7-1

AUTHORITY
CENTRALIZATION VS DECENTRALIZATION

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-2

AUTHORITY
qAuthority may be defined as the legal
right to give orders and get these orders
obeyed.
qThe exercise of a authority involves
superior-subordinate relationship.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-3

AUTHORITY
Authority may be defined as the power to
make decisions which guide the actions of
another. It is a relationship between two
individuals; one superior, another
subordinate. The superior frames and
transmits decisions with the expectation that
these will be accepted by the subordinate.
The subordinate executes such decisions and
his conduct is determined by them.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-4

AUTHORITY
Authority in the organization is the power in


a position to exercise good judgment in

making decisions affecting others.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-5

Features of AUTHORITY
qExistence of right in authority.
qRight is given to a manager by superior.
qRight of giving of order is lawful.
qAuthority gives right of decision making.
qAuthority is to influence the behavior of the
subordinates in terms of doing right things at right
time.
qAuthority is determined by the personality factors
of its possessor and the persons or group.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-6
Flow of formal AUTHORITY

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-7

Limits of authority
Limits of authority at various levels


TOP
LEVEL
EXTENT OF
AUTHORITY

LIMITS OF
AUTHORITY

BOTTOM LEVEL

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-8

Authority is restricted by various factors:

qAuthority must be exercised keeping in
view the group’s fundamentals.
qFactors such as partnership agreements,
memorandum, factory acts and company
acts.
qDepends on the span of management.
qManager can use the authority which is
specifically delegated to him.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-9

POWER
 Max Weber defined
 Power is the probability that one actor within the
relationship will be in a position to carry out his own
will despite resistance.


 Nord defined
 Power is the ability to influence flows of the available
resources towards certain goals as opposed to other
goals.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-10

Features of POWER
qPower is one of the means to influence
others for getting results.
qPower is used not only in getting certain
results achieved but it also includes negative
decisions.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 
7-11
 Difference between Authority and Power

AUTHORITY POWER

ns, laws and practices.

er has no such lawful practices as in authority.
ause of structural relationships.
er emerges because of personal factors and varies with the individuals. It reflects
onal relationship, mostly in superior-subordinate relationship either direct or otherw
er relationship may exist between any two persons and organizational relationship

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 Sources of Powers 7-12
lCoercive Power: Actions such as dismissal, suspension,
demotion.


lReward Power: Reward power is based on one’s control and

allocation of material resources and rewards. This power is
based on salaries, wages, commissions, fringe benefits.


lLegitimate Power: Legitimate power is based on agreement

and commonly held values allowing one person to have
power over another person.


lReferent Power: Referent power is based on identification.

Identification is the process of learning wherein a person
copies the behavior of other person whom he takes as an
ideal.


lExpert Power: Expert power is that influence which one wields

as a result of one’s experience, special skill, or knowledge.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 7-13
Responsibility
 Responsibility is the duty to which a person is
bound by reason of his status or task. Such
responsibility implies fulfillment with orders
of the person making the initial delegation.

RESPONSIBILITY
Superior
DELEGATION
AUTHORITY
OF

Sub-ordinate

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-14

accountability
 Authority is the right to act;
 Responsibility the obligation to carry out
delegated authority;
 Accountability establishes reliability for the
proper discharge of the duties delegated to the
subordinate.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-15

Delegation of Authority
 To delegate means to grant.
 Delegation means give authority from one
manager or organizational unit to another in
order to accomplish particular assignments.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-16

Features of Delegation of Authority

 Delegation is authorization to a manager to act
in a certain manner.
 Formal authority originates at the top level. It is

distributed throughout the organization

through delegation and redelegation.
 Subordinate receives authority from his
superior, but at the same time, his superior still
retains all his original authority.
 Authority once delegate can be enhanced,
reduced or withdrawn depending on the
situation and requirement. Eg: change in
Organizational structure, policy.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-17
Features of Delegation of Authority
 Delegation of authority is always to the position
created through the process of organizing.
 The individual occupying a position may
exercise the authority so long as he holds the
position.
A manager delegates authority out of the
authority vesting in him.
 Manager cannot delegate which he himself does

not possess.
 Manager does not delegate his full authority

because if he delegates , he cannot work.

