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 nonviolence, 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.

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.

LINE AND STAFF ORGANISATION OF A TYPICAL MANUFACTURING COMPANY

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.

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.

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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 attitude 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.

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 coordinate 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.

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.

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.
• 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 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.