Authority and Power’ Line, Staff and Functional Authority, Delegation

of Authority, Centralization and Decentralization

Authority and Power
Organisations must somehow drive and galvanise their workers into action, and in order to do so,
managers must be properly vested with authority. Before concentrating on the authority in
organisation, it is necessary to distinguish between authority and power. Power is the ability of
individuals to induce groups. Authority in organisation is the right in a position (and, through it, the
right of the person occupying the position) to exercise discretion in making decisions affecting others.
It is, of course, one type of power, but power in an organisation setting.
As we shall see later on, there are many different bases of power. The power of primary
concern – the subject of our present discussion – is legitimate power. It normally arises from
organisational position, and this position validates it as authority. Also this authority owes its origin to
the prevailing cultural system of rights, obligations and duties of industrial society, whereby a
"position" is accepted by people as "legitimate."
Power may also come from the expert knowledge of a person or a group. This is the power of
expertise or knowledge. Physicians, lawyers and university professors may have considerable
influence on others because they are respected for their special knowledge. Power may further exist as
referent power, which people or groups may exercise because people believe in them and their ideas.
Thus Mahatma Gandhi had very little legitimate power, but by dint of his personality and ideas of non-
violence, he strongly influenced the behaviour of many people.

Line and Staff Concepts

Much confusion has arisen among both scholars and managers as to what "line" and "staff" mean. As a
result, there is probably no area of management that causes more difficulties, more friction, and more
loss of time and effectiveness. Yet the line-and-staff relationships of the members of an organisation
must necessarily affect the operation of the enterprise.

The Nature of Line and Staff Relationships

A more precise and logically valid concept of line and staff is that they are simply a matter of
relationships. Line authority gives a superior a line of authority over a subordinate. It exists in all
organisations as an uninterrupted scale or series of steps. Hence, the scalar principle in organisation:
the clearer the line of authority from the ultimate management position in an enterprise to every
subordinate position is, the clearer will be the responsibility for decision-making and the more
effective will be organisation communication. In many large enterprises, the steps are long and
complex; but even in the smallest, the very fact of organisation introduces the scalar principle.
It therefore becomes apparent from the scalar principle that line authority is that relationship in
which a superior exercises direct supervision over a subordinate-authority relationship in direct line or
steps.
The nature of the staff relationship is advisory. The function of people in a pure staff capacity is
to investigate, research, and give advice to line managers.

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Functional Authority
Functional authority is the right that is delegated to an individual or a department to control specified
processes, practices, policies, or other matters relating to activities undertaken by persons in other
departments. If the principle of unity of command were followed without exception, authority over
these activities would be exercised only by their line superiors. But numerous reasons - including a
lack of special knowledge, a lack of ability to supervise processes, and the danger of diverse
interpretations of policies - explain why these managers are occasionally not allowed to exercise this
authority. In such cases, line managers are deprived of some authority. It is delegated by their common
superior to a staff specialist or to a manager in another department. For example, a company controller
is ordinarily given functional authority to prescribe the system of accounting throughout the company,
but this specialised authority is really a delegation from the chief executive.
Functional authority is not restricted to managers of a particular type of department. It may be
exercised by line, service, or staff department heads, but more often by the latter two because service
and staff departments are usually composed of specialists whose knowledge becomes the basis for
functional controls
FIGURE 6-9

PRESIDENT

Vice-president Director of Vice-president Director of Vice-president

finance research production public sales
relations

Manager Manager cash Manager Manager Manager

accounting control domestic sales advertising foreign sales

Manager Manager Manager

purchasing factory personnel

Chief Chief Chief Chief

Production control Parts production assembly maintenance

LINE AND STAFF ORGANISATION OF A TYPICAL MANUFACTURING COMPANY

Source: Heinz Weihrich and Harold Koontz ,"Management: A Global Perspective" Tenth Edition, P.296.

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Delegation of Functional Authority
One can better understand functional authority by thinking of it as a small slice of the authority of a
line superior. A corporation president, for example, has complete authority to manage a corporation,
subject only to limitations placed by such superior authority as the board of directors, the corporate
charter and by laws, and government regulation. In the pure staff situation, the advisers on personnel,
accounting, purchasing, or public relations have no part in this line authority, their duty being merely
to offer counsel. But when the president delegates to these advisers the right to issue instructions
directly to the line organisations, as shown in Figure 6-10, that right is called "functional authority."
The four staff and service executives have functional authority over the line organisations with
respect to procedures in the field of accounting, personnel, purchasing and public relations. What has
happened is that the president, feeling it unnecessary to clear such specialised matters personally, has
delegated line authority to staff assistants (or managers) to issue their own instructions to the operating
department.