 Delegation of authority may be specific or
general.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 7-18
Steps in Delegation of Authority

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 Steps in Delegation 7-19
lDetermination of Results Expected: Authority should be
delegated to a position according to the results expected from
that position. It implies that results expected from each
position have been identified properly.
lAssignment of Duties: Assignment of duties to the subordinate.
Delegation involves assignment of these activities by a
manager to subordinate.
lAuthorization for action: Granting of permission to take
actions like making commitments, use or resources, and
other actions necessary to get the assigned work done.
 The manager confers upon a subordinate the right to act
in a specified way or to decide within limited boundaries.
lCreation of Obligation: Subordinate is responsible for the total
activities assigned to him and not only for the activities being
performed by him. The sense of commitment required arises
from the maintenance of responsibility by the superior and
an accompanying insistence that the work performed must
meet his expectations.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 Principles of Delegation 7-20
§ Delegation by Results expected
§
§ Functional Definition
§ More a department has clear definitions of expected activities
to be undertaken, authority delegated, the more adequately
the department can contribute towards accomplishing
organizational objectives.
§
§ Clarity of Lines of Authority
§ Scalar Chain, Unity of command
§
§ Level of Authority
§ Managers should make whatever decisions they can in the light
of their delegated authority and only matters that authority
limitations keep them from deciding should be referred
upward.
§
§ Absoluteness of Responsibility
§ Superiors cannot escape responsibility for the performance of
activities of their subordinates.
 Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 Blocks to Delegation 7-21
§ Love of Authority (Autocratic manager)
§
§ Maintenance of Tight Control


§ Fear of Subordinates


§ Fear of Exposure
§ Weak manager


§ Attitude towards subordinates

§ Lack of confidence in subordinate
§ May feel that subordinates do not require more authority.
§ Superior may not have good interpersonal relationships.
§
§ Personality of Superior
§ Superior beliefs like modern management


Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-22

Blocks to Delegation
§ Lack of self confidence by subordinates.
§
§ When the superior is easily available for making decsions on
their part.


§ Organizational factors

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-23
Centralization and Decentralization


 Centralization:
 Centralization is the systematic and consistent reservation of authority at

central points within an organization.



 Decentralization:
 Decentralization is the systematic delegation of authority in an organization-

wide context.

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-24
Factors determining Degree of Decentralization
§
§ Size of Organization
§
§ History of the Organization
§
§ Manager Philosophy
§
§ Availability of Managers
§
§ Pattern of Planning
§
§ Control Techniques
§
§ Decentralized Activities
§
§ Rate of Change in Organization
§
§ Environmental Influences

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000
 7-25
Concept of Line and Staff Authority
§
§ Line functions are those which have direct responsibility
for accomplishing the objectives of the enterprise.
§ Line authority becomes clear from the scalar principle as
being that relationship in which a superior exercises
direct supervision over a subordinate.
§ Line Authority has
§ a chain of command,
§ channel of communication,
§ Carrier of responsibility


Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000

 7-26
Concept of Line and Staff Authority
§
§ Staff functions are those elements of the organization
that help the line to work most effectively in
accomplishing the primary objectives of the enterprise.
§ staff relationship is advisory. The function of people in a
pure staff capacity is to investigate, research, and give
advice to line managers to whom they report.
§ Staff Authority may be in following forms:
§ Advisory staff authority (pure advisory
relationship of staff with line)
§ Concurring staff authority (Quality control)
§ Control staff authority (auditors)
§ Functional staff authority (Staff man can give
certain orders directly to line managers)

Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000