic managers. responsibility.
7. Increase focus on products, 5. Increases costs incurred through
markets, and quick response to duplication of functions.
change. 6. Creates difficulty maintaining
overall corporate image.

Centralization VS Decentralization:
Centralization and decentralization are two very important concept of managing. No
organization is cent percent centralized or cent percent decentralized. The relative degree
of centralization or decentralization depends on some underlying factors. If an
organization is cent percent decentralized then the existence of the top-level executives
will be cease to exist. On the other hand, if an organization centralizes all its power and
authority, then it will be difficult to create formal organization. Centralization-
decentralization is a relative, not absolute, concept. What we mean by this is that an
organization is never completely centralized or decentralized. Few organizations could
function effectively if all decisions were made only by a select group of top managers;
nor could they do so if all decisions were delegated to the lowest level of the
organization. Rather, organizations will be relatively centralized or relatively
decentralized. Let us define the two terminologies:

Decentralization is the tendency to disperse decision-making authority in an organization


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Decentralization is the process of systematically delegate power and authority throughout

the organization to middle and lower-level managers.

Centralization is the process of systematically retaining power and authority in the hands
of higher –level managers

Centralization is defined as the relative retention of decision-making authority by top-

level management, whereas, decentralization refers to granting of decision-making by
management to lower level employees.


• Environment is more stable • Environment is complex, uncertain
• Lower-level managers are not as • Lower-level managers are capable
capable or experienced at making or experienced at making decisions
decisions • Lower-level managers want a voice
• Lower-level managers do not want in decisions
to have a say in decisions • Decisions are relatively minor
• Decisions are more significant • Corporate culture is more open to
• Organization is facing a crisis or allowing managers to have a say in
the risk of company failure what happens
• Company is large • Company is geographically
• Effective implementation of dispersed
company strategies depends on • Effective implementation of
managers retaining more say over company strategies depends on
what happens managers having more involvement
and flexibility to make decisions.

What is Span of Management?

Span of management is also referred as span of control, span of supervision. Principle of

span of management states that there is a limit to the number of subordinates a manager
can effectively supervise, but the exact number will depend on the impact of underlying
factors. Span of management is normally defined as the number of people who report to
each manager. A manager cannot manage an unlimited number of subordinates
effectively. The number of subordinates that can effectively be managed by a supervisor
is termed as span of management. The number that can easily be controlled by a manager
depends on some factors.

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Factors Affecting Wide or Narrow span is shown in the following

Of course, the initial question in span of management remains: How do managers
determine the appropriate span for their unique situations? Although no perfect formula
exists, researchers have identified a set of factors that influence the span for a particular
circumstance. Some of these factors are listed in the following table:
Narrow Span (a great number of time Wide span (very little time spent with
spent with subordinates) subordinates)
• Little or no training of subordinates • Thorough training of subordinates
• Inadequate or unclear authority • Clear delegation and well-defined
delegation tasks
• Unclear plans for nonrepetitive • Well-defined plans for repetitive
operations operations
• Nonverifiable objectives and • Verifiable used as standards
standards • Slow changes in external and
• Fast change in external and internal internal environments
environments • Use of appropriate techniques, such
• Use of poor or inappropriate as proper organization structure and
communication techniques, written and oral communication
including vague instructions • Effective interaction between
• Ineffective interaction of supervisor supervisor and subordinate
and subordinate • Greater number of specialists at
• Ineffective meetings upper level (top managers
• Greater number of specialists at concerned with external
lower and middle levels environment)
• Incompetent and untrained manager • Competent and trained manager
• Complex task • Simple task
• Subordinates’ unwillingness to • Subordinates’ willingness to assume
assume responsibility and responsibility and reasonable risks
reasonable risks • Mature subordinates.
• Immature subordinates

While Ricky F. Griffin identified the following factors in determining the effective span.
The factors are shown below:

• Competence of supervisor and subordinates ( the greater the competence , the

wider the potential span)
• Physical dispersion of subordinates (the greater the dispersion, the narrower the
potential span)
• Extent of nonsupervisory work in a manager’s job (the more nonsupervisory
work, the narrower the potential span)

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• Degree of required interactions (the less required interaction, the wider the
potential span)
• Extent of standardized procedures (the more procedures, the wider the potential
• Similarity of tasks being supervised (the more similar the tasks, the wider the
• Frequency of new problems (the higher the frequency, the narrower the potential
• Preferences of supervisors and subordinates.

Decentralization is the process of systematically delegating power and authority

throughout the organization to middle and lower-level managers.