FIGURE 6-10
LINE AUTHORITY OF THE PRESIDENT

AUTHORITY AFTER DELEGATION

Accounting Personnel Purchasing Public relations

Procedures Procedures Procedures Procedures

Controller Personnel Purchasing Public relations

manager manager manager

Manager Manager Manager

Western Central Eastern
division division division

Normal line relationships

Delegation of functional authority from line authority of the president
FUNCTIONAL AUTHORITY DELEGATION
Source: Heinz Weihrich and Harold Koontz ,"Management: A Global Perspective" Tenth Edition, P.297.

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Delegation of Authority, Centralization and Decentralization
Delegation of Authority
Simple as delegation of authority might appear to be, studies show that managers fail more often
because of poor delegation than of any other cause. For anyone going into any kind of organisation, it
is worthwhile to study the science and art of delegation.
The primary purpose of delegation is to make organisation possible. Just as no one person in an
enterprise can do all the tasks necessary for accomplishing group purpose, it is impossible, as an
enterprise grows, for one person to exercise all the authority for making decisions. As was discussed
under the subject of span of supervision, there is a limit to the number of persons managers can
effectively supervise and for whom they can make decisions. Once this limit is passed, authority must
be delegated to subordinates, who will make decisions within the area of their assigned duties.

How Authority is Delegated?

Authority is delegated when discretion is vested in a subordinate by a superior. Clearly, superiors
cannot delegate authority they do not have, whether they are board members, presidents, vice-
presidents, or supervisors. Equally clear, superiors cannot delegate all their authority without, in effect,
passing on their position to their subordinates.
The entire process of delegation involves determination of results expected, assignment of
tasks, delegation of authority for accomplishing these tasks, and exaction of responsibility for their
accomplishment. In practice, it is impossible to split this process, since expecting a person to
accomplish goals without the authority to achieve them is meaningless, as is the delegation of authority
without knowing what end results it is to be used for. Moreover, since responsibility cannot be
delegated, a boss has no practical alternative but to exact responsibility from subordinates for
completing the assignment.

Clarity of Delegation
Delegation of authority may be specific or general, written or unwritten. If the delegation is unclear, a
manager may not understand the nature of the duties or the results expected. The job assignment of a
company controller, for example, may specify such functions as accounting, credit control, cash
control, financing, export-license handling, and preparation of financial statistics, and these broad
functions may even be broken down into more definite duties. Or a controller may be told merely that
he or she is expected to do what controllers generally do.
Specific written delegations of authority are extremely helpful both to the manager who
receives them and to the person who delegates them. The latter will more easily see conflicts or
overlaps with other positions and will also be better able to identify those things for which a
subordinate can and should be held responsible.
The fear that specific delegations will result in inflexibility is best met by developing a tradition
of flexibility. It is true that if authority delegations are specific, a manager may regard his or her job as
a staked claim with a high fence around it. But this attitu Functional authorityde can be eliminated by
making necessary changes in the organisation structure. Much of the resistance to change through
definite delegations comes from managerial laziness and the failure to reorganise things often enough
for the smooth accomplishment of objectives.

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Principles of Delegation

The following principles are guides to delegation of authority. Unless carefully recognised in practice,
delegation may be ineffective, organisation may fail, and poor managing may result.
Principle of delegation by results expected: Since authority is intended to furnish managers with a
tool for so managing as to assure that objectives are achieved, authority delegated to individual
managers should be adequate to assure their ability to accomplish expected results. Too many
managers try to partition and define authority on the basis of the rights to be delegated or withheld,
rather than to look first at the goals to be achieved and then to determine how much discretion is
necessary to achieve them.
Principle of functional definition: To make delegation possible, activities must be grouped to
facilitate accomplishment of goals, and managers of each subdivision must have authority to co-
ordinate its activities with the organisation as a whole. These requirements give rise to the principle of
functional definition: the more a position or a department has clear definitions of results expected,
activities to be undertaken, organisation authority delegated, and authority and informational
relationships with other positions understood, the more adequately the individuals responsible can
contribute towards accomplishing enterprise objectives.
Scalar principle: The scalar principle refers to the chain of direct authority relationships from superior
to subordinate throughout the organisation. The clearer the line of authority from the top manager in an
enterprise is to the subordinate position, the more effective the responsible decision-making and
organisation communication will be.
A clear understanding of the scalar principle is necessary for proper organisation functioning.
Subordinates must know who delegates authority to them and to whom matters beyond their own
authority must be referred. Although the chain of command may be safely departed from for purposes
of information, departures for purposes of decision-making tend to destroy the decision-making system
and undermine managership itself.
Authority-level principle: Functional definition plus the scalar principle gives rise to the authority
level principle. Clearly, at some organisation level, authority exists for making a decision within the
power of an enterprise. Therefore, the authority-level principle derived would be as follows:
maintenance of intended delegation requires that decisions within the authority of individuals be made
by them and not be referred upwards in the organisation structure. In other words, managers at each
level 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 to superiors.
Principle of unity of command: A basic management principle, often disregarded for what are
believed to be compelling circumstances, is that of unity of command: the more completely an
individual has a reporting relationship to a single superior, the less the problem of conflict in
instructions and the greater the feeling of personal responsibility for results.
Principle of absoluteness of responsibility: Since responsibility, being an obligation owed, cannot be
delegated, no superior can escape, through delegation, responsibility for the activities of subordinates,
for it is the superior who has delegated authority and assigned duties. Likewise, the responsibility of
subordinates to their superiors for performance is absolute, once they have accepted an assignment and
the right to carry it out, and superiors cannot escape responsibility for the organisation activities of
their subordinates.
Principle of parity of authority and responsibility: Since authority is the discretionary right to carry
out assignments and responsibility is the obligation to accomplish them, it logically follows that
authority should correspond to responsibility.

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Guides for Overcoming Weak Delegation
Unclear delegations, partial delegations, delegations inconsistent with the results expected, and the
hovering of superiors who refuse to allow subordinates to use their authority are among the many
widely found weaknesses of delegation of authority.
In overcoming these errors - and emphasising the principles outlined above - the five following
guides are practical in making delegation tangible:
1. Define assignments and delegate authority in the light of results expected.
2. Select the person in the light of the job to be done. This is the purpose of the managerial function
of staffing. It is important to remember that qualifications influence the nature of the authority
delegated.
3. Maintain open lines of communication. This means that there should be a free flow of information
between the superior and the subordinate, and subordinates should be furnished with information
with which to make decisions and properly interpret the authority delegated.
4. Establish proper controls. But if controls are not to interfere with delegation, they must be
relatively broad and designed to show deviations from plans rather than interfere with detailed
actions of subordinates.
5. Reward effective delegation and successful assumption of authority. It is seldom sufficient to
suggest that authority be delegated, or even to order that this be done. Managers should be ever
watchful for means of rewarding both effective delegation and effective assumption of authority.
Although many of these rewards will be in terms of money, the granting of greater discretion and
prestige - both in a given position and in promotion to a higher position - often works as a
stronger incentive.