Centralization is the process of systematically retaining power and authority in the hands
of higher-level managers.

Centralization is defined as the relative retention of decision-making authority by top-

level management, whereas decentralization refers to granting of decision-making
authority by management to lower level employees.

No organization is cent percent centralized or cent percent decentralized.

How the relationship between Line and Staff be improved?

1) Acquire better understanding of the basic authority relationship

2) Develop a clear concept of the interrelationship of those with different types of
authority within the organization, and
3) Stress interdependence, not separation, of the various units and their respective

What is Delegation?

The term delegation is commonly used to describe a variety of different forms and
degrees of power sharing with individual subordinates. Major aspects of delegation
include the variety and magnitude of responsibilities, the amount of discretion or range of
choice allowed in deciding how to carry out responsibilities, the authority to take action
and implement decisions without prior approval, the frequency and nature of reporting
requirements, and the flow of performance information (Sherman, 1966; Webber, 1981).

In most common form, delegation involves assignment of new and different tasks or
responsibilities to a subordinate. For example, a person who is responsible for
manufacturing something is also given responsibility for inspecting the product and
correcting any defects that are found. When new tasks are assigned, the additional

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authority necessary to accomplish the tasks is usually delegated also. For example, a
production worker who is given new responsibility for ordering materials is given the
authority (within specified constraints) to sign contracts with suppliers.

Sometimes delegation involves only the specification of additional authority and

discretion fore the same tasks and assignments already performed by the subordinate. For
example, a sales representative is allowed to negotiate sales within a specified range of
prices, quantities, and delivery dates, but cannot exceed these limits without prior
approval from the sales manager. Delegation is increased by giving the sales
representative more latitude in setting prices and delivery dates.

Authority is delegated when a supervisor gives a subordinate discretion to make

decisions. (KOONTZ)

Delegation may be defined as the process by which managers assign a portion of their
total workload to others. (GRIFFIN)

The assignment of authority and responsibility to subordinate is termed as delegation in

management. (BOONE & KURTZ)

Why Delegation?

Delegation is necessary for an organization to exist. Just as one person in an enterprise

cannot do all the tasks necessary for accomplishing a group purpose, so it is impossible,
as an enterprise grows, for one person to exercise all the authority for making decisions.
As we know, that managers have got limitation in supervising the activities of their
subordinates, they must have to delegate their authorities to subordinates, who will make
decision within area of their assigned duties. Louis A Allen, a famous management
scholar has rightly observed that, “ If the managers require his or her subordinate to
perform the work, he or she must entrust him/her with part of rights and power which he
or she otherwise would have to exercise himself/herself to get the work done.”

Reasons for delegation:

The primary reason for delegation is to enable the manager to get more work
Sometimes the subordinates may have better expertise than the manager has,
It helps in developing subordinate’s skills,
It relieves the manager of his heavy workload,
It leads to better decisions,
It helps in speedy decision-making,
Subordinates are more motivated with delegation,
It helps in creating formal organization structure.

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There are many different reasons for delegating. The following table shows the results
found in a study that asked managers in several organizations about the importance of
various reasons for delegation to a subordinate.
Table Showing Percentage of Managers Who Rated a Reasons for
Delegating As Moderately or Very Important:
Develop subordinate skills and confidence 97%
Enable subordinates to deal with problems quickly 91
Improve decisions by moving them close to the action 8 9
Increase subordinate commitment to a task 89
Make the job more interesting for subordinates 78
Reduce your workload to manage time better 68
Satisfy superiors who want you to delegate more 24
Get rid of tedious tasks you don’t want to do 23
Source: Adapted from G. Yukl and P. Fu, “ Determinants of Delegation and consultation by
managers”, Journal of Organizational Behavior, 20 (1999), pp.219-232.

Delegation offers a number of potential advantages if carried out in an appropriate

manner by a manager. One potential advantage of delegation, like other forms of
participation and power sharing, is the improvement of decision quality. Delegation
quality is likely to improve if a subordinate has more expertise in how to do the task than
the manager. Decision quality is likely to improve also if the subordinate’s job requires
quick response to a changing situation and the lines of communication do not permit the
manager to monitor the situation closely and make rapid adjustments. A subordinate who
is closer to the problem than the manager and has more relevant information can make
quicker and better decisions about to resolve the problem. The result may be better
customer service and reduced administrative costs. However, delegation is not likely to
improve decision quality if the subordinate lacks the skills to make good decisions, fails
to understand what is expected, or has goals incompatible with those of the manager.