Decentralisation Vs. Centralisation

Decentralisation is a fundamental aspect of delegation: to the extent that authority is not delegated, it is
centralised. Absolute centralisation in one person is conceivable. But it implies no subordinate
managers and therefore no structured organisation. Consequently, it can be said that some
decentralisation characterises all organisations. On the other hand, there cannot be absolute
decentralisation, for if managers should delegate all their authority, their status as managers would
cease, their position would be eliminated, and there would, again, be no organisation. Centralisation
and decentralisation are therefore tendencies; they are qualities like "hot" and "cold."
"Centralisation" has been used to describe tendencies other than the dispersal of authority, as in
centralisation of performances. This is a problem of geography: a business characterised by centralised
performance operates in a single location or under a single roof. Furthermore, centralisation often
refers to departmental activities. Service divisions centralise similar or specialised activities in a single
department. But when centralisation is discussed as an aspect of management, it refers to withholding
or delegating authority for decision-making.
Although closely related to delegation of authority, decentralisation is something more: it
reflects a philosophy of organisation and management. It requires careful selection of what decisions to
push down into the organisation structure and what to hold at or near the top, specific policy-making to
guide the decision-making, selection and training of people, and adequate controls. A policy of
decentralisation affects all areas of management and can be looked upon as an essential element of a
managerial system. It is a fact that , without decentralisation, managers cannot use their discretion to
handle the ever-present and ever-changing situations they continually face.
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Factors Determining the Degree of Decentralisation of Authority
Managers cannot be ordinarily for or against decentralisation of authority. They may prefer to delegate
authority, or they may like to make all decisions. A well-known despot in a certain large enterprise,
who would like to make all the decisions, finds that he cannot. Even the autocrat in a smaller enterprise
is often forced to delegate some authority.
Although the temperament of individual managers influences the extent of authority delegation,
other factors also affect it. Most of these are beyond the control of individual managers. They may
resist their influence, but no successful manager can ignore them.
Costliness of the Decision: Perhaps the overriding factor determining the extent of decentralisation is,
as in other aspects of policy, the criterion of costliness. As a general rule, the more costly the action to
be decided is, the more probable it is that the decision will be made at the upper levels of management.
Uniformity of policy: Another, and somewhat related factor favouring the centralisation of authority,
is the desire to obtain uniform policy. Those who value consistency above all are invariably in favour
of centralised authority, since this is the easiest road to such a goal. They may wish to ensure that
customers will be treated alike with respect to quality, price, credit, delivery, and service; that the same
policies will be followed in dealing with suppliers; or that public relations policies will be
standardised.
Size: The larger the organisation, the more decisions to be made and the more places in which they
must be made, the more difficult it is to co-ordinate them. These complexities of organisation may
require policy questions to be passed up the line and discussed not only with many managers in the
chain of command but also with many managers at each level, since horizontal agreement may be as
necessary as vertical clearance.
Slow decisions - slow because of the number of specialists and managers who must be
consulted - are costly. To minimise this cost, authority should be decentralised wherever feasible.
Indeed, the large enterprise that prides itself on the right kind of decentralisation recognises the
inevitable, although the extent and effectiveness of decentralisation may differ widely among
companies, depending largely upon the quality of their management.
The costs of a large size may be reduced by organising an enterprise into a number of units.
Considerable increases in efficiency are likely to result from making the unit small enough for its top
executives to be near the point where decisions are made. This makes possible speedy decisions, keeps
executives from spending time co-ordinating their decisions with many others, reduces the amount of
paper work, and improves the quality of decisions by reducing their magnitude to manageable
proportions.
History of the enterprise: Whether or not authority will be frequently decentralised depends upon the
way the business has been built. The enterprises that expand from within in the main – such as
Marshall Field and Company and International Harvester Company – show a marked tendency to keep
authority centralised, as do those which expand under the direction of their owner-founders. The Ford
Motor Company was, under its founder, an extraordinary case of centralised authority; Henry Ford,
Sr., prided himself on having no organisational titles in the top management except that of president
and general manager, insisting, to the extent he could, that every major decision in that vast company
be made by himself.
Management philosophy: The character of top executives and their philosophy have an important
influence on the extent to which authority is decentralised. Sometimes top managers are despotic,
brooking no interference with the authority and information they jealously hoard. At other times, top
managers keep authority not merely to gratify a desire for status or power but because they simply

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cannot give up the activities and authorities they enjoyed before they reached the top or before the
business expanded from an owner-manager shop.
Desire for independence: It is a characteristic of individuals and of groups to desire a degree of
independence. Individuals may become frustrated by delay in getting decisions, by long lines of
communication, and by the great game of passing the buck.
Availability of managers: A real shortage of managerial manpower would limit the extent of
decentralisation of authority, as delegation of decision-making assumes the availability of trained
managers. But too often the lamentable scarcity of good managers is used as an excuse for centralising
authority; executives who complain that they have no one to whom they can delegate authority often
try to magnify their own value to the firm or confess to a failure to develop subordinates. There are
managers, also, who believe that a firm should centralise authority because it will then need very few
good managers. One difficulty is that the firm that so centralises its authority may not be able to train
managers to take over the duties of top executives, and external sources must be relied upon to furnish
necessary replacements. Thus the key to safe decentralisation is adequate training of managers. By the
same token, decentralisation is perhaps the most important key to training.
Control techniques: Another factor affecting the degree of decentralisation is the state of
development of control techniques. One cannot expect a good manager at any level of the organisation
to delegate authority without having some way of knowing whether it will be used properly.
Decentralised performance: This is basically a technical matter depending upon such factors as the
economics of division of labour, the opportunities for using machines and the nature of the work to be
performed.
The pace of change: The fast-moving character of an enterprise also affects the degree to which
authority may be decentralised. If a business is growing fast and facing the complex problems of
expansion, its managers, particularly those responsible for top policy, may be forced to make a large
share of the decision. But, strangely enough, this very dynamic condition may force these managers to
delegate authority and take a calculated risk on the costs of error.
Environmental influences: The factors determining the extent of decentralisation discussed above
have been largely internal to the enterprise, although the economics of decentralisation of performance
and the character of change include elements well beyond the control of an enterprise's manager. In
addition, there are definite external forces affecting the extent of decentralisation. Among the most
important of these are governmental controls, national unionism, and tax policies.