Another potential advantage of delegation is greater subordinate commitment to

implement decision effectively. The commitment results from identification with the
decision and a desire to make it successful. However, commitment is likely to improve if
a subordinate views delegation as a manipulative tactic by the manager, considers the task
impossible to do, or believes the newly delegated responsibilities are an unfair increase in

Delegation of additional responsibilities and authority can make a subordinate’s job more
interesting, challenging, and meaningful. Enriched jobs are sometimes necessary to
attract and retain competent employees, especially when the organization has limited
opportunities for advancement to higher-level positions. Giving junior mangers more
responsibility and authority, with a commensurate increase in salary, reduces the
likelihood that they will be lured away to other companies in times of stiff competition
for managerial talent. However, delegation will only increase the satisfaction of a

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subordinate who desires more responsibility, has the skills necessary to handle new
responsibilities and is able to experience some success in accomplishing a challenging
task. Delegation will decrease job satisfaction if the subordinate is constantly frustrated
due to a lack of sufficient authority and resources to carry out new responsibilities, or to a
lack of ability to do the work.

Delegation is an important form of time management for a manager who is overloaded

with responsibilities. By delegating less important duties and functions to a subordinate, a
manager frees additional time for more important responsibilities. Even when a manager
could do the delegated tasks better than subordinates, it is a more efficient use of the
manager’s time to concentrate on those functions that will have the greatest influence on
the performance of the manager’s organizational unit. Without delegation, a manager is
unlikely to have sufficient discretionary time to do some important takes than require
larger blocks of time and are not immediately urgent.

Delegation can be effective method of management development. Organizations need to

develop managerial talent to fill vacant positions at higher levels of authority. Delegation
is a way to facilitate development of the skills necessary to perform key responsibilities
in a higher position. When delegation is used for development purposes, however, it is
usually necessary for the manger to do more monitoring and coaching. Thus, when used
for this purpose, delegation is unlikely to reduce a manager’s workload much

Barriers to Effective Delegation:

In spite of several advantages, managers are found unwilling to delegate authority and
many subordinates are found unwilling to accept it. The reasons for this unwillingness on
both sides are as under:
On the managers’ side, the reluctance to delegate may be due to the following reasons:

Fear of loss of power,

The ‘I can do it better myself’ fallacy,
Lack of confidence in subordinates,
Fear of being exposed,
Difficulty in briefing.

On subordinates’ side:

They may refuse to accept authority because of their fear of criticisms by their
managers in case they commit mistakes in decision-making,
They may avoid accepting any authority if they feel that they lack adequate
information and responsibility to help them discharge their duties properly,
They may lack self-confidence and initiatives and this may also be the cause for
them unwilling to accept it,
They may avoid accepting any authority because there are no positive personal
gains to them for assuming extra responsibility.

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Guidelines for Overcoming Weak Delegation:

The following practical guides will facilitate successful delegation:

Define the assignment and delegate authority in light of results expected,
Select the person in light of the jobs to be done,
Maintain the open lines of communication,
Establish proper controls,
Reward effective delegation and successful assumption of authority.

How Authority is delegated?

If you’re a manager and want to delegate some of your authority to someone else, how do
you go about it? The following summarizes the primary steps you need to take:
Clarify the assignment:
The place to begin is to determine what is to be delegated and to whom? You need to
identify the person most capable of doing the task and then determine if he or she has the
time and motivation to do the job.

Assuming you’re willing and able individual, it is your responsibility to provide clear
information on what is being delegated, the result you expect and any time or
performance expectations you hold.

Specify the delegate’s range of discretion:

Every act of delegation comes with constraints. You’re delegating authority to act on
certain issues and on those issues, with certain parameters. You need to specify what
those parameters are so the individual knows, in no uncertain terms, the range of his or
her discretion.

Allow the delegates to participate:

One of the best sources of determining how much authority will be necessary to
accomplish a task is the person who will be held accountable for that task. If you allow
employees to participate in determining what is delegated, how much authority is needed
to get the job done, and the standards by which they will be judged. You increase
employee motivation, satisfaction and accountability for performance.

Inform others that delegation has occurred:

Delegation should not take place in vacuum. Not only you and the delegate need to know
specially what has been delegated and how much authority has been grated but anyone
else who may be affected by the delegation act also needs to be informed.

Establish feedback controls:

The establishment of controls to monitor the employees’ progress increases the likelihood
that important problems will be identified early and that the task will be completed on

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time and to the desired specifications. For instance, agree on a specific time for
completion of the task and the set progress dates when the employee will report back on
how well he or she is doing and any major problem that have surfaced.

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